82 FR 17913 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendments No. 1 and No. 2, To List and Trade Shares of the iShares iBonds Dec 2024 AMT-Free Muni Bond ETF, iShares iBonds Dec 2025 AMT-Free Muni Bond ETF, and iShares iBonds Dec 2026 AMT-Free Muni Bond ETF of the iShares U.S. ETF Trust Under Exchange Rule 14.11(i)
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 70 (April 13, 2017)
Federal Register Volume 82, Issue 70 (April 13, 2017)
| Page Range | 17913-17916 | |
| FR Document | 2017-07456 |
[Federal Register Volume 82, Number 70 (Thursday, April 13, 2017)] [Notices] [Pages 17913-17916] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-07456] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80399; File No. SR-BatsBZX-2017-10] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Approving a Proposed Rule Change, as Modified by Amendments No. 1 and No. 2, To List and Trade Shares of the iShares iBonds Dec 2024 AMT-Free Muni Bond ETF, iShares iBonds Dec 2025 AMT-Free Muni Bond ETF, and iShares iBonds Dec 2026 AMT-Free Muni Bond ETF of the iShares U.S. ETF Trust Under Exchange Rule 14.11(i) April 7, 2017. I. Introduction On January 31, 2017, Bats BZX Exchange, Inc. (``Exchange'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to list and trade shares of the iShares iBonds Dec 2024 AMT-Free Muni Bond ETF, iShares iBonds Dec 2025 AMT-Free Muni Bond ETF, and iShares iBonds Dec 2026 AMT-Free Muni Bond ETF (each a ``Fund'' or, collectively, the ``Funds'') of the iShares U.S. ETF Trust (``Trust'') under Exchange Rule 14.11(i).\4\ The proposed rule change was published for comment in the Federal Register on February 21, 2017.\5\ On March 28, 2017, the Exchange filed Amendment No. 1 to the proposed rule change, which replaced the original proposal in its entirety, and on March 29, 2017, the Exchange filed Amendment No. 2 to the proposed rule change.\6\ The Commission has received no comment letters on the proposed rule change. The Commission is approving the proposed rule change, as modified by Amendments No. 1 and No. 2. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. \4\ The shares of the Funds are referred to herein as the ``Shares.'' \5\ See Securities Exchange Act Release No. 80036 (February 14, 2017), 82 FR 11278. \6\ The amendments to the proposed rule change are available at: https://www.sec.gov/comments/sr-batsbzx-2017-10/batsbzx201710.htm. In Amendment No. 1, the Exchange clarified the operation of the portfolio diversification requirements and its description of how the Funds' net asset values will be calculated. In Amendment No. 2, the Exchange affirmed that: (1) All statements and representations made in the proposed rule change regarding (a) the description of the portfolio, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange; (2) the issuer has represented to the Exchange that it will advise the Exchange of any failure by a Fund to comply with the continued listing requirements; (3) the Exchange will surveil for compliance with the continued listing requirements; and (4) if a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Exchange Rule 14.12. Each of the amendments is a technical amendment, and none of them is subject to notice and comment. --------------------------------------------------------------------------- II. The Exchange's Description of the Proposed Rule Change \7\ --------------------------------------------------------------------------- \7\ The Commission notes that additional information regarding the Trust, the Funds, their investments, and the Shares, including investment strategies, risks, creation and redemption procedures, fees, portfolio holdings disclosure policies, calculation of net asset value (``NAV''), distributions, and taxes, among other things, can be found in Amendment No. 1 and the Registration Statement, as applicable. See Amendment No. 1, supra note 6, and Registration Statement, infra note 9. --------------------------------------------------------------------------- The Exchange proposes to list and trade the Shares under Exchange Rule 14.11(i), which governs the listing and trading of Managed Fund Shares on the Exchange. The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities.\8\ --------------------------------------------------------------------------- \8\ See Amendment No. 1, supra note 6, at 39. --------------------------------------------------------------------------- The Shares will be offered by the Trust,\9\ which is established as a [[Page 17914]] Delaware statutory trust. BlackRock Fund Advisors is the investment adviser (``BFA'' or ``Adviser'') to the Funds.\10\ State Street Bank and Trust Company is the administrator, custodian, and transfer agent for the Trust. BlackRock Investments, LLC serves as the distributor for the Trust. --------------------------------------------------------------------------- \9\ The Trust is registered with the Commission as an open-end investment company and has filed a registration statement on behalf of the Funds on Form N-1A (``Registration Statement'') with the Commission. See Registration Statement on Form N-1A for the Trust, dated November 2, 2015 (File Nos. 333-179904 and 811-22649). See also Investment Company Act Release No. 29571 (January 24, 2011) (File No. 812-13601). \10\ The Exchange represents that the Adviser is not registered as a broker-dealer. The Adviser is affiliated with multiple broker- dealers and has implemented fire walls with respect to such respective broker-dealer affiliate(s) regarding access to information concerning the composition of and/or changes to the portfolio. In the event (a) the Adviser becomes newly affiliated with a broker-dealer or registers as a broker-dealer, or (b) any new adviser or sub-adviser is a registered broker-dealer or becomes affiliated with a broker-dealer, it will implement a fire wall with respect to its relevant personnel and/or such broker-dealer affiliate, if applicable, regarding access to information concerning the composition of, or changes to, the portfolio and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio. See Amendment No. 1, supra note 6, at 6; see also Exchange Rule 14.11(i)(7). --------------------------------------------------------------------------- According to the Exchange, the investment objective of each Fund will be to maximize tax-free current income and terminate on or around December 2024, December 2025 or December 2026, as applicable. A. The Funds' Principal Investments Under normal circumstances,\11\ each Fund will invest at least 80% of its net assets in U.S.-dollar denominated investment-grade fixed- rate Municipal Securities,\12\ as defined below, such that the interest on each security is exempt from U.S. federal income taxes and the federal alternative minimum tax (``AMT''). The Municipal Securities in which the Funds will invest are fixed and variable rate securities issued in the United States by U.S. states and territories, municipalities and other political subdivisions, agencies, authorities, and instrumentalities of states and multi-state agencies and authorities and will consist of only the following instruments: general obligation bonds, limited obligation bonds (or revenue bonds), municipal notes, municipal commercial paper, tender option bonds, variable rate demand obligations (``VRDOs''), municipal lease obligations, stripped securities, structured securities,\13\ when issued securities, zero coupon securities, and exchange-traded and non- exchange-traded investment companies that invest in such Municipal Securities. --------------------------------------------------------------------------- \11\ The term ``under normal circumstances'' includes, but is not limited to, the absence of adverse market, economic, political, or other conditions, including extreme volatility or trading halts in the financial markets; operational issues causing dissemination of inaccurate market information; or force majeure type events such as systems failure, natural or man-made disaster, act of God, armed conflict, act of terrorism, riot, or labor disruption, or any similar intervening circumstance. \12\ Investment-grade securities are rated a minimum of BBB- or higher by Standard & Poor's Ratings Services and/or Fitch, or Baa3 or higher by Moody's, or if unrated, determined by the Adviser to be of equivalent quality. According to the Adviser, BFA may determine that unrated securities are of ``equivalent quality'' based on such credit quality factors that it deems appropriate, which may include among other things, performing an analysis similar, to the extent possible, to that performed by a nationally recognized statistical ratings organization when rating similar securities and issuers. In making such a determination, BFA may consider internal analyses and risk ratings, third party research and analysis, and other sources of information, as deemed appropriate by the Adviser. See Amendment No. 1, supra note 6, at 8, n.9. \13\ Structured securities, when combined with those instruments held as part of the other portfolio holdings described below, will not exceed 20% of the Fund's net assets. See id. at 9, n.19. --------------------------------------------------------------------------- In each Fund's last year of operation, as the bonds held by the Fund mature, the proceeds will not be reinvested in bonds but instead will be held in cash and cash equivalents, including, without limitation, shares of affiliated money market funds, AMT-free tax- exempt municipal notes, VRDOs, tender option bonds and municipal commercial paper. In or around December 2024, December 2025, or December 2026, as applicable, the Fund will wind up and terminate, and its net assets will be distributed to then current shareholders. B. Other Portfolio Holdings of the Funds Under normal circumstances each Fund may also hold, to a limited extent (less than 20% of the Fund's net assets), interest rate futures, interest rate options, interest rate swaps, and swaps on Municipal Securities indexes.\14\ --------------------------------------------------------------------------- \14\ The derivatives will be centrally cleared and they will be collateralized. See Amendment No. 1, supra note 6, at 12, n.26. --------------------------------------------------------------------------- A Fund may also enter into repurchase and reverse repurchase agreements for Municipal Securities. A Fund may also invest in short- term instruments, which includes exchange-traded and non-exchange- traded investment companies that invest in money market instruments. C. The Funds' Investment Restrictions Each Fund will hold a minimum of 40 different Municipal Securities diversified among issuers in at least 8 different states with no more than 30% of the Fund's assets comprised of Municipal Bonds that provide exposure to any single state (collectively, ``Minimum Requirement 1''). Each Fund will hold a minimum of 75 different Municipal Securities when at least four creation units are outstanding (``Trigger Number 1A''). Each Fund will hold a minimum of 100 different Municipal Securities diversified among issuers in at least 20 different states when at least eight creation units are outstanding (``Trigger Number 1B''). No single Municipal Security held by any Fund will exceed 4% of the weight of the Fund's portfolio and no single issuer of Municipal Securities will account for more than 10% of the weight of any Fund's portfolio (collectively, ``Minimum Requirement 2''). Each Fund will hold Municipal Securities of at least 20 non-affiliated issuers (``Minimum Requirement 3''). Each Fund will hold Municipal Securities of at least 30 non-affiliated issuers when at least four creation units are outstanding (``Trigger Number 2'').\15\ To the extent that a Fund at one point has sufficient creation units outstanding necessary to trigger a diversity requirement laid out above (each of Trigger Numbers 1A, 1B and 2, a ``Trigger Number''), but subsequently has fewer creation units outstanding than the applicable Trigger Number, the Fund may no longer comply with the applicable diversity requirement. However, while a Fund may no longer comply with the diversity requirements applicable to the previously applicable Trigger Number, the Fund will continue to comply with any diversity requirement for which the number of creation units outstanding continues to exceed the Trigger Number (i.e., Trigger Number 1A), as well as each of Minimum Requirements 1, 2 and 3.\16\ --------------------------------------------------------------------------- \15\ The Exchange clarifies that each state and each separate political subdivision, agency, authority, or instrumentality of such state, each multi-state agency or authority, and each guarantor, if any, will be treated as separate issuers of Municipal Securities. See Amendment No. 1, supra note 6, at 11, n.23; at 18, n.47; and at 26, n.71. \16\ Id. at 11, n.24; at 18, n.48; and at 26, n.72. --------------------------------------------------------------------------- Each Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), as deemed illiquid by the Adviser. Each Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained and will consider taking appropriate steps in order to maintain adequate liquidity if, through a change in values, net assets, or other circumstances, more than 15% of the [[Page 17915]] Fund's net assets are held in illiquid assets.\17\ --------------------------------------------------------------------------- \17\ Id. at 13-14. --------------------------------------------------------------------------- Each Fund may also invest up to 20% of its net assets in Municipal Securities that pay interest that is subject to the AMT.\18\ --------------------------------------------------------------------------- \18\ Id. at 14. --------------------------------------------------------------------------- III. Discussion and Commission's Findings The Commission has carefully reviewed the proposed rule change and finds that it is consistent with the requirements of Section 6 of the Act \19\ and the rules and regulations thereunder applicable to a national securities exchange.\20\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\21\ which requires, among other things, that the Exchange's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f. \20\ In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \21\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission also finds that the proposal to list and trade the Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the Act,\22\ which sets forth the finding of Congress that it is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to assure the availability to brokers, dealers, and investors of information with respect to quotations for, and transactions in, securities. The Exchange provides that quotation and last-sale information for the Shares will be available on the facilities of the Consolidated Tape Association (``CTA''). In addition, for each Fund, an Intraday Indicative Value will be calculated and disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Regular Trading Hours.\23\ --------------------------------------------------------------------------- \22\ 15 U.S.C. 78k-1(a)(1)(C)(iii). \23\ See Exchange Rule 14.11(i)(4)(B)(i). ``Regular Trading Hours'' means the time between 9:30 a.m. and 4:00 p.m. Eastern Time. See Exchange Rule 1.5(w). The Intraday Indicative Value will be based upon the current value for the components of the Disclosed Portfolio. See Exchange Rule 14.11(i)(3)(C). --------------------------------------------------------------------------- According to the Exchange, each Fund's NAV will be determined as of the close of regular trading on the New York Stock Exchange (``NYSE'') (generally 4:00 p.m., E.T.) on each day the NYSE is open for trading. Information regarding market price and volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services. The previous day's closing price and trading volume information for the Shares will be published daily in the financial section of newspapers. The Exchange represents that intraday, executable price quotations on assets held by each Fund are available from major broker-dealer firms, and for exchange-traded assets such intraday information is available directly from the applicable listing exchange. All such intraday price information is available through subscription services, such as Bloomberg, Thomson Reuters and International Data Corporation, which can be accessed by authorized participants and other investors. Pricing information for repurchase agreements and securities not listed on an exchange or national securities market will be available from major broker-dealer firms and/or subscription services, such as Bloomberg, Thomson Reuters, and International Data Corporation. Price information relating to all other securities held by the Funds will be available from major market data vendors. The Funds' Web site, which will be publicly available prior to the public offering of Shares, will include a form of the prospectus for each Fund that may be downloaded. The Web site will also include additional quantitative information, updated on a daily basis, for each Fund. The Commission believes that the proposal to list and trade the Shares is reasonably designed to promote fair disclosure of information that may be necessary to price the Shares appropriately and to prevent trading when a reasonable degree of transparency cannot be assured. The Commission notes that the Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the identities and quantities of the portfolio of securities and other assets (the ``Disclosed Portfolio'') held by the Fund that will form the basis for the Fund's calculation of NAV at the end of the business day, will be made available to all market participants at the same time. Trading in Shares of a Fund will be halted under the conditions specified in Exchange Rule 11.18. Trading may also be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. Finally, trading in the Shares will be subject to Exchange Rule 14.11(i)(4)(B)(iv), which sets forth circumstances under which trading in the Shares may be halted. The Exchange states that it prohibits the distribution of material, non-public information by its employees. In addition, the Exchange represents that the Adviser is not registered as a broker-dealer; however, the Adviser is affiliated with multiple broker-dealers, and has implemented a fire wall with respect to its respective broker- dealer affiliates regarding access to information concerning the composition and/or changes to the portfolio.\24\ --------------------------------------------------------------------------- \24\ See Amendment No. 1, supra note 6, at 6. The Exchange further represents that an investment adviser to an open-end fund is required to be registered under the Investment Advisers Act of 1940 (``Advisers Act''). As a result, the Adviser and its related personnel are subject to the provisions of Rule 204A-1 under the Advisers Act relating to codes of ethics. This Rule requires investment advisers to adopt a code of ethics that reflects the fiduciary nature of the relationship to clients as well as compliance with other applicable securities laws. Accordingly, procedures designed to prevent the communication and misuse of non- public information by an investment adviser must be consistent with Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful for an investment adviser to provide investment advice to clients unless such investment adviser has (i) adopted and implemented written policies and procedures reasonably designed to prevent violation, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. --------------------------------------------------------------------------- The Exchange represents that trading in the Shares through the Exchange will be subject to the Exchange's surveillance procedures for derivative products, including Managed Fund Shares. The Exchange may obtain information regarding trading in the Shares and the underlying shares in exchange traded equity securities via the Intermarket Surveillance Group (``ISG''), from other exchanges that are members or affiliates of the ISG, or with which the Exchange has entered into a comprehensive surveillance sharing agreement.\25\ In addition, the Exchange is able to access, as needed, trade information for certain fixed income instruments reported to the Financial Industry Regulatory Authority's Trade Reporting and Compliance Engine (``TRACE''). --------------------------------------------------------------------------- \25\ For a list of the current members of ISG, see www.isgportal.org. --------------------------------------------------------------------------- The Exchange represents that all statements and representations made in the proposed rule change regarding (a) the description of the portfolio, (b) [[Page 17916]] limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange. In addition, the issuer has represented to the Exchange that it will advise the Exchange of any failure by a Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under the Exchange Rule 14.12.\26\ --------------------------------------------------------------------------- \26\ See Amendment No. 2, supra note 6, at 3-4. --------------------------------------------------------------------------- The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. In support of this proposal, the Exchange has made representations, including the following: (1) The Shares will be subject to Exchange Rule 14.11(i), which sets forth the initial and continued listing criteria applicable to Managed Fund Shares.\27\ --------------------------------------------------------------------------- \27\ See Amendment No. 1, supra note 6, at 38. --------------------------------------------------------------------------- (2) The Exchange's 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.\28\ --------------------------------------------------------------------------- \28\ See id. at 39. --------------------------------------------------------------------------- (3) The Exchange may obtain information regarding trading in the Shares and the underlying shares in exchange traded equity securities via the ISG, from other exchanges that are members or affiliates of the ISG, or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, the Exchange is able to access, as needed, trade information for certain fixed income instruments reported to TRACE.\29\ --------------------------------------------------------------------------- \29\ See id. at 43. --------------------------------------------------------------------------- (4) Structured securities, when combined with instruments held as part of the other portfolio holdings as described above, will not exceed 20% of each Fund's net assets.\30\ --------------------------------------------------------------------------- \30\ See id. at 9, n.19. --------------------------------------------------------------------------- (5) Each Fund will comply with Minimum Requirements 1, 2, and 3. If a Fund at any point has sufficient creation units outstanding necessary to trigger a diversity requirement and subsequently has fewer creation units outstanding than those applicable to the Trigger Number, the Fund will continue to comply with any diversity requirement for which the number of creation units outstanding continues to exceed the Trigger Number, as well as each of Minimum Requirements 1, 2 and 3. (6) Each Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), as deemed illiquid by the Adviser.\31\ --------------------------------------------------------------------------- \31\ See id. at 11, 18 and 26. --------------------------------------------------------------------------- (7) Prior to the commencement of trading, the Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Shares. Specifically, the Information Circular will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Units (and that Shares are not individually redeemable); (2) Exchange Rule 3.7, which imposes suitability obligations on Exchange members with respect to recommending transactions in the Shares to customers; (3) how information regarding the Intraday Indicative Value is disseminated; (4) the risks involved in trading the Shares during the Pre-Opening \32\ and After Hours Trading Sessions \33\ when an updated Intraday Indicative Value will not be calculated or publicly disseminated; (5) the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. In addition, the Information Circular will advise members, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Funds. Members purchasing Shares from the Funds for resale to investors will deliver a prospectus to such investors. The Information Circular will also discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act.\34\ --------------------------------------------------------------------------- \32\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m. Eastern Time. \33\ The After Hours Trading Session is from 4:00 p.m. to 5:00 p.m. Eastern Time. \34\ See Amendment No. 1, supra note 6, at 41. --------------------------------------------------------------------------- (8) For initial and/or continued listing, each Fund must be in compliance with Rule 10A-3 under the Act.\35\ --------------------------------------------------------------------------- \35\ See id. at 38. --------------------------------------------------------------------------- (9) A minimum of 100,000 Shares of each Fund will be outstanding at the commencement of trading on the Exchange.\36\ --------------------------------------------------------------------------- \36\ See id. --------------------------------------------------------------------------- (10) The Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time.\37\ --------------------------------------------------------------------------- \37\ See id. --------------------------------------------------------------------------- This approval order is based on all of the Exchange's representations, including those set forth above and in Amendments No. 1 and No. 2. For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendments No. 1 and No. 2, is consistent with Section 6(b)(5) of the Act \38\ and the rules and regulations thereunder applicable to a national securities exchange. --------------------------------------------------------------------------- \38\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,\39\ that the proposed rule change (SR-BatsBZX-2017-10), as modified by Amendments No. 1 and No. 2, be, and it hereby is, approved. --------------------------------------------------------------------------- \39\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\40\ --------------------------------------------------------------------------- \40\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-07456 Filed 4-12-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 70 / Thursday, April 13, 2017 / Notices 17913
Commission is received. The clearing Advance Notice between the collectively, the ‘‘Funds’’) of the iShares
agency shall not implement the Commission and any person, other than U.S. ETF Trust (‘‘Trust’’) under
proposed change if the Commission has those that may be withheld from the Exchange Rule 14.11(i).4 The proposed
any objection to the proposed change. public in accordance with the rule change was published for comment
The Commission may extend the provisions of 5 U.S.C. 552, will be in the Federal Register on February 21,
period for review by an additional 60 available for Web site viewing and 2017.5 On March 28, 2017, the Exchange
days if the proposed change raises novel printing in the Commission’s Public filed Amendment No. 1 to the proposed
or complex issues, subject to the Reference Room, 100 F Street NE., rule change, which replaced the original
Commission providing the clearing Washington, DC 20549 on official proposal in its entirety, and on March
agency with prompt written notice of business days between the hours of 29, 2017, the Exchange filed
the extension. A proposed change may 10:00 a.m. and 3:00 p.m. Copies of the Amendment No. 2 to the proposed rule
be implemented in less than 60 days filing also will be available for change.6 The Commission has received
from the date the advance notice is inspection and copying at the principal no comment letters on the proposed rule
filed, or the date further information office of FICC and on DTCC’s Web site change. The Commission is approving
requested by the Commission is (http://dtcc.com/legal/sec-rule- the proposed rule change, as modified
received, if the Commission notifies the filings.aspx). All comments received by Amendments No. 1 and No. 2.
clearing agency in writing that it does will be posted without change; the
II. The Exchange’s Description of the
not object to the proposed change and Commission does not edit personal
Proposed Rule Change 7
authorizes the clearing agency to identifying information from
implement the proposed change on an submissions. You should submit only The Exchange proposes to list and
earlier date, subject to any conditions information that you wish to make trade the Shares under Exchange Rule
imposed by the Commission. available publicly. All submissions 14.11(i), which governs the listing and
The clearing agency shall post notice should refer to File Number SR–FICC– trading of Managed Fund Shares on the
on its Web site of proposed changes that 2017–804 and should be submitted on Exchange. The Exchange deems the
are implemented. or before April 28, 2017. Shares to be equity securities, thus
The proposal shall not take effect By the Commission. rendering trading in the Shares subject
until all regulatory actions required Eduardo A. Aleman,
to the Exchange’s existing rules
with respect to the proposal are governing the trading of equity
Assistant Secretary.
completed. securities.8
[FR Doc. 2017–07452 Filed 4–12–17; 8:45 am] The Shares will be offered by the
IV. Solicitation of Comments BILLING CODE 8011–01–P Trust,9 which is established as a
Interested persons are invited to
submit written data, views and 4 The shares of the Funds are referred to herein
arguments concerning the foregoing, SECURITIES AND EXCHANGE as the ‘‘Shares.’’
including whether the Advance Notice COMMISSION 5 See Securities Exchange Act Release No. 80036
(February 14, 2017), 82 FR 11278.
is consistent with the Clearing [Release No. 34–80399; File No. SR– 6 The amendments to the proposed rule change
Supervision Act. Comments may be BatsBZX–2017–10] are available at: https://www.sec.gov/comments/sr-
submitted by any of the following batsbzx-2017-10/batsbzx201710.htm. In
methods: Self-Regulatory Organizations; Bats Amendment No. 1, the Exchange clarified the
BZX Exchange, Inc.; Order Approving operation of the portfolio diversification
Electronic Comments requirements and its description of how the Funds’
a Proposed Rule Change, as Modified net asset values will be calculated. In Amendment
• Use the Commission’s Internet by Amendments No. 1 and No. 2, To No. 2, the Exchange affirmed that: (1) All statements
comment form List and Trade Shares of the iShares and representations made in the proposed rule
(http://www.sec.gov/rules/sro.shtml); iBonds Dec 2024 AMT-Free Muni Bond change regarding (a) the description of the portfolio,
ETF, iShares iBonds Dec 2025 AMT- (b) limitations on portfolio holdings or reference
or assets, or (c) the applicability of Exchange rules and
• Send an email to rule-comments@ Free Muni Bond ETF, and iShares surveillance procedures shall constitute continued
sec.gov. Please include File Number SR– iBonds Dec 2026 AMT-Free Muni Bond listing requirements for listing the Shares on the
FICC–2017–804 on the subject line. ETF of the iShares U.S. ETF Trust Exchange; (2) the issuer has represented to the
Under Exchange Rule 14.11(i) Exchange that it will advise the Exchange of any
Paper Comments failure by a Fund to comply with the continued
listing requirements; (3) the Exchange will surveil
• Send paper comments in triplicate April 7, 2017.
for compliance with the continued listing
to Secretary, Securities and Exchange I. Introduction requirements; and (4) if a Fund is not in compliance
Commission, 100 F Street NE., with the applicable listing requirements, the
On January 31, 2017, Bats BZX Exchange will commence delisting procedures
Washington, DC 20549.
Exchange, Inc. (‘‘Exchange’’) filed with under Exchange Rule 14.12. Each of the
All submissions should refer to File the Securities and Exchange amendments is a technical amendment, and none
Number SR–FICC–2017–804. This file Commission (‘‘Commission’’), pursuant of them is subject to notice and comment.
7 The Commission notes that additional
number should be included on the to Section 19(b)(1) 1 of the Securities information regarding the Trust, the Funds, their
subject line if email is used. To help the Exchange Act of 1934 (‘‘Act’’) 2 and Rule investments, and the Shares, including investment
Commission process and review your 19b–4 thereunder,3 a proposed rule strategies, risks, creation and redemption
comments more efficiently, please use change to list and trade shares of the procedures, fees, portfolio holdings disclosure
only one method. The Commission will policies, calculation of net asset value (‘‘NAV’’),
asabaliauskas on DSK3SPTVN1PROD with NOTICES
iShares iBonds Dec 2024 AMT-Free distributions, and taxes, among other things, can be
post all comments on the Commission’s Muni Bond ETF, iShares iBonds Dec found in Amendment No. 1 and the Registration
Internet Web site (http://www.sec.gov/ 2025 AMT-Free Muni Bond ETF, and Statement, as applicable. See Amendment No. 1,
rules/sro.shtml). Copies of the iShares iBonds Dec 2026 AMT-Free supra note 6, and Registration Statement, infra note
submission, all subsequent 9.
Muni Bond ETF (each a ‘‘Fund’’ or, 8 See Amendment No. 1, supra note 6, at 39.
amendments, all written statements 9 The Trust is registered with the Commission as
with respect to the Advance Notice that 1 15 U.S.C. 78s(b)(1). an open-end investment company and has filed a
are filed with the Commission, and all 2 15 U.S.C. 78a. registration statement on behalf of the Funds on
written communications relating to the 3 17 CFR 240.19b–4. Continued
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![17916 Federal Register / Vol. 82, No. 70 / Thursday, April 13, 2017 / Notices
limitations on portfolio holdings or to comply with any diversity Shares that the NAV per Share will be
reference assets, or (c) the applicability requirement for which the number of calculated daily and that the NAV and
of Exchange rules and surveillance creation units outstanding continues to the Disclosed Portfolio will be made
procedures shall constitute continued exceed the Trigger Number, as well as available to all market participants at
listing requirements for listing the each of Minimum Requirements 1, 2 the same time.37
Shares on the Exchange. In addition, the and 3. This approval order is based on all of
issuer has represented to the Exchange (6) Each Fund may hold up to an the Exchange’s representations,
that it will advise the Exchange of any aggregate amount of 15% of its net including those set forth above and in
failure by a Fund to comply with the assets in illiquid assets (calculated at Amendments No. 1 and No. 2.
continued listing requirements, and, the time of investment), as deemed For the foregoing reasons, the
pursuant to its obligations under illiquid by the Adviser.31 Commission finds that the proposed
Section 19(g)(1) of the Act, the Exchange (7) Prior to the commencement of rule change, as modified by
will monitor for compliance with the trading, the Exchange will inform its Amendments No. 1 and No. 2, is
continued listing requirements. If a members in an Information Circular of consistent with Section 6(b)(5) of the
Fund is not in compliance with the the special characteristics and risks Act 38 and the rules and regulations
applicable listing requirements, the associated with trading the Shares. thereunder applicable to a national
Exchange will commence delisting Specifically, the Information Circular securities exchange.
procedures under the Exchange Rule will discuss the following: (1) The
procedures for purchases and IV. Conclusion
14.12.26
The Exchange deems the Shares to be redemptions of Shares in Creation Units It is therefore ordered, pursuant to
equity securities, thus rendering trading (and that Shares are not individually Section 19(b)(2) of the Act,39 that the
in the Shares subject to the Exchange’s redeemable); (2) Exchange Rule 3.7, proposed rule change (SR–BatsBZX–
existing rules governing the trading of which imposes suitability obligations on 2017–10), as modified by Amendments
equity securities. In support of this Exchange members with respect to No. 1 and No. 2, be, and it hereby is,
proposal, the Exchange has made recommending transactions in the approved.
representations, including the Shares to customers; (3) how For the Commission, by the Division of
following: information regarding the Intraday Trading and Markets, pursuant to delegated
(1) The Shares will be subject to Indicative Value is disseminated; (4) the authority.40
Exchange Rule 14.11(i), which sets forth risks involved in trading the Shares Eduardo A. Aleman,
the initial and continued listing criteria during the Pre-Opening 32 and After Assistant Secretary.
applicable to Managed Fund Shares.27 Hours Trading Sessions 33 when an
[FR Doc. 2017–07456 Filed 4–12–17; 8:45 am]
(2) The Exchange’s surveillance updated Intraday Indicative Value will
BILLING CODE 8011–01–P
procedures are adequate to properly not be calculated or publicly
monitor the trading of the Shares on the disseminated; (5) the requirement that
Exchange during all trading sessions members deliver a prospectus to
SECURITIES AND EXCHANGE
and to deter and detect violations of investors purchasing newly issued
COMMISSION
Exchange rules and the applicable Shares prior to or concurrently with the
federal securities laws.28 confirmation of a transaction; and (6) [Release No. 34–80404; File No. SR–NSCC–
trading information. In addition, the 2017–003]
(3) The Exchange may obtain
information regarding trading in the Information Circular will advise
members, prior to the commencement of Self-Regulatory Organizations;
Shares and the underlying shares in National Securities Clearing
exchange traded equity securities via trading, of the prospectus delivery
requirements applicable to the Funds. Corporation; Notice of Filing and
the ISG, from other exchanges that are Immediate Effectiveness of Proposed
members or affiliates of the ISG, or with Members purchasing Shares from the
Funds for resale to investors will deliver Rule Change To Provide for a New
which the Exchange has entered into a Data Repository Feature Called
comprehensive surveillance sharing a prospectus to such investors. The
Information Circular will also discuss ‘‘Insurance Profile’’ for Transmission of
agreement. In addition, the Exchange is Fee Data and Implement Fees in
able to access, as needed, trade any exemptive, no-action, and
interpretive relief granted by the Connection With This Feature
information for certain fixed income
instruments reported to TRACE.29 Commission from any rules under the April 7, 2017.
(4) Structured securities, when Act.34 Pursuant to Section 19(b)(1) of the
combined with instruments held as part (8) For initial and/or continued Securities Exchange Act of 1934, as
of the other portfolio holdings as listing, each Fund must be in amended (‘‘Act’’),1 and Rule 19b–4
described above, will not exceed 20% of compliance with Rule 10A–3 under the thereunder,2 notice is hereby given that
each Fund’s net assets.30 Act.35 on March 31, 2017, National Securities
(5) Each Fund will comply with (9) A minimum of 100,000 Shares of
Clearing Corporation (‘‘NSCC’’) filed
Minimum Requirements 1, 2, and 3. If each Fund will be outstanding at the
with the Securities and Exchange
a Fund at any point has sufficient commencement of trading on the
Commission (‘‘Commission’’) the
creation units outstanding necessary to Exchange.36
(10) The Exchange will obtain a proposed rule change as described in
trigger a diversity requirement and Items I, II and III below, which Items
representation from the issuer of the
asabaliauskas on DSK3SPTVN1PROD with NOTICES
subsequently has fewer creation units have been prepared by the clearing
outstanding than those applicable to the 31 See id. at 11, 18 and 26. agency. NSCC filed the proposed rule
Trigger Number, the Fund will continue 32 The Pre-Opening Session is from 8:00 a.m. to
37 See id.
9:30 a.m. Eastern Time.
26 See Amendment No. 2, supra note 6, at 3–4. 33 The After Hours Trading Session is from 4:00 38 15 U.S.C. 78f(b)(5).
27 See Amendment No. 1, supra note 6, at 38. p.m. to 5:00 p.m. Eastern Time. 39 15 U.S.C. 78s(b)(2).
28 See id. at 39. 34 See Amendment No. 1, supra note 6, at 41. 40 17 CFR 200.30–3(a)(12).
29 See id. at 43. 35 See id. at 38. 1 15 U.S.C. 78s(b)(1).
30 See id. at 9, n.19. 36 See id. 2 17 CFR 240.19b–4.
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Document Created: 2017-04-13 01:09:20
Document Modified: 2017-04-13 01:09:20
| 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 17913 |
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