82_FR_22774 82 FR 22680 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the VanEck Vectors AMT-Free National Municipal Index ETF of VanEck Vectors ETF Trust Under BZX Rule 14.11(c)(4)

82 FR 22680 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the VanEck Vectors AMT-Free National Municipal Index ETF of VanEck Vectors ETF Trust Under BZX Rule 14.11(c)(4)

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 94 (May 17, 2017)

Page Range22680-22682
FR Document2017-09932

Federal Register, Volume 82 Issue 94 (Wednesday, May 17, 2017) 
[Federal Register Volume 82, Number 94 (Wednesday, May 17, 2017)]
[Notices]
[Pages 22680-22682]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-09932]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80664; File No. SR-BatsBZX-2017-07]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order 
Instituting Proceedings To Determine Whether To Approve or Disapprove a 
Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade 
Shares of the VanEck Vectors AMT-Free National Municipal Index ETF of 
VanEck Vectors ETF Trust Under BZX Rule 14.11(c)(4)

May 11, 2017.

I. Introduction

    On January 27, 2017, Bats BZX Exchange, Inc. (``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to list and trade shares (``Shares'') of the 
VanEck Vectors AMT-Free National Municipal Index ETF (``Fund'') under 
BZX Rule 14.11(c)(4). The proposed rule change was published for 
comment in the Federal Register on February 14, 2017.\3\ On March 10, 
2017, the Exchange filed Amendment No. 1 to the proposed rule change, 
which amended and replaced the proposed rule change as originally 
filed.\4\ On March 30, 2017, pursuant to Section 19(b)(2) of the 
Act,\5\ the Commission designated a longer period within which to 
approve the proposed rule change, disapprove the proposed rule change, 
or institute proceedings to determine whether to disapprove the 
proposed rule change.\6\ The Commission has received no comment letters 
on the proposed rule change. This order institutes proceedings under 
Section 19(b)(2)(B) of the Act \7\ to determine whether to approve or 
disapprove the proposed rule change, as modified by Amendment No. 1.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 79989 (February 8, 
2017), 82 FR 10615.
    \4\ In Amendment No. 1, the Exchange: (1) Clarified its 
description of the two benchmark indexes that the Index (as defined 
below) tracks; (2) clarified its description of the Fund's 
investments; (3) made additional representations regarding the 
applicability of Exchange rules and other requirements; (4) 
clarified its description of the calculation of the net asset value 
of the Fund; (5) stated the cutoff time for orders to create 
Creation Units; (6) represented that FINRA, on behalf of the 
Exchange, may obtain certain information for surveillance; and (7) 
made technical changes. Amendment No. 1 to the proposed rule change 
is available at: https://www.sec.gov/comments/sr-batsbzx-2017-07/batsbzx201707-1667531-148997.pdf.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 80350, 82 FR 16647 
(April 5, 2017). The Commission designated May 15, 2017 as the date 
by which the Commission shall either approve or disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

II. Exchange's Description of the Proposed Rule Change, as Modified by 
Amendment No. 1

    The Exchange proposes to list and trade Shares of the Fund under 
BZX Rule 14.11(c)(4), which governs the listing and trading of index 
fund shares based on fixed income securities indexes. The Shares will 
be offered by the VanEck Vectors ETF Trust (``Trust'').\8\ Van Eck 
Associates Corporation will be the investment adviser (``Adviser'') to 
the Fund. The Adviser will serve as the administrator for the Fund. The 
Bank of New York Mellon will serve as the custodian and transfer agent 
for the Fund. Van Eck Securities Corporation will be the distributor of 
the Shares. Bloomberg Finance L.P. and its affiliates will be the index 
provider.
---------------------------------------------------------------------------

    \8\ The Exchange states that the Trust is registered with the 
Commission as an open-end investment company. See Registration 
Statement on Form N-1A for the Trust, dated October 31, 2016 (File 
Nos. 333-123257 and 811-10325) (``Registration Statement''). The 
Exchange further states that the Commission has issued an order 
granting certain exemptive relief to the Trust under the Investment 
Company Act of 1940 (``1940 Act''). See Investment Company Act 
Release No. 28021 (October 24, 2007) (File No. 812-13426).
---------------------------------------------------------------------------

    The Exchange has made the following representations and statements 
in describing the Fund and its investment strategy, including the 
Fund's portfolio holdings and investment restrictions.\9\
---------------------------------------------------------------------------

    \9\ The Commission notes that additional information regarding 
the Fund, the Index (as defined below), the Trust, and the Shares, 
including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings disclosure policies, 
calculation of net asset value, distributions, and taxes, among 
other things, can be found in Amendment No. 1 and the Registration 
Statement, as applicable. See supra notes 4 and 8, respectively.
---------------------------------------------------------------------------

A. Exchange's Description of the Fund's Principal Investments

    According to the Exchange, the Fund will seek to replicate as 
closely as possible, before fees and expenses, the price and yield 
performance of the Bloomberg Barclays AMT-Free National Municipal Index 
(``Index'').\10\ The Index tracks the municipal bond market by tracking 
two total return, market-size-weighted benchmark indexes with target 
weights as follows:
---------------------------------------------------------------------------

    \10\ The Exchange states that, unless otherwise noted, all 
statistics related to the Index presented in the proposal were 
accurate as of November 30, 2016.
---------------------------------------------------------------------------

     A 75% weight in the Muni Investment-Grade Rated/$75 
Million Deal Size Index in order to gain exposure to investment grade 
municipal bonds (i.e., rated Baa3/BBB- or higher). To be included in 
the Muni Investment-Grade Rated/$75 Million Deal Size Index, a bond 
must be rated Baa3/BBB- or higher by at least two of the following 
rating agencies if all three agencies rate the bond: Moody's Investors 
Service (``Moody's''), Standard & Poor's Ratings Services (``S&P'') and 
Fitch Ratings, Inc. (``Fitch''). If only two of the three agencies rate 
the bond, the lower rating is used to determine index eligibility. If 
only one of the three agencies rates the bond, the rating must be Baa3/
BBB- or higher. Bonds in the Muni Investment-Grade Rated/$75 Million 
Deal Size Index must have an outstanding par value of at least $7 
million and be

[[Page 22681]]

issued as part of a transaction of at least $75 million.
     A 25% weight in the Muni High Yield/$20 Million Deal Size 
Index in order to gain exposure to non-investment grade municipal bonds 
(i.e., unrated or rated Ba1/BB+ or lower). To be included in the Muni 
High Yield/$20 Million Deal Size Index, a bond must be unrated or rated 
Ba1/BB+ or lower by at least two of the following rating agencies if 
all three agencies rate the bond: Moody's, S&P, and Fitch. If only two 
of the three agencies rate the bond, the lower rating is used to 
determine index eligibility. If only one of the three agencies rates 
the bond, the rating must be Ba1/BB+ or lower. Bonds in the Muni High 
Yield/$20 Million Deal Size Index must have an outstanding par value of 
at least $3 million and be issued as part of a transaction of at least 
$20 million.
    All bonds included in the Index must have a fixed rate, a dated 
date (i.e., the date when interest begins to accrue) after December 31, 
1990, and a nominal maturity of 1 to 30 years. Bonds subject to the 
alternative minimum tax, taxable municipal bonds, bonds with floating 
rates, derivatives and municipal bonds of issuers from the territories 
of the United States (e.g., Puerto Rico) are excluded from the Index. 
The composition of the Index is rebalanced monthly. Interest and 
principal payments earned by the component securities are held in the 
Index without a reinvestment return until month end when they are 
removed from the Index. Qualifying securities issued, but not 
necessarily settled, on or before the month end rebalancing date 
qualify for inclusion in the Index in the following month.
    According to the Exchange, the Fund normally invests at least 80% 
of its total assets in securities that comprise the Fund's benchmark 
index. The Index is comprised of publicly traded municipal bonds that 
cover the U.S. dollar-denominated investment grade and high yield tax-
exempt bond market. The Fund's 80% investment policy is non-fundamental 
and may be changed without shareholder approval upon 60 days' prior 
written notice to shareholders.\11\ The Fund also has adopted a 
fundamental investment policy to invest at least 80% of its assets in 
municipal securities.\12\ When issued transactions (``WIs'') 
representing securities eligible for inclusion in the Index may be used 
by the Fund in seeking performance that corresponds to the Index and in 
such cases would count towards the Fund's 80% Investment Policy.
---------------------------------------------------------------------------

    \11\ The Exchange states that the Fund's policy to invest 80% of 
its total assets in securities that comprise the Fund's benchmark 
index (``80% Investment Policy'') is non-fundamental and may be 
changed without shareholder approval upon 60 days' prior written 
notice to shareholders. The Exchange notes that, notwithstanding the 
foregoing, all statements and representations made in the filing 
regarding (a) the description of the portfolio, (b) limitations on 
portfolio holdings or reference assets (including, for example, the 
Fund's 80% Investment Policy), or (c) the applicability of Exchange 
rules and surveillance procedures shall constitute continued listing 
requirements for listing the Shares on the Exchange. The issuer has 
represented to the Exchange that it will advise the Exchange of any 
failure by the Fund to comply with the continued listing 
requirements (or any changes made with respect to the Fund's 80% 
Investment Policy), and, pursuant to its obligations under Section 
19(g)(1) of the Act, the Exchange will surveil for compliance with 
the continued listing requirements. If the Fund is not in compliance 
with the applicable listing requirements, the Exchange will commence 
delisting procedures under Exchange Rule 14.12.
    \12\ The Fund's policy to invest 80% of its assets in municipal 
securities is a fundamental investment policy that cannot be changed 
without the approval of the holders of a majority of the Fund's 
outstanding voting securities.
---------------------------------------------------------------------------

B. Exchange's Description of the Fund's Other Investments

    While the Fund normally will invest at least 80% of its total 
assets in securities that compose the Index, as described above, the 
Fund may invest its remaining assets in the other financial instruments 
described below.
    The Fund may invest its remaining assets in the following 
instruments: Municipal bonds not included in the Index; money market 
instruments, including repurchase agreements or other funds which 
invest exclusively in money market instruments; convertible securities; 
structured notes; certain derivative instruments described below; and, 
to the extent permitted by the 1940 Act, affiliated and unaffiliated 
funds, such as open-end or closed-end management investment companies, 
including other exchange-traded funds (``ETFs'').\13\ WIs not included 
in the Index may also be used by the Fund in managing cash flows. The 
Fund may use exchange-traded futures contracts and exchange-traded 
options thereon, together with positions in cash and money market 
instruments, to simulate full investment in the Index. The Fund may use 
cleared or non-cleared index, interest rate or credit default swap 
agreements. The Fund may invest in exchange-traded warrants. The Fund 
may invest in participation notes.
---------------------------------------------------------------------------

    \13\ For purposes of this filing, ETFs include Index Fund Shares 
(as described in Rule 14.11(c)); Portfolio Depositary Receipts (as 
described in Rule 14.11(b)); and Managed Fund Shares (as described 
in Rule 14.11(i)). All ETFs will be listed and traded in the U.S. on 
registered exchanges. The Fund may invest in the securities of ETFs 
registered under the 1940 Act consistent with the requirements of 
Section 12(d)(1) of the 1940 Act, or any rule, regulation or order 
of the Commission or interpretation thereof. While the Fund may 
invest in inverse ETFs, the Fund will not invest in leveraged or 
inverse leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
---------------------------------------------------------------------------

C. Exchange's Description of the Index

    The Exchange is submitting this proposed rule change because the 
Index for the Fund does not meet all of the generic listing 
requirements of BZX Rule 14.11(c)(4) applicable to index fund shares 
based on fixed income securities indexes. The Exchange states that the 
Index meets all such requirements except for those set forth in BZX 
Rule 14.11(c)(4)(B)(i)(b).\14\ BZX Rule 14.11(c)(4)(B)(i)(b) provides 
that components that in the aggregate account for at least 75% of the 
weight of the index or portfolio each shall have a minimum original 
principal amount outstanding of $100 million or more. As of November 
30, 2016, 25.04% of the weight of the Index components have a minimum 
original principal amount outstanding of $100 million or more.
---------------------------------------------------------------------------

    \14\ The Exchange states that, except for BZX Rule 
14.11(c)(4)(B)(i)(b), the Index currently satisfies and will 
continue to satisfy all of the generic listing standards under BZX 
Rule 14.11(c)(4). The Exchange also states that the continued 
listing standards under BZX Rule 14.11(c) applicable to index fund 
shares shall apply to the Shares.
---------------------------------------------------------------------------

    According to the Exchange, as of November 30, 2016, there were 
50,615 issues in the Index, and 86.49% of the weight of the Index 
components was comprised of individual maturities that were part of an 
entire municipal bond offering with a minimum original principal amount 
outstanding $100 million or more for all maturities of the offering. In 
addition, the total dollar amount outstanding of issues in the Index 
was approximately $1.5 trillion and the average dollar amount 
outstanding of issues in the Index was approximately $30.4 million. 
Further, the most heavily weighted component represented 1.57% of the 
weight of the Index and the five most heavily weighted components 
represented 3.93% of the weight of the Index. Finally, 63.8% of the 
Index weight consisted of issues with a rating of AA/Aa2 or higher.

III. Proceedings To Determine Whether To Approve or Disapprove SR-
BatsBZX-2017-07, as Modified by Amendment No. 1, and Grounds for 
Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act \15\ to determine whether the proposed rule 
change, as modified by Amendment No. 1, should be approved or 
disapproved. Institution

[[Page 22682]]

of such proceedings is appropriate at this time in view of the legal 
and policy issues raised by the proposed rule change. Institution of 
proceedings does not indicate that the Commission has reached any 
conclusions with respect to any of the issues involved. Rather, as 
described below, the Commission seeks and encourages interested persons 
to provide comments on the proposed rule change, as modified by 
Amendment No. 1.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Act,\16\ the Commission is 
providing notice of the grounds for disapproval under consideration. 
The Commission is instituting proceedings to allow for additional 
analysis of the proposal's consistency with Section 6(b)(5) of the Act, 
which requires, among other things, that the rules of a national 
securities exchange be ``designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade,'' and ``to protect investors and the public 
interest.'' \17\ As noted above, the Exchange is submitting this 
proposed rule change because the Index for the Fund does not meet the 
requirements set forth in BZX Rule 14.11(c)(4)(B)(i)(b). In the 
proposal, the Exchange described certain characteristics of the Index 
as of November 30, 2016,\18\ and stated its belief that the Index is 
sufficiently broad-based to deter potential manipulation and that the 
Index securities are sufficiently liquid to deter potential 
manipulation. However, the Commission notes that the Exchange did not 
provide, for the continued listing of the Shares, parameters around the 
extent to which the Index may change from those characteristics. The 
Commission seeks commenters' views on whether the Exchange's statements 
and representations support a determination that the listing and 
trading of the Shares would be consistent with Section 6(b)(5) of the 
Act, which, among other things, requires that the rules of an exchange 
be designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, and to protect 
investors and the public interest.
---------------------------------------------------------------------------

    \16\ Id.
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ See supra Section II.C.
---------------------------------------------------------------------------

IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 6(b)(5) or any other provision of the Act, or 
the rules and regulations thereunder. Although there do not appear to 
be any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 19b-4, any request for an 
opportunity to make an oral presentation.\19\
---------------------------------------------------------------------------

    \19\ Section 19(b)(2) of the Act, as amended by the Securities 
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Acts Amendments of 1975, Senate Comm. 
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by June 7, 2017. Any person who wishes to file a rebuttal 
to any other person's submission must file that rebuttal by June 21, 
2017. The Commission asks that commenters address the sufficiency of 
the Exchange's statements in support of the proposal, which are set 
forth in Amendment No. 1,\20\ in addition to any other comments they 
may wish to submit about the proposed rule change.
---------------------------------------------------------------------------

    \20\ See supra note 4.
---------------------------------------------------------------------------

    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 rule-comments@sec.gov. Please include 
File Number SR-BatsBZX-2017-07 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-2017-07. 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-2017-07 and should 
be submitted on or before June 7, 2017. Rebuttal comments should be 
submitted by June 21, 2017.
---------------------------------------------------------------------------

    \21\ 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-09932 Filed 5-16-17; 8:45 am]
BILLING CODE 8011-01-P

22680 Federal Register / Vol. 82, No. 94 / Wednesday, May 17, 2017 / Notices The public portions of the Postal Commission (‘‘Commission’’), pursuant Corporation will be the investment Service’s request(s) can be accessed via to Section 19(b)(1) of the Securities adviser (‘‘Adviser’’) to the Fund. The the Commission’s Web site (http:// Exchange Act of 1934 (‘‘Act’’) 1 and Rule Adviser will serve as the administrator www.prc.gov). Non-public portions of 19b–4 thereunder,2 a proposed rule for the Fund. The Bank of New York the Postal Service’s request(s), if any, change to list and trade shares Mellon will serve as the custodian and can be accessed through compliance (‘‘Shares’’) of the VanEck Vectors AMT- transfer agent for the Fund. Van Eck with the requirements of 39 CFR Free National Municipal Index ETF Securities Corporation will be the 3007.40. (‘‘Fund’’) under BZX Rule 14.11(c)(4). distributor of the Shares. Bloomberg The Commission invites comments on The proposed rule change was Finance L.P. and its affiliates will be the whether the Postal Service’s request(s) published for comment in the Federal index provider. in the captioned docket(s) are consistent Register on February 14, 2017.3 On The Exchange has made the following with the policies of title 39. For March 10, 2017, the Exchange filed representations and statements in request(s) that the Postal Service states Amendment No. 1 to the proposed rule describing the Fund and its investment concern market dominant product(s), change, which amended and replaced strategy, including the Fund’s portfolio applicable statutory and regulatory the proposed rule change as originally holdings and investment restrictions.9 requirements include 39 U.S.C. 3622, 39 filed.4 On March 30, 2017, pursuant to A. Exchange’s Description of the Fund’s U.S.C. 3642, 39 CFR part 3010, and 39 Section 19(b)(2) of the Act,5 the Principal Investments CFR part 3020, subpart B. For request(s) Commission designated a longer period that the Postal Service states concern within which to approve the proposed According to the Exchange, the Fund competitive product(s), applicable rule change, disapprove the proposed will seek to replicate as closely as statutory and regulatory requirements rule change, or institute proceedings to possible, before fees and expenses, the include 39 U.S.C. 3632, 39 U.S.C. 3633, determine whether to disapprove the price and yield performance of the 39 U.S.C. 3642, 39 CFR part 3015, and proposed rule change.6 The Commission Bloomberg Barclays AMT-Free National 39 CFR part 3020, subpart B. Comment has received no comment letters on the Municipal Index (‘‘Index’’).10 The Index deadline(s) for each request appear in proposed rule change. This order tracks the municipal bond market by section II. institutes proceedings under Section tracking two total return, market-size- 19(b)(2)(B) of the Act 7 to determine weighted benchmark indexes with target II. Docketed Proceeding(s) whether to approve or disapprove the weights as follows: 1. Docket No(s).: CP2017–186; Filing proposed rule change, as modified by • A 75% weight in the Muni Title: Notice of United States Postal Amendment No. 1. Investment-Grade Rated/$75 Million Service of Filing a Functionally Deal Size Index in order to gain II. Exchange’s Description of the exposure to investment grade municipal Equivalent Global Reseller Expedited Proposed Rule Change, as Modified by bonds (i.e., rated Baa3/BBB¥ or higher). Package 2 Negotiated Service Amendment No. 1 To be included in the Muni Investment- Agreement; Filing Acceptance Date: May 11, 2017; Filing Authority: 39 CFR The Exchange proposes to list and Grade Rated/$75 Million Deal Size 3015.5; Public Representative: Kenneth trade Shares of the Fund under BZX Index, a bond must be rated Baa3/BBB- R. Moeller; Comments Due: May 19, Rule 14.11(c)(4), which governs the or higher by at least two of the following listing and trading of index fund shares rating agencies if all three agencies rate 2017. This notice will be published in the based on fixed income securities the bond: Moody’s Investors Service Federal Register. indexes. The Shares will be offered by (‘‘Moody’s’’), Standard & Poor’s Ratings the VanEck Vectors ETF Trust Services (‘‘S&P’’) and Fitch Ratings, Inc. Stacy L. Ruble, (‘‘Trust’’).8 Van Eck Associates (‘‘Fitch’’). If only two of the three Secretary. agencies rate the bond, the lower rating [FR Doc. 2017–09966 Filed 5–16–17; 8:45 am] 1 15 U.S.C. 78s(b)(1). is used to determine index eligibility. If BILLING CODE 7710–FW–P 2 17 CFR 240.19b–4. only one of the three agencies rates the 3 See Securities Exchange Act Release No. 79989 bond, the rating must be Baa3/BBB¥ or (February 8, 2017), 82 FR 10615. higher. Bonds in the Muni Investment- 4 In Amendment No. 1, the Exchange: (1) Clarified SECURITIES AND EXCHANGE Grade Rated/$75 Million Deal Size its description of the two benchmark indexes that COMMISSION the Index (as defined below) tracks; (2) clarified its Index must have an outstanding par description of the Fund’s investments; (3) made value of at least $7 million and be [Release No. 34–80664; File No. SR– additional representations regarding the BatsBZX–2017–07] applicability of Exchange rules and other 1A for the Trust, dated October 31, 2016 (File Nos. requirements; (4) clarified its description of the 333–123257 and 811–10325) (‘‘Registration Self-Regulatory Organizations; Bats calculation of the net asset value of the Fund; (5) Statement’’). The Exchange further states that the stated the cutoff time for orders to create Creation Commission has issued an order granting certain BZX Exchange, Inc.; Order Instituting Units; (6) represented that FINRA, on behalf of the exemptive relief to the Trust under the Investment Proceedings To Determine Whether To Exchange, may obtain certain information for Company Act of 1940 (‘‘1940 Act’’). See Investment Approve or Disapprove a Proposed surveillance; and (7) made technical changes. Company Act Release No. 28021 (October 24, 2007) Rule Change, as Modified by Amendment No. 1 to the proposed rule change is (File No. 812–13426). available at: https://www.sec.gov/comments/sr- Amendment No. 1, To List and Trade batsbzx-2017-07/batsbzx201707-1667531- 9 The Commission notes that additional Shares of the VanEck Vectors AMT- information regarding the Fund, the Index (as 148997.pdf. defined below), the Trust, and the Shares, including Free National Municipal Index ETF of 5 15 U.S.C. 78s(b)(2). investment strategies, risks, creation and VanEck Vectors ETF Trust Under BZX 6 See Securities Exchange Act Release No. 80350, redemption procedures, fees, portfolio holdings nlaroche on DSK30NT082PROD with NOTICES Rule 14.11(c)(4) 82 FR 16647 (April 5, 2017). The Commission disclosure policies, calculation of net asset value, designated May 15, 2017 as the date by which the distributions, and taxes, among other things, can be May 11, 2017. Commission shall either approve or disapprove, or found in Amendment No. 1 and the Registration institute proceedings to determine whether to Statement, as applicable. See supra notes 4 and 8, I. Introduction disapprove, the proposed rule change. respectively. 7 15 U.S.C. 78s(b)(2)(B). 10 The Exchange states that, unless otherwise On January 27, 2017, Bats BZX 8 The Exchange states that the Trust is registered noted, all statistics related to the Index presented Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) with the Commission as an open-end investment in the proposal were accurate as of November 30, filed with the Securities and Exchange company. See Registration Statement on Form N– 2016. VerDate Sep<11>2014 15:18 May 16, 2017 Jkt 241001 PO 00000 Frm 00038 Fmt 4703 Sfmt 4703 E:\FR\FM\17MYN1.SGM 17MYN1

Federal Register / Vol. 82, No. 94 / Wednesday, May 17, 2017 / Notices 22681 issued as part of a transaction of at least adopted a fundamental investment interest rate or credit default swap $75 million. policy to invest at least 80% of its assets agreements. The Fund may invest in • A 25% weight in the Muni High in municipal securities.12 When issued exchange-traded warrants. The Fund Yield/$20 Million Deal Size Index in transactions (‘‘WIs’’) representing may invest in participation notes. order to gain exposure to non- securities eligible for inclusion in the investment grade municipal bonds (i.e., C. Exchange’s Description of the Index Index may be used by the Fund in unrated or rated Ba1/BB+ or lower). To seeking performance that corresponds to The Exchange is submitting this be included in the Muni High Yield/$20 the Index and in such cases would proposed rule change because the Index Million Deal Size Index, a bond must be count towards the Fund’s 80% for the Fund does not meet all of the unrated or rated Ba1/BB+ or lower by at Investment Policy. generic listing requirements of BZX least two of the following rating Rule 14.11(c)(4) applicable to index B. Exchange’s Description of the Fund’s fund shares based on fixed income agencies if all three agencies rate the Other Investments securities indexes. The Exchange states bond: Moody’s, S&P, and Fitch. If only two of the three agencies rate the bond, While the Fund normally will invest that the Index meets all such the lower rating is used to determine at least 80% of its total assets in requirements except for those set forth index eligibility. If only one of the three securities that compose the Index, as in BZX Rule 14.11(c)(4)(B)(i)(b).14 BZX agencies rates the bond, the rating must described above, the Fund may invest Rule 14.11(c)(4)(B)(i)(b) provides that be Ba1/BB+ or lower. Bonds in the Muni its remaining assets in the other components that in the aggregate High Yield/$20 Million Deal Size Index financial instruments described below. account for at least 75% of the weight must have an outstanding par value of The Fund may invest its remaining of the index or portfolio each shall have at least $3 million and be issued as part assets in the following instruments: a minimum original principal amount of a transaction of at least $20 million. Municipal bonds not included in the outstanding of $100 million or more. As All bonds included in the Index must Index; money market instruments, of November 30, 2016, 25.04% of the have a fixed rate, a dated date (i.e., the including repurchase agreements or weight of the Index components have a date when interest begins to accrue) other funds which invest exclusively in minimum original principal amount after December 31, 1990, and a nominal money market instruments; convertible outstanding of $100 million or more. maturity of 1 to 30 years. Bonds subject securities; structured notes; certain According to the Exchange, as of to the alternative minimum tax, taxable derivative instruments described below; November 30, 2016, there were 50,615 municipal bonds, bonds with floating and, to the extent permitted by the 1940 issues in the Index, and 86.49% of the rates, derivatives and municipal bonds Act, affiliated and unaffiliated funds, weight of the Index components was of issuers from the territories of the such as open-end or closed-end comprised of individual maturities that United States (e.g., Puerto Rico) are management investment companies, were part of an entire municipal bond excluded from the Index. The including other exchange-traded funds offering with a minimum original composition of the Index is rebalanced (‘‘ETFs’’).13 WIs not included in the principal amount outstanding $100 monthly. Interest and principal Index may also be used by the Fund in million or more for all maturities of the payments earned by the component managing cash flows. The Fund may use offering. In addition, the total dollar securities are held in the Index without exchange-traded futures contracts and amount outstanding of issues in the a reinvestment return until month end exchange-traded options thereon, Index was approximately $1.5 trillion when they are removed from the Index. together with positions in cash and and the average dollar amount Qualifying securities issued, but not money market instruments, to simulate outstanding of issues in the Index was necessarily settled, on or before the full investment in the Index. The Fund approximately $30.4 million. Further, month end rebalancing date qualify for may use cleared or non-cleared index, the most heavily weighted component inclusion in the Index in the following represented 1.57% of the weight of the constitute continued listing requirements for listing month. the Shares on the Exchange. The issuer has Index and the five most heavily According to the Exchange, the Fund represented to the Exchange that it will advise the weighted components represented normally invests at least 80% of its total Exchange of any failure by the Fund to comply with 3.93% of the weight of the Index. assets in securities that comprise the the continued listing requirements (or any changes Finally, 63.8% of the Index weight made with respect to the Fund’s 80% Investment Fund’s benchmark index. The Index is Policy), and, pursuant to its obligations under consisted of issues with a rating of AA/ comprised of publicly traded municipal Section 19(g)(1) of the Act, the Exchange will Aa2 or higher. bonds that cover the U.S. dollar- surveil for compliance with the continued listing requirements. If the Fund is not in compliance with III. Proceedings To Determine Whether denominated investment grade and high the applicable listing requirements, the Exchange To Approve or Disapprove SR– yield tax-exempt bond market. The will commence delisting procedures under BatsBZX–2017–07, as Modified by Fund’s 80% investment policy is non- Exchange Rule 14.12. Amendment No. 1, and Grounds for fundamental and may be changed 12 The Fund’s policy to invest 80% of its assets in municipal securities is a fundamental investment Disapproval Under Consideration without shareholder approval upon 60 policy that cannot be changed without the approval The Commission is instituting days’ prior written notice to of the holders of a majority of the Fund’s shareholders.11 The Fund also has outstanding voting securities. proceedings pursuant to Section 13 For purposes of this filing, ETFs include Index 19(b)(2)(B) of the Act 15 to determine 11 The Exchange states that the Fund’s policy to Fund Shares (as described in Rule 14.11(c)); whether the proposed rule change, as invest 80% of its total assets in securities that Portfolio Depositary Receipts (as described in Rule modified by Amendment No. 1, should comprise the Fund’s benchmark index (‘‘80% 14.11(b)); and Managed Fund Shares (as described Investment Policy’’) is non-fundamental and may be in Rule 14.11(i)). All ETFs will be listed and traded be approved or disapproved. Institution nlaroche on DSK30NT082PROD with NOTICES changed without shareholder approval upon 60 in the U.S. on registered exchanges. The Fund may 14 The Exchange states that, except for BZX Rule days’ prior written notice to shareholders. The invest in the securities of ETFs registered under the Exchange notes that, notwithstanding the foregoing, 1940 Act consistent with the requirements of 14.11(c)(4)(B)(i)(b), the Index currently satisfies and all statements and representations made in the Section 12(d)(1) of the 1940 Act, or any rule, will continue to satisfy all of the generic listing filing regarding (a) the description of the portfolio, regulation or order of the Commission or standards under BZX Rule 14.11(c)(4). The (b) limitations on portfolio holdings or reference interpretation thereof. While the Fund may invest Exchange also states that the continued listing assets (including, for example, the Fund’s 80% in inverse ETFs, the Fund will not invest in standards under BZX Rule 14.11(c) applicable to Investment Policy), or (c) the applicability of leveraged or inverse leveraged (e.g., 2X, –2X, 3X or index fund shares shall apply to the Shares. Exchange rules and surveillance procedures shall –3X) ETFs. 15 15 U.S.C. 78s(b)(2)(B). VerDate Sep<11>2014 15:18 May 16, 2017 Jkt 241001 PO 00000 Frm 00039 Fmt 4703 Sfmt 4703 E:\FR\FM\17MYN1.SGM 17MYN1

22682 Federal Register / Vol. 82, No. 94 / Wednesday, May 17, 2017 / Notices of such proceedings is appropriate at identified above, as well as any other amendments, all written statements this time in view of the legal and policy concerns they may have with the with respect to the proposed rule issues raised by the proposed rule proposal. In particular, the Commission change that are filed with the change. Institution of proceedings does invites the written views of interested Commission, and all written not indicate that the Commission has persons concerning whether the communications relating to the reached any conclusions with respect to proposal is consistent with Section proposed rule change between the any of the issues involved. Rather, as 6(b)(5) or any other provision of the Act, Commission and any person, other than described below, the Commission seeks or the rules and regulations thereunder. those that may be withheld from the and encourages interested persons to Although there do not appear to be any public in accordance with the provide comments on the proposed rule issues relevant to approval or provisions of 5 U.S.C. 552, will be change, as modified by Amendment No. disapproval that would be facilitated by available for Web site viewing and 1. an oral presentation of views, data, and printing in the Commission’s Public Pursuant to Section 19(b)(2)(B) of the arguments, the Commission will Reference Room, 100 F Street NE., Act,16 the Commission is providing consider, pursuant to Rule 19b–4, any Washington, DC 20549, on official notice of the grounds for disapproval request for an opportunity to make an business days between the hours of under consideration. The Commission is oral presentation.19 10:00 a.m. and 3:00 p.m. Copies of the instituting proceedings to allow for Interested persons are invited to filing also will be available for additional analysis of the proposal’s submit written data, views, and inspection and copying at the principal consistency with Section 6(b)(5) of the arguments regarding whether the office of the Exchange. All comments Act, which requires, among other proposal should be approved or received will be posted without change; things, that the rules of a national disapproved by June 7, 2017. Any the Commission does not edit personal securities exchange be ‘‘designed to person who wishes to file a rebuttal to identifying information from prevent fraudulent and manipulative any other person’s submission must file submissions. You should submit only acts and practices, to promote just and that rebuttal by June 21, 2017. The information that you wish to make equitable principles of trade,’’ and ‘‘to Commission asks that commenters available publicly. All submissions protect investors and the public address the sufficiency of the should refer to File Number SR– interest.’’ 17 As noted above, the Exchange’s statements in support of the BatsBZX–2017–07 and should be Exchange is submitting this proposed proposal, which are set forth in submitted on or before June 7, 2017. rule change because the Index for the Amendment No. 1,20 in addition to any Rebuttal comments should be submitted Fund does not meet the requirements other comments they may wish to by June 21, 2017. set forth in BZX Rule submit about the proposed rule change. 14.11(c)(4)(B)(i)(b). In the proposal, the For the Commission, by the Division of Comments may be submitted by any Trading and Markets, pursuant to delegated Exchange described certain of the following methods: authority.21 characteristics of the Index as of Electronic Comments Eduardo A. Aleman, November 30, 2016,18 and stated its belief that the Index is sufficiently • Use the Commission’s Internet Assistant Secretary. broad-based to deter potential comment form (http://www.sec.gov/ [FR Doc. 2017–09932 Filed 5–16–17; 8:45 am] manipulation and that the Index rules/sro.shtml); or BILLING CODE 8011–01–P securities are sufficiently liquid to deter • Send an email to rule-comments@ potential manipulation. However, the sec.gov. Please include File Number SR– Commission notes that the Exchange BatsBZX–2017–07 on the subject line. SECURITIES AND EXCHANGE did not provide, for the continued COMMISSION Paper Comments listing of the Shares, parameters around the extent to which the Index may • Send paper comments in triplicate [Release No. 34–80661; File No. SR–BOX– to Secretary, Securities and Exchange 2017–14] change from those characteristics. The Commission seeks commenters’ views Commission, 100 F Street NE., Self-Regulatory Organizations; BOX on whether the Exchange’s statements Washington, DC 20549–1090. Options Exchange LLC; Notice of and representations support a All submissions should refer to File Filing and Immediate Effectiveness of determination that the listing and Number SR-BatsBZX–2017–07. This file a Proposed Rule Change To Adopt trading of the Shares would be number should be included on the Qualified Contingent Cross Orders consistent with Section 6(b)(5) of the subject line if email is used. To help the Commission process and review your May 11, 2017. Act, which, among other things, requires that the rules of an exchange be comments more efficiently, please use Pursuant to Section 19(b)(1) of the designed to prevent fraudulent and only one method. The Commission will Securities Exchange Act of 1934 manipulative acts and practices, to post all comments on the Commission’s (‘‘Act’’),1 and Rule 19b–4 thereunder,2 promote just and equitable principles of Internet Web site (http://www.sec.gov/ notice is hereby given that on May 9, trade, and to protect investors and the rules/sro.shtml). Copies of the 2017, BOX Options Exchange LLC (the public interest. submission, all subsequent ‘‘Exchange’’) filed with the Securities and Exchange Commission IV. Procedure: Request for Written 19 Section 19(b)(2) of the Act, as amended by the (‘‘Commission’’) the proposed rule Comments Securities Acts Amendments of 1975, Public Law change as described in Items I, II, and 94–29 (June 4, 1975), grants the Commission The Commission requests that III below, which Items have been nlaroche on DSK30NT082PROD with NOTICES flexibility to determine what type of proceeding— interested persons provide written either oral or notice and opportunity for written prepared by the self-regulatory submissions of their views, data, and comments—is appropriate for consideration of a organization. The Commission is particular proposal by a self-regulatory publishing this notice to solicit arguments with respect to the issues organization. See Securities Acts Amendments of 1975, Senate Comm. on Banking, Housing & Urban 16 Id. 21 17 CFR 200.30–3(a)(57). Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 17 15 U.S.C. 78f(b)(5). (1975). 1 15 U.S.C. 78s(b)(1). 18 See supra Section II.C. 20 See supra note 4. 2 17 CFR 240.19b–4. VerDate Sep<11>2014 15:18 May 16, 2017 Jkt 241001 PO 00000 Frm 00040 Fmt 4703 Sfmt 4703 E:\FR\FM\17MYN1.SGM 17MYN1


Document Created: 2017-05-17 01:42:24
Document Modified: 2017-05-17 01:42:24
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 22680 
2026 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR