82 FR 12860 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To List and Trade Shares of the Amplify YieldShares Oil Hedged MLP Fund, a Series of the Amplify ETF Trust, Under Rule 14.11(i), Managed Fund Shares

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 43 (March 7, 2017)

Page Range		12860-12862
FR Document		2017-04351
Federal Register, Volume 82 Issue 43 (Tuesday, March 7, 2017)
[Federal Register Volume 82, Number 43 (Tuesday, March 7, 2017)]
[Notices]
[Pages 12860-12862]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-04351]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80136; File No. SR-BatsBZX-2017-14]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To List and Trade Shares of the 
Amplify YieldShares Oil Hedged MLP Fund, a Series of the Amplify ETF 
Trust, Under Rule 14.11(i), Managed Fund Shares

March 1, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on February 17, 2017, Bats BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to list and trade shares of the 
Amplify YieldShares Oil Hedged MLP Fund (the ``Fund''), a series of the 
Amplify ETF Trust (the ``Trust''), under Rule 14.11(i) (``Managed Fund 
Shares''). The shares of the Fund are referred to herein as the 
``Shares.''
    The text of the proposed rule change is available at the Exchange's 
Web site at www.bats.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares under Rule 
14.11(i), which governs the listing and trading of Managed Fund Shares 
on the Exchange.\3\ The Fund will be an actively managed exchange-
traded fund that invests in equity securities of energy master limited 
partnerships (``MLPs'') and will selectively hedge these positions to 
limit the correlation of its performance to the price of West Texas 
Intermediate Crude Oil (``WTI Crude Oil'').\4\ The Exchange submits 
this proposal in order to allow the Fund to hold listed derivatives, in 
particular WTI Crude Oil futures, in a manner that does not comply with 
Rule 14.11(i)(4)(C)(iv)(b).\5\
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    \3\ The Commission originally approved BZX Rule 14.11(i) in 
Securities Exchange Act Release No. 65225 (August 30, 2011), 76 FR 
55148 (September 6, 2011) (SR-BATS-2011-018) and subsequently 
approved generic listing standards for Managed Fund Shares under 
Rule 14.11(i) in Securities Exchange Act Release No. 78396 (July 22, 
2016), 81 FR 49698 (July 28, 2016) (SR-BATS-2015-100).
    \4\ The Trust plans to list the Fund on the Exchange pursuant to 
the generic listing rules for Managed Fund Shares under Rule 
14.11(i)(4)(C) (the ``Generic Listing Rules'') regardless of the 
timing and posture of this proposal. As noted further below, the 
Fund can achieve its investment objective by meeting the Generic 
Listing Rules, but the Exchange is submitting this proposal in order 
to allow the Fund to hold listed derivatives in a manner that does 
not comply with Rule 14.11(i)(4)(C).
    \5\ Rule 14.11(i)(4)(C)(iv)(b) provides that ``the aggregate 
gross notional value of listed derivatives based on any five or 
fewer underlying reference assets shall not exceed 65% of the weight 
of the portfolio (including gross notional exposures), and the 
aggregate gross notional value of listed derivatives based on any 
single underlying reference asset shall not exceed 30% of the weight 
of the portfolio (including gross notional exposures).''
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    The Shares are offered by the Trust, which was established as a 
Massachusetts business trust on January 6, 2015.\6\ The Trust is 
registered with the Commission as an investment company and has filed a 
registration statement on Form N-1A (``Registration Statement'') with 
the Commission.\7\ The Fund is a series of the Trust.
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    \6\ The Commission has issued an order, upon which the Trust may 
rely, granting certain exemptive relief under the 1940 Act. See 
Investment Company Act Release No. 31582 (April 28, 2015) (File No. 
812-14423) (the ``Exemptive Relief'').
    \7\ See Post-Effective Amendment No. 27 to Registration 
Statement on Form N-1A for the Trust, dated January 6, 2017 (File 
Nos. 333-207937 and 811-23108). The descriptions of the Fund and the 
Shares contained herein are based, in part, on information in the 
Registration Statement.
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    The Commodity Futures Trading Commission (``CFTC'') has recently 
adopted substantial amendments to CFTC Rule 4.5 relating to the 
permissible exemptions and conditions for reliance on exemptions from 
registration as a commodity pool operator. The Trust, on behalf of the 
Fund, has filed a notice of eligibility for exclusion from the 
definition of the term ``commodity pool operator'' in accordance with 
CFTC Rule 4.5, and, therefore, the Fund would not be subject to 
registration or regulation as a commodity pool operator under the 
Commodity Exchange Act (``CEA'') to the extent that it complies with 
the requirements of the rule. To the extent that the Fund makes 
investments regulated by the CFTC, it will do so in accordance with 
Rule 4.5 under the CEA.
    The Fund intends to qualify each year as a regulated investment 
company under Subchapter M of the Internal Revenue Code of 1986, as 
amended.

[[Page 12861]]

Amplify YieldShares Oil Hedged MLP Fund
    According to the Registration Statement, the Fund will be an 
actively managed exchange-traded fund that invests in equity securities 
of MLPs and will selectively hedge these positions to limit the 
correlation of its performance to the price of WTI Crude Oil. WTI Crude 
Oil, also known as Texas light sweet, is a grade of crude oil used as a 
benchmark in oil futures contracts pricing. The Fund will use a 
benchmark, the Oil Hedged MLP Index (the ``Benchmark''), which is 
developed, maintained and sponsored by ETP Ventures LLC. The Fund will 
seek to exceed the performance of the Benchmark by actively selecting 
investments for the Fund from the underlying components of the 
Benchmark. The Fund is not an index tracking exchange-traded fund and 
is not required to invest in all of the components of the Benchmark. 
However, the Fund will generally seek to hold similar instruments to 
those included in the Benchmark with investments in MLPs and short 
exposure oil futures contracts included in the Benchmark.
    In order to achieve its investment objective, under Normal Market 
Conditions,\8\ the Fund will invest at least 80% of its total assets in 
equity securities of MLPs.\9\ As noted above, the Fund plans to hedge 
its positions in MLPs in order to limit the correlation of its 
performance to the price of WTI Crude Oil and achieves this hedge by 
holding listed and/or OTC derivative instruments in a manner that 
complies with Rule 14.11(i)(4)(C)(4)(iv) and (v). Rule 
14.11(i)(4)(C)(4)(iv) prevents the Fund from holding listed derivatives 
based on any single underlying reference asset in excess of 30% of the 
weight of its portfolio (including gross notional exposures). The 
Exchange is proposing to allow the Fund to hold up to 50% of the weight 
of its portfolio (including gross notional exposures) in WTI Crude Oil 
futures contracts traded on the New York Mercantile Exchange and ICE 
Futures Europe (``WTI Crude Oil Futures''). Allowing the Fund to hold a 
greater portion of its portfolio in WTI Crude Oil Futures would 
mitigate the Fund's dependency on holding OTC instruments, which would 
reduce the Fund's operational burden by allowing the Fund to primarily 
use listed futures contracts to achieve its investment objective and 
would further reduce counter-party risk associated with holding OTC 
instruments. The Fund would continue to meet all other requirements of 
the Generic Listing Rules and other applicable requirements for Managed 
Fund Shares under Rule 14.11(i) including Rule 14.11(i)(4)(C)(iv)(a), 
because all of the futures contracts held by the Fund will trade on 
markets that are a member of Intermarket Surveillance Group (``ISG'') 
or affiliated with a member of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.\10\
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    \8\ As defined in Rule 14.11(i)(3)(E), the term ``Normal Market 
Conditions'' includes, but is not limited to, the absence of trading 
halts in the applicable financial markets generally; operational 
issues causing dissemination of inaccurate market information or 
system failures; or force majeure type events such as natural or 
man-made disaster, act of God, armed conflict, act of terrorism, 
riot or labor disruption, or any similar intervening circumstance.
    \9\ To qualify as an MLP, and not to be taxed as a corporation, 
a partnership must receive at least 90% of its income from 
qualifying sources as set forth in Section 7704(d) of the Internal 
Revenue Code of 1986, as amended (the ``Code''). These qualifying 
sources include natural resource-based activities such as the 
exploration, development, mining, production, processing, refining, 
transportation, storage and marketing of mineral or natural 
resources.
    \10\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com. The Exchange notes that not all 
components of the Disclosed Portfolio for the Fund may trade on 
markets that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
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    The Exchange notes that the Fund may also hold certain fixed income 
securities and cash and cash equivalents in compliance with Rules 
14.11(i)(4)(C)(ii) and (iii) in order to collateralize its derivatives 
positions.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \11\ in general and Section 6(b)(5) of the Act \12\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
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    \11\ 15 U.S.C. 78f.
    \12\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system and, in general, to 
protect investors and the public interest in that the Shares will meet 
each of the initial and continued listing criteria in BZX Rule 14.11(i) 
with the exception Rule 14.11(i)(4)(C)(iv)(b), which requires that the 
aggregate gross notional value of listed derivatives based on any five 
or fewer underlying reference assets shall not exceed 65% of the weight 
of the portfolio (including gross notional exposures), and the 
aggregate gross notional value of listed derivatives based on any 
single underlying reference asset shall not exceed 30% of the weight of 
the portfolio (including gross notional exposures). The Exchange 
believes that the liquidity in the WTI Crude Oil Futures markets 
mitigates the concerns that Rule 14.11(i)(4)(C)(iv)(b) is intended to 
address and that such liquidity would prevent the Shares from being 
susceptible to manipulation.\13\ Further, allowing the Fund to hold a 
greater portion of its portfolio in WTI Crude Oil Futures would 
mitigate the Fund's dependency on holding OTC instruments, which would 
reduce the Fund's operational burden by allowing the Fund to primarily 
use listed futures contracts to achieve its investment objective and 
would further reduce counter-party risk associated with holding OTC 
instruments. The Exchange believes that its surveillance procedures are 
adequate to properly monitor the trading of the Shares on the Exchange 
during all trading sessions and to deter and detect violations of 
Exchange rules and the applicable federal securities laws. All of the 
futures contracts held by the Fund will trade on markets that are a 
member of ISG or affiliated with a member of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
The Exchange may obtain information regarding trading in the Shares and 
the underlying futures contracts held by the Fund via the ISG from 
other exchanges who are members or affiliates of the ISG or with which 
the Exchange has entered into a comprehensive surveillance sharing 
agreement.\14\ The Exchange further notes that the Fund will continue 
to meet and be subject to all other requirements of the Generic Listing 
Rules and other applicable continued listing requirements for Managed 
Fund

[[Page 12862]]

Shares under Rule 14.11(i), including those requirements regarding the 
Disclosed Portfolio,\15\ Intraday Indicative Value,\16\ suspension of 
trading or removal,\17\ trading halts,\18\ disclosure,\19\ and 
firewalls.\20\
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    \13\ As of 1/31/2017 the average daily contract volume over the 
last year was 558,353, 307,289 and 110,208 respectively for the 
front, second and third month contracts. For the third month 
contract, at today's price levels, that equates to an average daily 
traded notional of approximately $5.9 billion.
    \14\ See note 9, supra. [sic]
    \15\ See Rule 14.11(i)(4)(B)(i).
    \16\ See Rule 14.11(i)(4)(B)(ii).
    \17\ See Rule 14.11(i)(4)(B)(iii).
    \18\ See Rule 14.11(i)(4)(B)(iv).
    \19\ See Rule 14.11(i)(6).
    \20\ See Rule 14.11(i)(7).
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    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change, rather will facilitate the listing and trading of 
an additional actively-managed exchange-traded product that will 
enhance competition among both market participants and listing venues, 
to the benefit of investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-BatsBZX-2017-14 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-BatsBZX-2017-14. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BatsBZX-2017-14 and should 
be submitted on or before March 28, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-04351 Filed 3-6-17; 8:45 am]
 BILLING CODE 8011-01-P
12860 Federal Register / Vol. 82, No. 43 / Tuesday, March 7, 2017 / Notices

characterized as an ‘‘Evidence Summit,’’ 17, 2017, Bats BZX Exchange, Inc. (the Intermediate Crude Oil (‘‘WTI Crude
on Friday, March 10, 2017, in the ‘‘Exchange’’ or ‘‘BZX’’) filed with the Oil’’).4 The Exchange submits this
Auditorium, Room L–002 at the Securities and Exchange Commission proposal in order to allow the Fund to
Commission’s headquarters, 100 F (‘‘Commission’’) the proposed rule hold listed derivatives, in particular
Street NE., Washington, DC 20549. The change as described in Items I and II WTI Crude Oil futures, in a manner that
conference will begin at 9:30 a.m. (ET). below, which Items have been prepared does not comply with Rule
Seating will be on a first-come, first- by the Exchange. The Commission is 14.11(i)(4)(C)(iv)(b).5
served basis. Doors will open at 9:00 publishing this notice to solicit The Shares are offered by the Trust,
a.m. Visitors will be subject to security comments on the proposed rule change which was established as a
checks. The conference will be webcast from interested persons. Massachusetts business trust on January
on the Commission’s Web site at 6, 2015.6 The Trust is registered with
I. Self-Regulatory Organization’s the Commission as an investment
www.sec.gov. Statement of the Terms of Substance of
On February 24, 2017, the company and has filed a registration
the Proposed Rule Change statement on Form N–1A (‘‘Registration
Commission issued notice of the
conference (Release No. 33–10312), The Exchange filed a proposal to list Statement’’) with the Commission.7 The
indicating that the conference is open to and trade shares of the Amplify Fund is a series of the Trust.
the public. This Sunshine Act notice is YieldShares Oil Hedged MLP Fund (the The Commodity Futures Trading
being issued because a quorum of the ‘‘Fund’’), a series of the Amplify ETF Commission (‘‘CFTC’’) has recently
Commission may attend. Trust (the ‘‘Trust’’), under Rule 14.11(i) adopted substantial amendments to
The agenda for the conference (‘‘Managed Fund Shares’’). The shares of CFTC Rule 4.5 relating to the
includes: Opening remarks by Acting the Fund are referred to herein as the permissible exemptions and conditions
Chairman Michael S. Piwowar; plenary ‘‘Shares.’’ for reliance on exemptions from
remarks by panelists Brigitte Madrian The text of the proposed rule change registration as a commodity pool
and Terry Odean; a panel discussion is available at the Exchange’s Web site operator. The Trust, on behalf of the
exploring how investors think and act; at www.bats.com, at the principal office Fund, has filed a notice of eligibility for
a keynote address by panelist George of the Exchange, and at the exclusion from the definition of the
Loewenstein; a panel discussion Commission’s Public Reference Room. term ‘‘commodity pool operator’’ in
addressing ways in which the accordance with CFTC Rule 4.5, and,
II. Self-Regulatory Organization’s
Commission’s disclosure regime can therefore, the Fund would not be subject
Statement of the Purpose of, and
facilitate disclosure in the most effective to registration or regulation as a
Statutory Basis for, the Proposed Rule
manner for a wide variety of users; commodity pool operator under the
Change
remarks from Commissioner Kara M. Commodity Exchange Act (‘‘CEA’’) to
In its filing with the Commission, the the extent that it complies with the
Stein; a panel discussion regarding ways Exchange included statements
in which to improve the disclosure of requirements of the rule. To the extent
concerning the purpose of and basis for that the Fund makes investments
fees, strategies/risks, and performance; the proposed rule change and discussed regulated by the CFTC, it will do so in
and a nonpublic networking session for any comments it received on the accordance with Rule 4.5 under the
panelists during lunch. proposed rule change. The text of these CEA.
For further information, please statements may be examined at the The Fund intends to qualify each year
contact Brent J. Fields from the Office of places specified in Item IV below. The as a regulated investment company
the Secretary at (202) 551–5400. Exchange has prepared summaries, set under Subchapter M of the Internal
Dated: March 2, 2017. forth in Sections A, B, and C below, of Revenue Code of 1986, as amended.
Brent J. Fields, the most significant parts of such
Secretary. statements. 4 The Trust plans to list the Fund on the Exchange

pursuant to the generic listing rules for Managed
[FR Doc. 2017–04496 Filed 3–3–17; 11:15 am] A. Self-Regulatory Organization’s Fund Shares under Rule 14.11(i)(4)(C) (the ‘‘Generic
BILLING CODE 8011–01–P Statement of the Purpose of, and Listing Rules’’) regardless of the timing and posture
of this proposal. As noted further below, the Fund
Statutory Basis for, the Proposed Rule can achieve its investment objective by meeting the
Change Generic Listing Rules, but the Exchange is
SECURITIES AND EXCHANGE submitting this proposal in order to allow the Fund
COMMISSION 1. Purpose to hold listed derivatives in a manner that does not
The Exchange proposes to list and comply with Rule 14.11(i)(4)(C).
[Release No. 34–80136; File No. SR– 5 Rule 14.11(i)(4)(C)(iv)(b) provides that ‘‘the
BatsBZX–2017–14] trade the Shares under Rule 14.11(i),
aggregate gross notional value of listed derivatives
which governs the listing and trading of based on any five or fewer underlying reference
Self-Regulatory Organizations; Bats Managed Fund Shares on the assets shall not exceed 65% of the weight of the
BZX Exchange, Inc.; Notice of Filing of Exchange.3 The Fund will be an actively portfolio (including gross notional exposures), and
the aggregate gross notional value of listed
a Proposed Rule Change To List and managed exchange-traded fund that derivatives based on any single underlying
Trade Shares of the Amplify invests in equity securities of energy reference asset shall not exceed 30% of the weight
YieldShares Oil Hedged MLP Fund, a master limited partnerships (‘‘MLPs’’) of the portfolio (including gross notional
Series of the Amplify ETF Trust, Under and will selectively hedge these exposures).’’
6 The Commission has issued an order, upon
Rule 14.11(i), Managed Fund Shares positions to limit the correlation of its
which the Trust may rely, granting certain
performance to the price of West Texas exemptive relief under the 1940 Act. See
sradovich on DSK3GMQ082PROD with NOTICES

March 1, 2017.
Investment Company Act Release No. 31582 (April
Pursuant to Section 19(b)(1) of the 3 The Commission originally approved BZX Rule 28, 2015) (File No. 812–14423) (the ‘‘Exemptive
Securities Exchange Act of 1934 (the 14.11(i) in Securities Exchange Act Release No. Relief’’).
‘‘Act’’),1 and Rule 19b–4 thereunder,2 65225 (August 30, 2011), 76 FR 55148 (September 7 See Post-Effective Amendment No. 27 to

6, 2011) (SR–BATS–2011–018) and subsequently Registration Statement on Form N–1A for the Trust,
notice is hereby given that on February approved generic listing standards for Managed dated January 6, 2017 (File Nos. 333–207937 and
Fund Shares under Rule 14.11(i) in Securities 811–23108). The descriptions of the Fund and the
1 15 U.S.C. 78s(b)(1). Exchange Act Release No. 78396 (July 22, 2016), 81 Shares contained herein are based, in part, on
2 17 CFR 240.19b–4. FR 49698 (July 28, 2016) (SR–BATS–2015–100). information in the Registration Statement.

VerDate Sep<11>2014 16:01 Mar 06, 2017 Jkt 241001 PO 00000 Frm 00079 Fmt 4703 Sfmt 4703 E:\FR\FM\07MRN1.SGM 07MRN1
Federal Register / Vol. 82, No. 43 / Tuesday, March 7, 2017 / Notices 12861

Amplify YieldShares Oil Hedged MLP (including gross notional exposures) in mechanism of a free and open market
Fund WTI Crude Oil futures contracts traded and a national market system and, in
According to the Registration on the New York Mercantile Exchange general, to protect investors and the
Statement, the Fund will be an actively and ICE Futures Europe (‘‘WTI Crude public interest in that the Shares will
managed exchange-traded fund that Oil Futures’’). Allowing the Fund to meet each of the initial and continued
invests in equity securities of MLPs and hold a greater portion of its portfolio in listing criteria in BZX Rule 14.11(i) with
will selectively hedge these positions to WTI Crude Oil Futures would mitigate the exception Rule 14.11(i)(4)(C)(iv)(b),
limit the correlation of its performance the Fund’s dependency on holding OTC which requires that the aggregate gross
to the price of WTI Crude Oil. WTI instruments, which would reduce the notional value of listed derivatives
Crude Oil, also known as Texas light Fund’s operational burden by allowing based on any five or fewer underlying
sweet, is a grade of crude oil used as a the Fund to primarily use listed futures reference assets shall not exceed 65% of
benchmark in oil futures contracts contracts to achieve its investment the weight of the portfolio (including
pricing. The Fund will use a objective and would further reduce gross notional exposures), and the
benchmark, the Oil Hedged MLP Index counter-party risk associated with aggregate gross notional value of listed
(the ‘‘Benchmark’’), which is developed, holding OTC instruments. The Fund derivatives based on any single
maintained and sponsored by ETP would continue to meet all other underlying reference asset shall not
Ventures LLC. The Fund will seek to requirements of the Generic Listing exceed 30% of the weight of the
exceed the performance of the Rules and other applicable requirements portfolio (including gross notional
Benchmark by actively selecting for Managed Fund Shares under Rule exposures). The Exchange believes that
investments for the Fund from the 14.11(i) including Rule the liquidity in the WTI Crude Oil
underlying components of the 14.11(i)(4)(C)(iv)(a), because all of the Futures markets mitigates the concerns
Benchmark. The Fund is not an index futures contracts held by the Fund will that Rule 14.11(i)(4)(C)(iv)(b) is
tracking exchange-traded fund and is trade on markets that are a member of intended to address and that such
not required to invest in all of the Intermarket Surveillance Group (‘‘ISG’’) liquidity would prevent the Shares from
components of the Benchmark. or affiliated with a member of ISG or being susceptible to manipulation.13
However, the Fund will generally seek with which the Exchange has in place Further, allowing the Fund to hold a
to hold similar instruments to those a comprehensive surveillance sharing greater portion of its portfolio in WTI
included in the Benchmark with agreement.10 Crude Oil Futures would mitigate the
investments in MLPs and short The Exchange notes that the Fund Fund’s dependency on holding OTC
exposure oil futures contracts included may also hold certain fixed income instruments, which would reduce the
in the Benchmark. securities and cash and cash equivalents Fund’s operational burden by allowing
In order to achieve its investment in compliance with Rules the Fund to primarily use listed futures
objective, under Normal Market 14.11(i)(4)(C)(ii) and (iii) in order to contracts to achieve its investment
Conditions,8 the Fund will invest at collateralize its derivatives positions. objective and would further reduce
least 80% of its total assets in equity counter-party risk associated with
2. Statutory Basis holding OTC instruments. The
securities of MLPs.9 As noted above, the
Fund plans to hedge its positions in The Exchange believes that the Exchange believes that its surveillance
MLPs in order to limit the correlation of proposal is consistent with Section 6(b) procedures are adequate to properly
its performance to the price of WTI of the Act 11 in general and Section monitor the trading of the Shares on the
Crude Oil and achieves this hedge by 6(b)(5) of the Act 12 in particular in that Exchange during all trading sessions
holding listed and/or OTC derivative it is designed to prevent fraudulent and and to deter and detect violations of
instruments in a manner that complies manipulative acts and practices, to Exchange rules and the applicable
with Rule 14.11(i)(4)(C)(4)(iv) and (v). promote just and equitable principles of federal securities laws. All of the futures
Rule 14.11(i)(4)(C)(4)(iv) prevents the trade, to foster cooperation and contracts held by the Fund will trade on
Fund from holding listed derivatives coordination with persons engaged in markets that are a member of ISG or
based on any single underlying facilitating transactions in securities, to affiliated with a member of ISG or with
reference asset in excess of 30% of the remove impediments to and perfect the which the Exchange has in place a
weight of its portfolio (including gross mechanism of a free and open market comprehensive surveillance sharing
notional exposures). The Exchange is and a national market system and, in agreement. The Exchange may obtain
proposing to allow the Fund to hold up general, to protect investors and the information regarding trading in the
to 50% of the weight of its portfolio public interest. Shares and the underlying futures
The Exchange believes that the contracts held by the Fund via the ISG
8 As defined in Rule 14.11(i)(3)(E), the term proposed rule change is designed to from other exchanges who are members
‘‘Normal Market Conditions’’ includes, but is not prevent fraudulent and manipulative or affiliates of the ISG or with which the
limited to, the absence of trading halts in the acts and practices, to promote just and Exchange has entered into a
applicable financial markets generally; operational comprehensive surveillance sharing
issues causing dissemination of inaccurate market
equitable principles of trade, to foster
cooperation and coordination with agreement.14 The Exchange further
information or system failures; or force majeure
type events such as natural or man-made disaster, persons engaged in facilitating notes that the Fund will continue to
act of God, armed conflict, act of terrorism, riot or transactions in securities, to remove meet and be subject to all other
labor disruption, or any similar intervening
impediments to and perfect the requirements of the Generic Listing
circumstance. Rules and other applicable continued
9 To qualify as an MLP, and not to be taxed as
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a corporation, a partnership must receive at least
10 For a list of the current members and affiliate listing requirements for Managed Fund
90% of its income from qualifying sources as set members of ISG, see www.isgportal.com. The
forth in Section 7704(d) of the Internal Revenue Exchange notes that not all components of the 13 As of 1/31/2017 the average daily contract

Code of 1986, as amended (the ‘‘Code’’). These Disclosed Portfolio for the Fund may trade on volume over the last year was 558,353, 307,289 and
qualifying sources include natural resource-based markets that are members of ISG or with which the 110,208 respectively for the front, second and third
activities such as the exploration, development, Exchange has in place a comprehensive month contracts. For the third month contract, at
mining, production, processing, refining, surveillance sharing agreement. today’s price levels, that equates to an average daily
11 15 U.S.C. 78f. traded notional of approximately $5.9 billion.
transportation, storage and marketing of mineral or
natural resources. 12 15 U.S.C. 78f(b)(5). 14 See note 9, supra. [sic]

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12862 Federal Register / Vol. 82, No. 43 / Tuesday, March 7, 2017 / Notices

Shares under Rule 14.11(i), including Electronic Comments SECURITIES AND EXCHANGE
those requirements regarding the COMMISSION
Disclosed Portfolio,15 Intraday • Use the Commission’s Internet
comment form (http://www.sec.gov/ [Investment Company Act Release No.
Indicative Value,16 suspension of 32519; File No. 812–14719]
trading or removal,17 trading halts,18 rules/sro.shtml); or
disclosure,19 and firewalls.20 • Send an email to rule- Victory Portfolios, et al.; Notice of
For the above reasons, the Exchange comments@sec.gov. Please include File Application
believes that the proposed rule change Number SR–BatsBZX–2017–14 on the
March 2, 2017.
is consistent with the requirements of subject line.
AGENCY: Securities and Exchange
Section 6(b)(5) of the Act. Paper Comments Commission (‘‘Commission’’).
B. Self-Regulatory Organization’s ACTION: Notice of an application for an
Statement on Burden on Competition • Send paper comments in triplicate order pursuant to: (a) Section 6(c) of the
to Secretary, Securities and Exchange Investment Company Act of 1940
The Exchange does not believe that Commission, 100 F Street NE., (‘‘Act’’) granting an exemption from
the proposed rule change will impose Washington, DC 20549–1090. sections 18(f) and 21(b) of the Act; (b)
any burden on competition that is not section 12(d)(1)(J) of the Act granting an
All submissions should refer to File
necessary or appropriate in furtherance exemption from section 12(d)(1) of the
Number SR–BatsBZX–2017–14. This file
of the purpose of the Act. The Exchange Act; (c) sections 6(c) and 17(b) of the
notes that the proposed rule change, number should be included on the
Act granting an exemption from sections
rather will facilitate the listing and subject line if email is used. To help the
17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
trading of an additional actively- Commission process and review your
and (d) section 17(d) of the Act and rule
managed exchange-traded product that comments more efficiently, please use 17d–1 under the Act to permit certain
will enhance competition among both only one method. The Commission will joint arrangements and transactions.
market participants and listing venues, post all comments on the Commission’s Applicants request an order that would
to the benefit of investors and the Internet Web site (http://www.sec.gov/ permit certain registered open-end
marketplace. rules/sro.shtml). Copies of the management investment companies to
submission, all subsequent participate in a joint lending and
C. Self-Regulatory Organization’s amendments, all written statements borrowing facility.
Statement on Comments on the with respect to the proposed rule
Proposed Rule Change Received From change that are filed with the APPLICANTS: Victory Portfolios, Victory
Members, Participants, or Others Portfolios II, Victory Institutional Funds
Commission, and all written
communications relating to the and Victory Variable Insurance Funds
The Exchange has neither solicited
proposed rule change between the (each a ‘‘Trust’’), each a Delaware
nor received written comments on the
Commission and any person, other than statutory trust registered under the Act
proposed rule change.
those that may be withheld from the as an open-end management investment
III. Date of Effectiveness of the company with multiple series,1 and
public in accordance with the
Proposed Rule Change and Timing for Victory Capital Management Inc. (the
provisions of 5 U.S.C. 552, will be
Commission Action ‘‘Adviser’’), a New York Corporation
available for Web site viewing and registered as an investment adviser
Within 45 days of the date of printing in the Commission’s Public under the Investment Advisers Act of
publication of this notice in the Federal Reference Room, 100 F Street, NE., 1940.
Register or within such longer period Washington, DC 20549, on official DATES: Filing Dates: The application was
up to 90 days (i) as the Commission may business days between the hours of filed on December 2, 2016 and amended
designate of such date if it finds such 10:00 a.m. and 3:00 p.m. Copies of the on January 17, 2017.
longer period to be appropriate and filing also will be available for HEARING OR NOTIFICATION OF HEARING: An
publishes its reasons for so finding or inspection and copying at the principal order granting the requested relief will
(ii) as to which the Exchange consents, office of the Exchange. All comments be issued unless the Commission orders
the Commission will: (a) By order received will be posted without change; a hearing. Interested persons may
approve or disapprove such proposed the Commission does not edit personal request a hearing by writing to the
rule change, or (b) institute proceedings identifying information from Commission’s Secretary and serving
to determine whether the proposed rule submissions. You should submit only applicants with a copy of the request,
change should be disapproved. information that you wish to make personally or by mail. Hearing requests
IV. Solicitation of Comments available publicly. All submissions should be received by the Commission
should refer to File Number SR– by 5:30 p.m. on March 27, 2017 and
Interested persons are invited to BatsBZX–2017–14 and should be should be accompanied by proof of
submit written data, views, and submitted on or before March 28, 2017. service on the applicants, in the form of
arguments concerning the foregoing, an affidavit, or, for lawyers, a certificate
For the Commission, by the Division of
including whether the proposed rule of service. Pursuant to Rule 0–5 under
Trading and Markets, pursuant to delegated
change is consistent with the Act. authority.21 the Act, hearing requests should state
Comments may be submitted by any of the nature of the writer’s interest, any
sradovich on DSK3GMQ082PROD with NOTICES

the following methods: Eduardo A. Aleman,
Assistant Secretary. 1 In the future the Adviser may advise Funds (as

15 See Rule 14.11(i)(4)(B)(i). [FR Doc. 2017–04351 Filed 3–6–17; 8:45 am] defined below) that are registered closed-end
16 See Rule 14.11(i)(4)(B)(ii). management investment companies or Funds that
BILLING CODE 8011–01–P
17 See Rule 14.11(i)(4)(B)(iii).
are money market funds that comply with Rule 2a–
7 under the 1940 Act. The Funds that are closed-
18 See Rule 14.11(i)(4)(B)(iv).
end management investment companies and money
19 See Rule 14.11(i)(6).
market funds will not participate as borrowers in
20 See Rule 14.11(i)(7). 21 17 CFR 200.30–3(a)(12). the interfund lending facility.

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Document Created: 2018-02-01 14:49:12
Document Modified: 2018-02-01 14:49:12
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		82 FR 12860