82_FR_57742 82 FR 57510 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To List and Trade the Shares of the Brandes Value NextShares Fund

82 FR 57510 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To List and Trade the Shares of the Brandes Value NextShares Fund

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 232 (December 5, 2017)

Page Range57510-57516
FR Document2017-26121

Federal Register, Volume 82 Issue 232 (Tuesday, December 5, 2017)
[Federal Register Volume 82, Number 232 (Tuesday, December 5, 2017)]
[Notices]
[Pages 57510-57516]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-26121]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82167; File No. SR-NASDAQ-2017-124]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing of Proposed Rule Change To List and Trade the Shares 
of the Brandes Value NextShares Fund

November 29, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on November 14, 2017, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to list and trade under Nasdaq Rule 5745 
(Exchange-Traded Managed Fund Shares (``NextShares'')) the common 
shares (``Shares'') of the exchange-traded managed fund described 
herein (the ``Fund'').\3\
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    \3\ Except for the specific Fund information set forth below, 
this rule filing conforms to the rule filing, as modified by 
amendments 1 and 2 thereto, relating to the listing and trading on 
Nasdaq of the shares of 18 series of the Eaton Vance ETMF Trust and 
the Eaton Vance ETMF Trust II, as approved by the Commission in 
Securities Exchange Act Release No. 75499 (July 21, 2015) (SR-
NASDAQ-2015-036).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

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

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

1. Purpose
    The Exchange proposes to list and trade the Shares of the Fund 
under Nasdaq Rule 5745, which governs the listing and trading of 
exchange-traded managed fund shares, as defined in Nasdaq Rule 
5745(c)(1), on the Exchange.\4\ Brandes Investment Trust, which is 
discussed below, is registered with the Commission as an open-end 
investment company and has filed a registration statement on Form N-1A 
(``Registration Statement'') with the Commission. The Fund is a series 
of Brandes Investment Trust and will be advised by an investment 
adviser registered under the Investment Advisers Act of 1940 
(``Advisers Act''), as described below. The Fund will be actively 
managed and will pursue the principal investment strategy, as noted 
below.\5\
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    \4\ The Commission approved Nasdaq Rule 5745 in Securities 
Exchange Act Release No. 34-73562 (Nov. 7, 2014), 79 FR 68309 (Nov. 
14, 2014) (SR-NASDAQ-2014-020).
    \5\ Additional information regarding the Fund will be available 
on the free public Web site for the Fund at www.brandesfunds.com and 
in the Registration Statement for the Fund.
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I. Brandes Investment Trust
    Brandes Investment Trust is registered with the Commission as an 
open-end investment company and has filed a Registration Statement with 
the Commission.\6\ The Fund is a series of Brandes Investment Trust.\7\
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    \6\ See Post-Effective Amendment number 60 to Registration 
Statement on Form N-1A for Brandes Investment Trust dated October 
13, 2017 (File Nos. 033-81396 and 811-08614). The descriptions of 
the Fund and the Shares contained herein conform to the initial 
Registration Statement.
    \7\ The Commission has issued an order granting Brandes 
Investment Trust and certain affiliates exemptive relief under the 
Investment Company Act. See Investment Company Act Release No. 32893 
(November 2, 2017) (File No. 812-14809).
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    Brandes Investment Partners, L.P. (the ``Adviser'') will be the 
adviser to the Fund. The Adviser is not a registered broker-dealer, and 
is not affiliated with a broker-dealer. Nevertheless, the Adviser will 
implement and will maintain a fire wall with respect to any future 
affiliated broker-dealer regarding access to information concerning the 
composition and/or changes to the Fund's portfolio.\8\ In addition, 
personnel who make decisions on the Fund's portfolio composition must 
be subject to procedures designed to prevent the use and dissemination 
of material, non- public information regarding the open-end fund's 
portfolio.
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    \8\ An investment adviser to an open-end fund is required to be 
registered under the 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.
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    In the event that (a) the Adviser registers as a broker-dealer or 
becomes newly affiliated with a broker-dealer, or (b) any new adviser 
or sub-adviser to the Fund is a registered broker-dealer or is

[[Page 57511]]

affiliated with a broker-dealer, such new adviser or sub-adviser will 
implement and will maintain a fire wall with respect to its relevant 
personnel and/or such broker-dealer affiliate, if applicable, regarding 
access to information concerning the composition and/or changes to the 
Fund's portfolio and will be subject to procedures designed to prevent 
the use and dissemination of material non-public information regarding 
such portfolio.
    ALPS Distributors, Inc. (the ``Distributor'') will be the principal 
underwriter and distributor of the Fund's Shares. U.S. Bancorp Fund 
Services, LLC will act as the administrator and accounting agent to the 
Fund; U.S. Bancorp Fund Services, LLC will act as transfer agent and 
custodian to the Fund.
    The Fund will be actively managed and will pursue the principal 
investment strategies described below.\9\
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    \9\ Additional information regarding the Fund will be available 
on a free public Web site for the Fund (www.brandesfunds.com, which 
may contain links for certain information to www.nextshares.com) and 
in the Registration Statement for the Fund.
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Brandes Value NextShares (the``Fund'')
    The Fund seeks long-term capital appreciation by investing 
primarily in equity securities of U.S. companies. Equity securities 
include common and preferred stocks, warrants, and rights. While the 
Fund may purchase equity securities issued by companies of any size, it 
typically focuses its investments on large-capitalization equity 
securities.
Creations and Redemptions of Shares
    Shares will be issued and redeemed on a daily basis at the Fund's 
next-determined net asset value (``NAV'') \10\ in specified blocks of 
Shares called ``Creation Units.'' A Creation Unit will consist of at 
least 25,000 Shares. Creation Units may be purchased and redeemed by or 
through ``Authorized Participants.'' \11\ Purchases and sales of Shares 
in amounts less than a Creation Unit may be effected only in the 
secondary market, as described below, and not directly with the Fund.
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    \10\ As with other registered open-end investment companies, NAV 
generally will be calculated daily Monday through Friday as of 4:00 
p.m. Eastern Time. NAV will be calculated by dividing the Fund's net 
asset value by the number of Shares outstanding. Information 
regarding the valuation of investments in calculating the Fund's NAV 
will be contained in the Registration Statement for its Shares.
    \11\ ``Authorized Participants'' will be either: (1) 
``participating parties,'' i.e., brokers or other participants in 
the Continuous Net Settlement System (``CNS System'') of the 
National Securities Clearing Corporation (``NSCC''), a clearing 
agency registered with the Commission and affiliated with the 
Depository Trust Company (``DTC''), or (2) DTC participants, which 
in either case have executed participant agreements with the Fund's 
distributor and transfer agent regarding the creation and redemption 
of Creation Units. Investors will not have to be Authorized 
Participants in order to transact in Creation Units, but must place 
an order through and make appropriate arrangements with an 
Authorized Participant for such transactions.
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    The creation and redemption process for the Fund may be effected 
``in kind,'' in cash, or in a combination of securities and cash. 
Creation ``in kind'' means that an Authorized Participant--usually a 
brokerage house or large institutional investor--purchases the Creation 
Unit with a basket of securities equal in value to the aggregate NAV of 
the Shares in the Creation Unit. When an Authorized Participant redeems 
a Creation Unit in kind, it receives a basket of securities equal in 
value to the aggregate NAV of the Shares in the Creation Unit.\12\
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    \12\ In compliance with Nasdaq Rule 5745(b)(5), which applies to 
Shares based on an international or global portfolio, Brandes 
Investment Trust's application for exemptive relief under the 
Investment Company Act states that the Trust will comply with the 
federal securities laws in accepting securities for deposits and 
satisfying redemptions with securities, including that the 
securities accepted for deposits and the securities used to satisfy 
redemption requests are sold in transactions that would be exempt 
from registration under the Securities Act of 1933, as amended (15 
U.S.C. 77a) (``Securities Act'').
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Composition File
    As defined in Nasdaq Rule 5745(c)(3), the Composition File is the 
specified portfolio of securities and/or cash that the Fund will accept 
as a deposit in issuing a Creation Unit of Shares, and the specified 
portfolio of securities and/or cash that the Fund will deliver in a 
redemption of a Creation Unit of Shares. The Composition File will be 
disseminated through the NSCC once each business day before the open of 
trading in Shares on such day and also will be made available to the 
public each day on a free Web site.\13\ Because the Fund seeks to 
preserve the confidentiality of its current portfolio trading program, 
the Fund's Composition File generally will not be a pro rata reflection 
of the Fund's investment positions. Each security included in the 
Composition File will be a current holding of the Fund, but the 
Composition File generally will not include all of the securities in 
the Fund's portfolio or match the weightings of the included securities 
in the portfolio. Securities that the Adviser is in the process of 
acquiring for the Fund generally will not be represented in the Fund's 
Composition File until their purchase has been completed. Similarly, 
securities that are held in the Fund's portfolio but in the process of 
being sold may not be removed from its Composition File until the sale 
program is substantially completed. To the extent that the Fund creates 
or redeems Shares in kind, it will use cash amounts to supplement the 
in-kind transactions to the extent necessary to ensure that Creation 
Units are purchased and redeemed at NAV. The Composition File also may 
consist entirely of cash, in which case it will not include any of the 
securities in the Fund's portfolio.\14\
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    \13\ The free Web site containing the Composition File will be 
www.nextshares.com.
    \14\ In determining whether the Fund will issue or redeem 
Creation Units entirely on a cash basis, the key consideration will 
be the benefit that would accrue to the Fund and its investors. For 
instance, in bond transactions, the Adviser may be able to obtain 
better execution for the Fund than Authorized Participants because 
of the Adviser's size, experience and potentially stronger 
relationships in the fixed-income markets.
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Transaction Fees
    All persons purchasing or redeeming Creation Units are expected to 
incur a transaction fee to cover the estimated cost to the Fund of 
processing the transaction, including the costs of clearance and 
settlement charged to it by NSCC or DTC, and the estimated trading 
costs (i.e., brokerage commissions, bid-ask spread and market impact) 
to be incurred in converting the Composition File to or from the 
desired portfolio holdings. The transaction fee is determined daily and 
will be limited to amounts that have been authorized by the board of 
trustees of the Fund and determined by the Adviser to be appropriate to 
defray the expenses that the Fund incurs in connection with the 
purchase or redemption of Creation Units.
    The purpose of transaction fees is to protect the Fund's existing 
shareholders from the dilutive costs associated with the purchase and 
redemption of Creation Units. Transaction fees may vary over time for 
the Fund depending on the estimated trading costs for its portfolio 
positions and Composition File, processing costs and other 
considerations. To the extent that the Fund specifies greater amounts 
of cash in its Composition File, it may impose higher transaction fees. 
In addition, to the extent that the Fund includes in its Composition 
File instruments that clear through DTC, the Fund may impose higher 
transaction fees than when the Composition File consists solely of 
instruments that clear through NSCC, because DTC may charge more than 
NSCC in connection with Creation Unit transactions.\15\ The transaction 
fees

[[Page 57512]]

applicable to the Fund's purchases and redemptions on a given business 
day will be disseminated through the NSCC prior to the open of market 
trading on that day and also will be made available to the public each 
day on a free Web site.\16\ In all cases, the transaction fees will be 
limited in accordance with the requirements of the Commission 
applicable to open-end management investment companies offering 
redeemable securities.
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    \15\ Authorized Participants that participate in the CNS System 
of the NSCC are expected to be able to use the enhanced NSCC/CNS 
process for effecting in-kind purchases and redemptions of ETFs (the 
``NSCC Process'') to purchase and redeem Creation Units of the Fund 
that limit the composition of its baskets to include only NSCC 
Process-eligible instruments (generally domestic equity securities 
and cash). Because the NSCC Process is generally more efficient than 
the DTC clearing process, NSCC is likely to charge the Fund less 
than DTC to settle purchases and redemptions of Creation Units.
    \16\ The free Web site will be www.nextshares.com.
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NAV-Based Trading
    Because Shares will be listed and traded on the Exchange, Shares 
will be available for purchase and sale on an intraday basis. Shares 
will be purchased and sold in the secondary market at prices directly 
linked to the Fund's next-determined NAV using a new trading protocol 
called ``NAV-Based Trading.''\17\ All bids, offers and execution prices 
of Shares will be expressed as a premium/discount (which may be zero) 
to the Fund's next-determined NAV (e.g., NAV-$0.01, NAV+$0.01). The 
Fund's NAV will be determined each business day, as of 4:00 p.m. 
Eastern Time. Trade executions will be binding at the time orders are 
matched on Nasdaq's facilities, with the transaction prices contingent 
upon the determination of NAV.
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    \17\ Aspects of NAV-Based Trading are protected intellectual 
property subject to issued and pending U.S. patents held by 
NextShares Solutions LLC (``NextShares Solutions''), a wholly owned 
subsidiary of Eaton Vance Corp. Nasdaq has entered into a license 
agreement with NextShares Solutions to allow for NAV- Based Trading 
on the Exchange of exchange-traded managed funds that have 
themselves entered into license agreements with NextShares 
Solutions.
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Trading Premiums and Discounts
    Bid and offer prices for Shares will be quoted throughout the day 
relative to NAV. The premium or discount to NAV at which Share prices 
are quoted and transactions are executed will vary depending on market 
factors, including the balance of supply and demand for Shares among 
investors, transaction fees and other costs in connection with creating 
and redeeming Creation Units of Shares, the cost and availability of 
borrowing Shares, competition among market makers, the Share inventory 
positions and inventory strategies of market makers, the profitability 
requirements and business objectives of market makers, and the volume 
of Share trading. Reflecting such market factors, prices for Shares in 
the secondary market may be above, at or below NAV.
    Because making markets in Shares will be simple to manage and low 
risk, competition among market makers seeking to earn reliable, low-
risk profits should enable the Shares to routinely trade at tight bid-
ask spreads and narrow premiums/discounts to NAV. As noted below, the 
Fund will make available on a public Web site that will be updated on a 
daily basis current and historical trading spreads and premiums/
discounts of Shares trading in the secondary market.\18\
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    \18\ The Web site containing this information will be 
www.nextshares.com, which will be available directly and through a 
link from www.brandesfunds.com.
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    Transmitting and Processing Orders. Member firms will utilize 
certain existing order types and interfaces to transmit Share bids and 
offers to Nasdaq, which will process Share trades like trades in shares 
of other listed securities.\19\ In the systems used to transmit and 
process transactions in Shares, the Fund's next-determined NAV will be 
represented by a proxy price (e.g., 100.00) and a premium/discount of a 
stated amount to the next-determined NAV to be represented by the same 
increment/decrement from the proxy price used to denote NAV (e.g., NAV-
$0.01 would be represented as 99.99; NAV+$0.01 as 100.01).
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    \19\ As noted below, all orders to buy or sell Shares that are 
not executed on the day the order is submitted will be automatically 
cancelled as of the close of trading on such day. Prior to the 
commencement of trading in the Fund, the Exchange will inform its 
members in an Information Circular of the effect of this 
characteristic on existing order types.
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    To avoid potential investor confusion, Nasdaq will work with member 
firms and providers of market data services to seek to ensure that 
representations of intraday bids, offers and execution prices of Shares 
that are made available to the investing public follow the ``NAV-$0.01/
NAV+$0.01'' (or similar) display format. All Shares listed on the 
Exchange will have a unique identifier associated with their ticker 
symbols, which would indicate that the Shares are traded using NAV-
Based Trading. Nasdaq makes available to member firms and market data 
services certain proprietary data feeds that are designed to supplement 
the market information disseminated through the consolidated tape 
(``Consolidated Tape''). Specifically, the Exchange will use the Nasdaq 
Basic and Nasdaq Last Sale data feeds to disseminate intraday price and 
quote data for Shares in real time in the ``NAV-$0.01/NAV+$0.01'' (or 
similar) display format. Member firms could use the Nasdaq Basic and 
Nasdaq Last Sale data feeds to source intraday Share prices for 
presentation to the investing public in the ``NAV-$0.01/NAV+$0.01'' (or 
similar) display format. Alternatively, member firms could source 
intraday Share prices in proxy price format from the Consolidated Tape 
and other Nasdaq data feeds (e.g., Nasdaq TotalView and Nasdaq Level 2) 
and use a simple algorithm to convert prices into the ``NAV-$0.01/
NAV+$0.01'' (or similar) display format. As noted below, prior to the 
commencement of trading in the Fund, the Exchange will inform its 
members in an Information Circular of the identities of the specific 
Nasdaq data feeds from which intraday Share prices in proxy price 
format may be obtained.
    Intraday Reporting of Quotes and Trades. All bids and offers for 
Shares and all Share trade executions will be reported intraday in real 
time by the Exchange to the Consolidated Tape \20\ and separately 
disseminated to member firms and market data services through the 
Exchange data feeds listed above. The Exchange will also provide the 
member firms participating in each Share trade with a contemporaneous 
notice of trade execution, indicating the number of Shares bought or 
sold and the executed premium/discount to NAV.\21\
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    \20\ Due to systems limitations, the Consolidated Tape will 
report intraday execution prices and quotes for Shares using a proxy 
price format. As noted, Nasdaq will separately report real-time 
execution prices and quotes to member firms and providers of market 
data services in the ``NAV-$0.01/NAV+$0.01'' (or similar) display 
format, and otherwise seek to ensure that representations of 
intraday bids, offers and execution prices for Shares that are made 
available to the investing public follow the same display format.
    \21\ All orders to buy or sell Shares that are not executed on 
the day the order is submitted will be automatically cancelled as of 
the close of trading on such day.
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    Final Trade Pricing, Reporting and Settlement. All executed Share 
trades will be recorded and stored intraday by Nasdaq to await the 
calculation of the Fund's end-of- day NAV and the determination of 
final trade pricing. After the Fund's NAV is calculated and provided to 
the Exchange, Nasdaq will price each Share trade entered into during 
the day at the Fund's NAV plus/minus the trade's executed premium/
discount. Using the final trade price, each executed Share trade will 
then be disseminated to member firms and market data services via an 
FTP file to be created for exchange-traded managed funds and confirmed 
to the member firms participating in the trade to supplement the 
previously provided

[[Page 57513]]

information to include final pricing.\22\ After the pricing is 
finalized, Nasdaq will deliver the Share trading data to NSCC for 
clearance and settlement, following the same processes used for the 
clearance and settlement of trades in other exchange-traded securities.
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    \22\ File Transfer Protocol (``FTP'') is a standard network 
protocol used to transfer computer files on the Internet. Nasdaq 
will arrange for the daily dissemination of an FTP file with 
executed Share trades to member firms and market data services.
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Availability of Information
    Prior to the commencement of market trading in Shares, the Fund 
will be required to establish and maintain a public Web site through 
which its current prospectus may be downloaded.\23\ The Web site will 
include directly or through a link additional Fund information updated 
on a daily basis, including the prior business day's NAV, and the 
following trading information for such business day expressed as 
premiums/discounts to NAV: (a) Intraday high, low, average and closing 
prices of Shares in Exchange trading; (b) the midpoint of the highest 
bid and lowest offer prices as of the close of Exchange trading, 
expressed as a premium/discount to NAV (the ``Closing Bid/Ask 
Midpoint''); and (c) the spread between highest bid and lowest offer 
prices as of the close of Exchange trading (the ``Closing Bid/Ask 
Spread.'').\24\ The Web site will also contain charts showing the 
frequency distribution and range of values of trading prices, Closing 
Bid/Ask Midpoints and Closing Bid/Ask Spreads over time.
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    \23\ The Web site containing this information will be 
www.brandesfunds.com.
    \24\ The Web site containing the Fund's NAV will be 
www.brandesfunds.com. All other information listed will be made 
available on www.nextshares.com, which can be accessed directly and 
via a link on www.brandesfunds.com.
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    The Composition File will be disseminated through the NSCC before 
the open of trading in Shares on each business day and also will be 
made available to the public each day on a free Web site as noted 
above.\25\ Consistent with the disclosure requirements that apply to 
traditional open-end investment companies, a complete list of current 
Fund portfolio positions will be made available at least once each 
calendar quarter, with a reporting lag of not more than 60 days. The 
Fund may provide more frequent disclosures of portfolio positions at 
its discretion.
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    \25\ Id.
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    Reports of Share transactions will be disseminated to the market 
and delivered to the member firms participating in the trade 
contemporaneous with execution. Once the Fund's daily NAV has been 
calculated and disseminated, Nasdaq will price each Share trade entered 
into during the day at the Fund's NAV plus/minus the trade's executed 
premium/discount. Using the final trade price, each executed Share 
trade will then be disseminated to member firms and market data 
services via an FTP file to be created for exchange-traded managed 
funds and confirmed to the member firms participating in the trade to 
supplement the previously provided information to include final 
pricing.
    Information regarding NAV-based trading prices, best bids and 
offers for Shares, and volume of Shares traded will be continuously 
available on a real-time basis throughout each trading day on brokers' 
computer screens and other electronic services.
Initial and Continued Listing
    Shares will conform to the initial and continued listing criteria 
as set forth under Nasdaq Rule 5745. A minimum of 50,000 Shares and no 
less than two Creation Units of the Fund will be outstanding at the 
commencement of trading on the Exchange. The Exchange will obtain a 
representation from the issuer of the Shares that the NAV per Share 
will be calculated daily (on each day the New York Stock Exchange is 
open for trading) and provided to Nasdaq via the Mutual Fund Quotation 
Service (''MFQS'') by the fund accounting agent. As soon as the NAV is 
entered into MFQS, Nasdaq will disseminate the value to market 
participants and market data vendors via the Mutual Fund Dissemination 
Service (``MFDS'') so all firms will receive the NAV per Share at the 
same time. The Reporting Authority \26\ also will ensure that the 
Composition File will implement and maintain, or be subject to, 
procedures designed to prevent the use and dissemination of material 
non-public information regarding the Fund's portfolio positions and 
changes in the positions.
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    \26\ See Nasdaq Rule 5745(c)(4).
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    An estimated value of an individual Share, defined in Nasdaq Rule 
5745(c)(2) as the ``Intraday Indicative Value,'' will be calculated and 
disseminated at intervals of not more than 15 minutes throughout the 
Regular Market Session \27\ when Shares trade on the Exchange. The 
Exchange will obtain a representation from the issuer of the Shares 
that the IIV will be calculated on an intraday basis and provided to 
Nasdaq for dissemination via the Nasdaq Global Index Service 
(``GIDS'').
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    \27\ See Nasdaq Rule 4120(b)(4) (describing the three trading 
sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30 
a.m. ET; (2) Regular Market Session from 9:30 a.m. to 4 p.m. or 4:15 
p.m. ET; and (3) Post-Market Session from 4 p.m. or 4:15 p.m. to 8 
p.m. ET).
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    The IIV will be based on current information regarding the value of 
the securities and other assets held by the Fund.\28\ The purpose of 
the IIVs is to enable investors to estimate the next-determined NAV so 
they can determine the number of Shares to buy or sell if they want to 
transact in an approximate dollar amount (e.g., if an investor wants to 
acquire approximately $5,000 of the Fund, how many Shares should the 
investor buy?).\29\
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    \28\ IIVs disseminated throughout each trading day would be 
based on the same portfolio as used to calculate that day's NAV. The 
Fund will reflect purchases and sales of portfolio positions in its 
NAV the next business day after trades are executed.
    \29\ Because, in NAV-Based Trading, prices of executed trades 
are not determined until the reference NAV is calculated, buyers and 
sellers of Shares during the trading day will not know the final 
value of their purchases and sales until the end of the trading day. 
The Fund's Registration Statement, Web site and any advertising or 
marketing materials will include prominent disclosure of this fact. 
Although IIVs may provide useful estimates of the value of intraday 
trades, they cannot be used to calculate with precision the dollar 
value of the Shares to be bought or sold.
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    The Adviser is not a registered broker-dealer, or affiliated with a 
broker-dealer. In addition, personnel who make decisions on the Fund's 
portfolio composition must be subject to procedures designed to prevent 
the use and dissemination of material, non-public information regarding 
the open-end fund's portfolio.
    In the event that (a) the Adviser registers as a broker-dealer or 
becomes newly affiliated with a broker-dealer, or (b) any new adviser 
or sub-adviser to the Fund is a registered broker-dealer or becomes 
affiliated with a broker-dealer, such new adviser or sub-adviser will 
implement and will maintain a fire wall with respect to its relevant 
personnel and/or such broker-dealer affiliate, if applicable, regarding 
access to information concerning the composition and/or changes to the 
Fund's portfolio and will be subject to procedures designed to prevent 
the use and dissemination of material non-public information regarding 
such portfolio.
Trading Halts
    The Exchange may consider all relevant factors in exercising its 
discretion to halt or suspend trading in Shares. Nasdaq will halt 
trading in Shares under the conditions specified in Nasdaq Rules 4120 
and in Nasdaq Rule 5745(d)(2)(C). Additionally, Nasdaq may cease 
trading Shares if other unusual conditions or circumstances exist

[[Page 57514]]

which, in the opinion of Nasdaq, make further dealings on Nasdaq 
detrimental to the maintenance of a fair and orderly market. To manage 
the risk of a non-regulatory Share trading halt, Nasdaq has in place 
back-up processes and procedures to ensure orderly trading.
    Because, in NAV-Based Trading, all trade execution prices are 
linked to end-of-day NAV, buyers and sellers of Shares should be less 
exposed to risk of loss due to intraday trading halts than buyers and 
sellers of conventional exchange-traded funds (``ETFs'') and other 
exchange-traded securities.
    Every order to trade Shares of the Fund is subject to the proxy 
price protection threshold of plus/minus $1.00, which determines the 
lower and upper threshold for the life of the order and whereby the 
order will be cancelled at any point if it exceeds $101.00 or falls 
below $99.00, the established thresholds.\30\ With certain exceptions, 
each order also must contain the applicable order attributes, including 
routing instructions and time-in-force information, as described in 
Nasdaq Rule 4703.\31\
---------------------------------------------------------------------------

    \30\ See Nasdaq Rule 5745(h).
    \31\ See Nasdaq Rule 5745(b)(6)
---------------------------------------------------------------------------

Trading Rules
    Nasdaq deems Shares to be equity securities, thus rendering trading 
in Shares subject to Nasdaq's existing rules governing the trading of 
equity securities. Nasdaq will allow trading in Shares from 9:30 a.m. 
until 4:00 p.m. Eastern Time.
Surveillance
    The Exchange represents that trading in Shares will be subject to 
the existing trading surveillances, administered by both Nasdaq and the 
Financial Industry Regulatory Authority, Inc. (``FINRA'') on behalf of 
the Exchange, which are designed to detect violations of Exchange rules 
and applicable federal securities laws.\32\ The Exchange represents 
that these procedures are adequate to properly monitor trading of 
Shares on the Exchange and to deter and detect violations of Exchange 
rules and applicable federal securities laws.
---------------------------------------------------------------------------

    \32\ FINRA provides surveillance of trading on the Exchange 
pursuant to a regulatory services agreement. The Exchange is 
responsible for FINRA's performance under this regulatory services 
agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    FINRA, on behalf of the Exchange, will communicate as needed with 
other markets and other entities that are members of the Intermarket 
Surveillance Group (``ISG'') \33\ regarding trading in Shares, and in 
exchange-traded securities and instruments held by the Fund (to the 
extent such exchange-traded securities and instruments are known 
through the publication of the Composition File and periodic public 
disclosures of the Fund's portfolio holdings), and FINRA may obtain 
trading information regarding such trading from other markets and other 
entities. In addition, the Exchange may obtain information regarding 
trading in Shares, and in exchange-traded securities and instruments 
held by the Fund (to the extent such exchange-traded securities and 
instruments are known through the publication of the Composition File 
and periodic public disclosures of the Fund's portfolio holdings), from 
markets and other entities that are members of ISG, which includes 
securities and futures exchanges, or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    \33\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Fund's portfolio may trade on markets that are members of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the 
distribution of material non-public information by its employees.
Information Circular
    Prior to the commencement of trading in the Fund, 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 noting that Shares are not individually redeemable); (2) 
Nasdaq Rule 2111A, which imposes suitability obligations on Nasdaq 
members with respect to recommending transactions in Shares to 
customers; (3) how information regarding the IIV and Composition File 
is disseminated; (4) the requirement that members deliver a prospectus 
to investors purchasing Shares prior to or concurrently with the 
confirmation of a transaction; and (5) information regarding NAV-Based 
Trading protocols.
    As noted above, all orders to buy or sell Shares that are not 
executed on the day the order is submitted will be automatically 
cancelled as of the close of trading on such day. The Information 
Circular will discuss the effect of this characteristic on existing 
order types. The Information Circular also will identify the specific 
Nasdaq data feeds from which intraday Share prices in proxy price 
format may be obtained.
    In addition, the Information Circular will advise members, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Fund. Members purchasing Shares from the Fund for 
resale to investors will deliver a summary 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.
    The Information Circular also will reference that the Fund is 
subject to various fees and expenses described in the Registration 
Statement. The Information Circular will also disclose the trading 
hours of the Shares and the applicable NAV calculation time for the 
Shares. The Information Circular will disclose that information about 
the Shares will be publicly available on the Fund's Web site.\34\
---------------------------------------------------------------------------

    \34\ See supra footnote 24.
---------------------------------------------------------------------------

    Information regarding Fund trading protocols will be disseminated 
to Nasdaq members in accordance with current processes for newly listed 
products. Nasdaq intends to provide its members with a detailed 
explanation of NAV-Based Trading through a Trading Alert issued prior 
to the commencement of trading in Shares on the Exchange.
Continued Listing Representations
    All statements and representations made in this filing regarding 
(a) the description of the portfolio or reference assets, (b) 
limitations on portfolio holdings or reference assets, (c) 
dissemination and availability of the reference asset or intraday 
indicative values, or (d) the applicability of Exchange listing rules 
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 the 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 the 
Fund is not in compliance with the applicable listing

[[Page 57515]]

requirements, the Exchange will commence delisting procedures under the 
Nasdaq 5800 Series.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\35\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\36\ in particular, in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities, and to remove impediments to and perfect the mechanism of a 
free and open market and a national market system.
---------------------------------------------------------------------------

    \35\ 15 U.S.C. 78f(b).
    \36\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares would be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in Nasdaq Rule 5745. The 
Exchange believes that its surveillance procedures are adequate to 
properly monitor the trading of Shares on Nasdaq and to deter and 
detect violations of Exchange rules and the applicable federal 
securities laws. The Adviser is not a registered broker-dealer, and is 
not affiliated with a broker-dealer. In addition, personnel who make 
decisions on the Fund's portfolio composition must be subject to 
procedures designed to prevent the use and dissemination of material, 
non-public information regarding the open-end fund's portfolio.
    In the event that (a) the Adviser registers as a broker-dealer or 
becomes newly affiliated with a broker-dealer, or (b) any new adviser 
or sub-adviser to the Fund is a registered broker-dealer or becomes 
affiliated with a broker-dealer, such new adviser or sub-adviser will 
implement and will maintain a fire wall with respect to its relevant 
personnel and/or such broker-dealer affiliate, if applicable, regarding 
access to information concerning the composition and/or changes to the 
Fund's portfolio and will be subject to procedures designed to prevent 
the use and dissemination of material non-public information regarding 
such portfolio.
    The Exchange may obtain information via ISG from other exchanges 
that are members of ISG or with which the Exchange has entered into a 
comprehensive surveillance sharing agreement, to the extent necessary.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest. 
The Exchange will obtain a representation from the issuer of Shares 
that the NAV per Share will be calculated on each business day that the 
New York Stock Exchange is open for trading and that the NAV will be 
made available to all market participants at the same time. In 
addition, a large amount of information would be publicly available 
regarding the Fund and the Shares, thereby promoting market 
transparency.
    Prior to the commencement of market trading in Shares, the Fund 
will be required to establish and maintain a public Web site through 
which its current prospectus may be downloaded.\37\ The Web site will 
display additional Fund information updated on a daily basis, including 
the prior business day's NAV, and the following trading information for 
such business day expressed as premiums/discounts to NAV: (a) Intraday 
high, low, average and closing prices of Shares in Exchange trading; 
(b) the Closing Bid/Ask Midpoint; and (c) the Closing Bid/Ask 
Spread.\38\ The Web site will also contain charts showing the frequency 
distribution and range of values of trading prices, Closing Bid/Ask 
Midpoints and Closing Bid/Ask Spreads over time.
---------------------------------------------------------------------------

    \37\ See supra footnote 23.
    \38\ See supra footnote 24
---------------------------------------------------------------------------

    The Composition File will be disseminated through the NSCC before 
the open of trading in Shares on each business day and also will be 
made available to the public each day on a free Web site.\39\ The 
Exchange will obtain a representation from the issuer of the Shares 
that the IIV will be calculated and disseminated on an intraday basis 
at intervals of not more than 15 minutes during trading on the Exchange 
and provided to Nasdaq for dissemination via GIDS. A complete list of 
current portfolio positions for the Fund will be made available at 
least once each calendar quarter, with a reporting lag of not more than 
60 days. The Fund may provide more frequent disclosures of portfolio 
positions at its discretion.
---------------------------------------------------------------------------

    \39\ See supra footnote 13.
---------------------------------------------------------------------------

    Transactions in Shares will be reported to the Consolidated Tape at 
the time of execution in proxy price format and will be disseminated to 
member firms and market data services through Nasdaq's trading service 
and market data interfaces, as defined above. Once the Fund's daily NAV 
has been calculated and the final price of its intraday Share trades 
has been determined, Nasdaq will deliver a confirmation with final 
pricing to the transacting parties. At the end of the day, Nasdaq will 
also post a newly created FTP file with the final transaction data for 
the trading and market data services. The Exchange expects that 
information regarding NAV-based trading prices and volumes of Shares 
traded will be continuously available on a real-time basis throughout 
each trading day on brokers' computer screens and other electronic 
services. Because Shares will trade at prices based on the next-
determined NAV, investors will be able to buy and sell individual 
Shares at a known premium or discount to NAV that they can limit by 
transacting using limit orders at the time of order entry. Trading in 
Shares will be subject to Nasdaq Rules 5745(d)(2)(B) and (C), which 
provide for the suspension of trading or trading halts under certain 
circumstances, including if, in the view of the Exchange, trading in 
Shares becomes inadvisable.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
the Fund, which seeks to provide investors with access to an actively 
managed investment strategy in a structure that offers the cost and tax 
efficiencies and shareholder protections of ETFs, while removing the 
requirement for daily portfolio holdings disclosure to ensure a tight 
relationship between market trading prices and NAV.
    For the above reasons, Nasdaq believes the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Act.

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

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. In fact, the 
Exchange believes that the introduction of the Fund would promote 
competition by making available to investors an actively managed 
investment strategy in a structure that offers the cost and tax 
efficiencies and shareholder protections of ETFs, while removing the 
requirement for daily portfolio holdings disclosure to ensure a tight 
relationship between market trading prices and NAV. Moreover, the 
Exchange believes that the proposed method of Share trading would 
provide investors with transparency of trading costs, and the ability 
to control trading costs using

[[Page 57516]]

limit orders, that is not available for conventionally traded ETFs.
    These developments could significantly enhance competition to the 
benefit of the markets and investors.

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

    No written comments were either solicited or received.

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2017-124 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-NASDAQ-2017-124. 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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASDAQ-2017-124 and should 
be submitted on or before December 26, 2017.
---------------------------------------------------------------------------

    \40\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\40\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-26121 Filed 12-4-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                57510                          Federal Register / Vol. 82, No. 232 / Tuesday, December 5, 2017 / Notices

                                                staff members who have an interest in                      comments on the proposed rule change                   principal investment strategy, as noted
                                                the matters also may be present.                           from interested persons.                               below.5
                                                   The General Counsel of the
                                                                                                           I. Self-Regulatory Organization’s                      I. Brandes Investment Trust
                                                Commission, or his designee, has
                                                certified that, in his opinion, one or                     Statement of the Terms of Substance of                    Brandes Investment Trust is registered
                                                more of the exemptions set forth in 5                      the Proposed Rule Change                               with the Commission as an open-end
                                                U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B)                                                                       investment company and has filed a
                                                                                                              The Exchange proposes to list and
                                                and (10) and 17 CFR 200.402(a)(3),                                                                                Registration Statement with the
                                                                                                           trade under Nasdaq Rule 5745
                                                (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and                                                                    Commission.6 The Fund is a series of
                                                                                                           (Exchange-Traded Managed Fund
                                                (a)(10), permit consideration of the                                                                              Brandes Investment Trust.7
                                                                                                           Shares (‘‘NextShares’’)) the common                       Brandes Investment Partners, L.P. (the
                                                scheduled matters at the closed meeting.                   shares (‘‘Shares’’) of the exchange-
                                                   Chairman Clayton, as duty officer,                                                                             ‘‘Adviser’’) will be the adviser to the
                                                                                                           traded managed fund described herein                   Fund. The Adviser is not a registered
                                                voted to consider the items listed for the                 (the ‘‘Fund’’).3
                                                closed meeting in closed session.                                                                                 broker-dealer, and is not affiliated with
                                                   The subject matters of the closed                       II. Self-Regulatory Organization’s                     a broker-dealer. Nevertheless, the
                                                meeting will be:                                           Statement of the Purpose of, and                       Adviser will implement and will
                                                   Institution and settlement of                           Statutory Basis for, the Proposed Rule                 maintain a fire wall with respect to any
                                                injunctive actions;                                        Change                                                 future affiliated broker-dealer regarding
                                                   Institution and settlement of                                                                                  access to information concerning the
                                                administrative proceedings;                                  In its filing with the Commission, the               composition and/or changes to the
                                                   Regulatory matters regarding a                          Exchange included statements                           Fund’s portfolio.8 In addition, personnel
                                                financial institution; and                                 concerning the purpose of and basis for                who make decisions on the Fund’s
                                                   Other matters relating to enforcement                   the proposed rule change and discussed                 portfolio composition must be subject to
                                                proceedings.                                               any comments it received on the                        procedures designed to prevent the use
                                                   At times, changes in Commission                         proposed rule change. The text of these                and dissemination of material, non-
                                                priorities require alterations in the                      statements may be examined at the                      public information regarding the open-
                                                scheduling of meeting items.                               places specified in Item IV below. The                 end fund’s portfolio.
                                                                                                           Exchange has prepared summaries, set                      In the event that (a) the Adviser
                                                CONTACT PERSON FOR MORE INFORMATION:                       forth in sections A, B, and C below, of                registers as a broker-dealer or becomes
                                                For further information and to ascertain                   the most significant aspects of such                   newly affiliated with a broker-dealer, or
                                                what, if any, matters have been added,                     statements.                                            (b) any new adviser or sub-adviser to the
                                                deleted or postponed; please contact                                                                              Fund is a registered broker-dealer or is
                                                Brent J. Fields from the Office of the                     A. Self-Regulatory Organization’s
                                                Secretary at (202) 551–5400.                               Statement of the Purpose of, and                          5 Additional information regarding the Fund will

                                                  Dated: November 30, 2017.                                Statutory Basis for, the Proposed Rule                 be available on the free public Web site for the
                                                                                                           Change                                                 Fund at www.brandesfunds.com and in the
                                                Brent J. Fields,                                                                                                  Registration Statement for the Fund.
                                                Secretary.                                                 1. Purpose                                                6 See Post-Effective Amendment number 60 to

                                                [FR Doc. 2017–26219 Filed 12–1–17; 11:15 am]                                                                      Registration Statement on Form N–1A for Brandes
                                                                                                              The Exchange proposes to list and                   Investment Trust dated October 13, 2017 (File Nos.
                                                BILLING CODE 8011–01–P                                                                                            033–81396 and 811–08614). The descriptions of the
                                                                                                           trade the Shares of the Fund under
                                                                                                                                                                  Fund and the Shares contained herein conform to
                                                                                                           Nasdaq Rule 5745, which governs the                    the initial Registration Statement.
                                                SECURITIES AND EXCHANGE                                    listing and trading of exchange-traded                    7 The Commission has issued an order granting

                                                COMMISSION                                                 managed fund shares, as defined in                     Brandes Investment Trust and certain affiliates
                                                                                                           Nasdaq Rule 5745(c)(1), on the                         exemptive relief under the Investment Company
                                                                                                           Exchange.4 Brandes Investment Trust,                   Act. See Investment Company Act Release No.
                                                [Release No. 34–82167; File No. SR–                                                                               32893 (November 2, 2017) (File No. 812–14809).
                                                NASDAQ–2017–124]                                           which is discussed below, is registered                   8 An investment adviser to an open-end fund is
                                                                                                           with the Commission as an open-end                     required to be registered under the Advisers Act. As
                                                Self-Regulatory Organizations; The                         investment company and has filed a                     a result, the Adviser and its related personnel are
                                                Nasdaq Stock Market LLC; Notice of                         registration statement on Form N–1A                    subject to the provisions of Rule 204A–1 under the
                                                                                                                                                                  Advisers Act relating to codes of ethics. This Rule
                                                Filing of Proposed Rule Change To                          (‘‘Registration Statement’’) with the                  requires investment advisers to adopt a code of
                                                List and Trade the Shares of the                           Commission. The Fund is a series of                    ethics that reflects the fiduciary nature of the
                                                Brandes Value NextShares Fund                              Brandes Investment Trust and will be                   relationship to clients as well as compliance with
                                                                                                           advised by an investment adviser                       other applicable securities laws. Accordingly,
                                                November 29, 2017.                                                                                                procedures designed to prevent the communication
                                                                                                           registered under the Investment                        and misuse of non-public information by an
                                                   Pursuant to Section 19(b)(1) of the                     Advisers Act of 1940 (‘‘Advisers Act’’),               investment adviser must be consistent with Rule
                                                Securities Exchange Act of 1934                            as described below. The Fund will be                   204A–1 under the Advisers Act. In addition, Rule
                                                (‘‘Act’’),1 and Rule 19b–4 thereunder,2                    actively managed and will pursue the                   206(4)–7 under the Advisers Act makes it unlawful
                                                notice is hereby given that on November                                                                           for an investment adviser to provide investment
                                                                                                                                                                  advice to clients unless such investment adviser has
                                                14, 2017, The Nasdaq Stock Market LLC                         3 Except for the specific Fund information set
                                                                                                                                                                  (i) adopted and implemented written policies and
                                                (‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the                forth below, this rule filing conforms to the rule     procedures reasonably designed to prevent
                                                Securities and Exchange Commission                         filing, as modified by amendments 1 and 2 thereto,     violation, by the investment adviser and its
                                                (‘‘Commission’’) the proposed rule                         relating to the listing and trading on Nasdaq of the   supervised persons, of the Advisers Act and the
sradovich on DSK3GMQ082PROD with NOTICES




                                                                                                           shares of 18 series of the Eaton Vance ETMF Trust      Commission rules adopted thereunder; (ii)
                                                change as described in Items I and II                      and the Eaton Vance ETMF Trust II, as approved         implemented, at a minimum, an annual review
                                                below, which Items have been prepared                      by the Commission in Securities Exchange Act           regarding the adequacy of the policies and
                                                by the Exchange. The Commission is                         Release No. 75499 (July 21, 2015) (SR–NASDAQ–          procedures established pursuant to subparagraph (i)
                                                publishing this notice to solicit                          2015–036).                                             above and the effectiveness of their
                                                                                                              4 The Commission approved Nasdaq Rule 5745 in       implementation; and (iii) designated an individual
                                                                                                           Securities Exchange Act Release No. 34–73562           (who is a supervised person) responsible for
                                                  1 15   U.S.C. 78s(b)(1).                                 (Nov. 7, 2014), 79 FR 68309 (Nov. 14, 2014) (SR–       administering the policies and procedures adopted
                                                  2 17   CFR 240.19b–4.                                    NASDAQ–2014–020).                                      under subparagraph (i) above.



                                           VerDate Sep<11>2014      18:13 Dec 04, 2017   Jkt 244001   PO 00000   Frm 00088   Fmt 4703   Sfmt 4703   E:\FR\FM\05DEN1.SGM   05DEN1


                                                                            Federal Register / Vol. 82, No. 232 / Tuesday, December 5, 2017 / Notices                                                     57511

                                                affiliated with a broker-dealer, such new               Shares in amounts less than a Creation                 Composition File until the sale program
                                                adviser or sub-adviser will implement                   Unit may be effected only in the                       is substantially completed. To the extent
                                                and will maintain a fire wall with                      secondary market, as described below,                  that the Fund creates or redeems Shares
                                                respect to its relevant personnel and/or                and not directly with the Fund.                        in kind, it will use cash amounts to
                                                such broker-dealer affiliate, if                          The creation and redemption process                  supplement the in-kind transactions to
                                                applicable, regarding access to                         for the Fund may be effected ‘‘in kind,’’              the extent necessary to ensure that
                                                information concerning the composition                  in cash, or in a combination of securities             Creation Units are purchased and
                                                and/or changes to the Fund’s portfolio                  and cash. Creation ‘‘in kind’’ means that              redeemed at NAV. The Composition
                                                and will be subject to procedures                       an Authorized Participant—usually a                    File also may consist entirely of cash, in
                                                designed to prevent the use and                         brokerage house or large institutional                 which case it will not include any of the
                                                dissemination of material non-public                    investor—purchases the Creation Unit                   securities in the Fund’s portfolio.14
                                                information regarding such portfolio.                   with a basket of securities equal in value
                                                   ALPS Distributors, Inc. (the                         to the aggregate NAV of the Shares in                  Transaction Fees
                                                ‘‘Distributor’’) will be the principal                  the Creation Unit. When an Authorized                     All persons purchasing or redeeming
                                                underwriter and distributor of the                      Participant redeems a Creation Unit in                 Creation Units are expected to incur a
                                                Fund’s Shares. U.S. Bancorp Fund                        kind, it receives a basket of securities               transaction fee to cover the estimated
                                                Services, LLC will act as the                           equal in value to the aggregate NAV of                 cost to the Fund of processing the
                                                administrator and accounting agent to                   the Shares in the Creation Unit.12                     transaction, including the costs of
                                                the Fund; U.S. Bancorp Fund Services,                                                                          clearance and settlement charged to it
                                                                                                        Composition File                                       by NSCC or DTC, and the estimated
                                                LLC will act as transfer agent and
                                                custodian to the Fund.                                     As defined in Nasdaq Rule 5745(c)(3),               trading costs (i.e., brokerage
                                                   The Fund will be actively managed                    the Composition File is the specified                  commissions, bid-ask spread and market
                                                and will pursue the principal                           portfolio of securities and/or cash that               impact) to be incurred in converting the
                                                investment strategies described below.9                 the Fund will accept as a deposit in                   Composition File to or from the desired
                                                                                                        issuing a Creation Unit of Shares, and                 portfolio holdings. The transaction fee is
                                                Brandes Value NextShares (the‘‘Fund’’)                  the specified portfolio of securities and/             determined daily and will be limited to
                                                  The Fund seeks long-term capital                      or cash that the Fund will deliver in a                amounts that have been authorized by
                                                appreciation by investing primarily in                  redemption of a Creation Unit of Shares.               the board of trustees of the Fund and
                                                equity securities of U.S. companies.                    The Composition File will be                           determined by the Adviser to be
                                                Equity securities include common and                    disseminated through the NSCC once                     appropriate to defray the expenses that
                                                preferred stocks, warrants, and rights.                 each business day before the open of                   the Fund incurs in connection with the
                                                While the Fund may purchase equity                      trading in Shares on such day and also                 purchase or redemption of Creation
                                                securities issued by companies of any                   will be made available to the public                   Units.
                                                size, it typically focuses its investments              each day on a free Web site.13 Because                    The purpose of transaction fees is to
                                                on large-capitalization equity securities.              the Fund seeks to preserve the                         protect the Fund’s existing shareholders
                                                                                                        confidentiality of its current portfolio               from the dilutive costs associated with
                                                Creations and Redemptions of Shares                     trading program, the Fund’s                            the purchase and redemption of
                                                   Shares will be issued and redeemed                   Composition File generally will not be                 Creation Units. Transaction fees may
                                                on a daily basis at the Fund’s next-                    a pro rata reflection of the Fund’s                    vary over time for the Fund depending
                                                determined net asset value (‘‘NAV’’) 10                 investment positions. Each security                    on the estimated trading costs for its
                                                in specified blocks of Shares called                    included in the Composition File will                  portfolio positions and Composition
                                                ‘‘Creation Units.’’ A Creation Unit will                be a current holding of the Fund, but the              File, processing costs and other
                                                consist of at least 25,000 Shares.                      Composition File generally will not                    considerations. To the extent that the
                                                Creation Units may be purchased and                     include all of the securities in the                   Fund specifies greater amounts of cash
                                                redeemed by or through ‘‘Authorized                     Fund’s portfolio or match the                          in its Composition File, it may impose
                                                Participants.’’ 11 Purchases and sales of               weightings of the included securities in               higher transaction fees. In addition, to
                                                                                                        the portfolio. Securities that the Adviser             the extent that the Fund includes in its
                                                   9 Additional information regarding the Fund will
                                                                                                        is in the process of acquiring for the                 Composition File instruments that clear
                                                be available on a free public Web site for the Fund     Fund generally will not be represented                 through DTC, the Fund may impose
                                                (www.brandesfunds.com, which may contain links
                                                for certain information to www.nextshares.com) and      in the Fund’s Composition File until                   higher transaction fees than when the
                                                in the Registration Statement for the Fund.             their purchase has been completed.                     Composition File consists solely of
                                                   10 As with other registered open-end investment      Similarly, securities that are held in the             instruments that clear through NSCC,
                                                companies, NAV generally will be calculated daily       Fund’s portfolio but in the process of                 because DTC may charge more than
                                                Monday through Friday as of 4:00 p.m. Eastern                                                                  NSCC in connection with Creation Unit
                                                Time. NAV will be calculated by dividing the
                                                                                                        being sold may not be removed from its
                                                Fund’s net asset value by the number of Shares                                                                 transactions.15 The transaction fees
                                                outstanding. Information regarding the valuation of     through and make appropriate arrangements with
                                                investments in calculating the Fund’s NAV will be       an Authorized Participant for such transactions.          14 In determining whether the Fund will issue or

                                                contained in the Registration Statement for its            12 In compliance with Nasdaq Rule 5745(b)(5),
                                                                                                                                                               redeem Creation Units entirely on a cash basis, the
                                                Shares.                                                 which applies to Shares based on an international      key consideration will be the benefit that would
                                                   11 ‘‘Authorized Participants’’ will be either: (1)   or global portfolio, Brandes Investment Trust’s        accrue to the Fund and its investors. For instance,
                                                ‘‘participating parties,’’ i.e., brokers or other       application for exemptive relief under the             in bond transactions, the Adviser may be able to
                                                participants in the Continuous Net Settlement           Investment Company Act states that the Trust will      obtain better execution for the Fund than
                                                System (‘‘CNS System’’) of the National Securities      comply with the federal securities laws in accepting   Authorized Participants because of the Adviser’s
sradovich on DSK3GMQ082PROD with NOTICES




                                                Clearing Corporation (‘‘NSCC’’), a clearing agency      securities for deposits and satisfying redemptions     size, experience and potentially stronger
                                                registered with the Commission and affiliated with      with securities, including that the securities         relationships in the fixed-income markets.
                                                the Depository Trust Company (‘‘DTC’’), or (2) DTC      accepted for deposits and the securities used to          15 Authorized Participants that participate in the

                                                participants, which in either case have executed        satisfy redemption requests are sold in transactions   CNS System of the NSCC are expected to be able
                                                participant agreements with the Fund’s distributor      that would be exempt from registration under the       to use the enhanced NSCC/CNS process for
                                                and transfer agent regarding the creation and           Securities Act of 1933, as amended (15 U.S.C. 77a)     effecting in-kind purchases and redemptions of
                                                redemption of Creation Units. Investors will not        (‘‘Securities Act’’).                                  ETFs (the ‘‘NSCC Process’’) to purchase and redeem
                                                have to be Authorized Participants in order to             13 The free Web site containing the Composition     Creation Units of the Fund that limit the
                                                transact in Creation Units, but must place an order     File will be www.nextshares.com.                                                                   Continued




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                                                57512                       Federal Register / Vol. 82, No. 232 / Tuesday, December 5, 2017 / Notices

                                                applicable to the Fund’s purchases and                  market makers, and the volume of Share                  display format. Member firms could use
                                                redemptions on a given business day                     trading. Reflecting such market factors,                the Nasdaq Basic and Nasdaq Last Sale
                                                will be disseminated through the NSCC                   prices for Shares in the secondary                      data feeds to source intraday Share
                                                prior to the open of market trading on                  market may be above, at or below NAV.                   prices for presentation to the investing
                                                that day and also will be made available                   Because making markets in Shares                     public in the ‘‘NAV¥$0.01/
                                                to the public each day on a free Web                    will be simple to manage and low risk,                  NAV+$0.01’’ (or similar) display format.
                                                site.16 In all cases, the transaction fees              competition among market makers                         Alternatively, member firms could
                                                will be limited in accordance with the                  seeking to earn reliable, low-risk profits              source intraday Share prices in proxy
                                                requirements of the Commission                          should enable the Shares to routinely                   price format from the Consolidated Tape
                                                applicable to open-end management                       trade at tight bid-ask spreads and                      and other Nasdaq data feeds (e.g.,
                                                investment companies offering                           narrow premiums/discounts to NAV. As                    Nasdaq TotalView and Nasdaq Level 2)
                                                redeemable securities.                                  noted below, the Fund will make                         and use a simple algorithm to convert
                                                                                                        available on a public Web site that will                prices into the ‘‘NAV¥$0.01/
                                                NAV-Based Trading                                       be updated on a daily basis current and                 NAV+$0.01’’ (or similar) display format.
                                                   Because Shares will be listed and                    historical trading spreads and                          As noted below, prior to the
                                                traded on the Exchange, Shares will be                  premiums/discounts of Shares trading                    commencement of trading in the Fund,
                                                available for purchase and sale on an                   in the secondary market.18                              the Exchange will inform its members in
                                                intraday basis. Shares will be purchased                   Transmitting and Processing Orders.                  an Information Circular of the identities
                                                and sold in the secondary market at                     Member firms will utilize certain                       of the specific Nasdaq data feeds from
                                                prices directly linked to the Fund’s                    existing order types and interfaces to                  which intraday Share prices in proxy
                                                next-determined NAV using a new                         transmit Share bids and offers to                       price format may be obtained.
                                                trading protocol called ‘‘NAV-Based                     Nasdaq, which will process Share trades                    Intraday Reporting of Quotes and
                                                Trading.’’17 All bids, offers and                       like trades in shares of other listed                   Trades. All bids and offers for Shares
                                                execution prices of Shares will be                      securities.19 In the systems used to                    and all Share trade executions will be
                                                expressed as a premium/discount                         transmit and process transactions in                    reported intraday in real time by the
                                                (which may be zero) to the Fund’s next-                 Shares, the Fund’s next-determined                      Exchange to the Consolidated Tape 20
                                                determined NAV (e.g., NAV¥$0.01,                        NAV will be represented by a proxy                      and separately disseminated to member
                                                NAV+$0.01). The Fund’s NAV will be                      price (e.g., 100.00) and a premium/                     firms and market data services through
                                                determined each business day, as of                     discount of a stated amount to the next-                the Exchange data feeds listed above.
                                                4:00 p.m. Eastern Time. Trade                           determined NAV to be represented by                     The Exchange will also provide the
                                                executions will be binding at the time                  the same increment/decrement from the                   member firms participating in each
                                                orders are matched on Nasdaq’s                          proxy price used to denote NAV (e.g.,                   Share trade with a contemporaneous
                                                facilities, with the transaction prices                 NAV¥$0.01 would be represented as
                                                                                                                                                                notice of trade execution, indicating the
                                                contingent upon the determination of                    99.99; NAV+$0.01 as 100.01).
                                                                                                                                                                number of Shares bought or sold and the
                                                NAV.                                                       To avoid potential investor confusion,
                                                                                                        Nasdaq will work with member firms                      executed premium/discount to NAV.21
                                                Trading Premiums and Discounts                          and providers of market data services to                   Final Trade Pricing, Reporting and
                                                   Bid and offer prices for Shares will be              seek to ensure that representations of                  Settlement. All executed Share trades
                                                quoted throughout the day relative to                   intraday bids, offers and execution                     will be recorded and stored intraday by
                                                NAV. The premium or discount to NAV                     prices of Shares that are made available                Nasdaq to await the calculation of the
                                                at which Share prices are quoted and                    to the investing public follow the                      Fund’s end-of- day NAV and the
                                                transactions are executed will vary                     ‘‘NAV¥$0.01/NAV+$0.01’’ (or similar)                    determination of final trade pricing.
                                                depending on market factors, including                  display format. All Shares listed on the                After the Fund’s NAV is calculated and
                                                the balance of supply and demand for                    Exchange will have a unique identifier                  provided to the Exchange, Nasdaq will
                                                Shares among investors, transaction fees                associated with their ticker symbols,                   price each Share trade entered into
                                                and other costs in connection with                      which would indicate that the Shares                    during the day at the Fund’s NAV plus/
                                                creating and redeeming Creation Units                   are traded using NAV-Based Trading.                     minus the trade’s executed premium/
                                                of Shares, the cost and availability of                 Nasdaq makes available to member                        discount. Using the final trade price,
                                                borrowing Shares, competition among                     firms and market data services certain                  each executed Share trade will then be
                                                market makers, the Share inventory                      proprietary data feeds that are designed                disseminated to member firms and
                                                positions and inventory strategies of                   to supplement the market information                    market data services via an FTP file to
                                                market makers, the profitability                        disseminated through the consolidated                   be created for exchange-traded managed
                                                requirements and business objectives of                 tape (‘‘Consolidated Tape’’).                           funds and confirmed to the member
                                                                                                        Specifically, the Exchange will use the                 firms participating in the trade to
                                                composition of its baskets to include only NSCC         Nasdaq Basic and Nasdaq Last Sale data                  supplement the previously provided
                                                Process-eligible instruments (generally domestic        feeds to disseminate intraday price and
                                                equity securities and cash). Because the NSCC                                                                      20 Due to systems limitations, the Consolidated
                                                Process is generally more efficient than the DTC
                                                                                                        quote data for Shares in real time in the
                                                                                                                                                                Tape will report intraday execution prices and
                                                clearing process, NSCC is likely to charge the Fund     ‘‘NAV¥$0.01/NAV+$0.01’’ (or similar)                    quotes for Shares using a proxy price format. As
                                                less than DTC to settle purchases and redemptions                                                               noted, Nasdaq will separately report real-time
                                                of Creation Units.                                        18 The Web site containing this information will      execution prices and quotes to member firms and
                                                   16 The free Web site will be www.nextshares.com.     be www.nextshares.com, which will be available          providers of market data services in the
                                                   17 Aspects of NAV-Based Trading are protected        directly and through a link from                        ‘‘NAV¥$0.01/NAV+$0.01’’ (or similar) display
sradovich on DSK3GMQ082PROD with NOTICES




                                                intellectual property subject to issued and pending     www.brandesfunds.com.                                   format, and otherwise seek to ensure that
                                                U.S. patents held by NextShares Solutions LLC             19 As noted below, all orders to buy or sell Shares   representations of intraday bids, offers and
                                                (‘‘NextShares Solutions’’), a wholly owned              that are not executed on the day the order is           execution prices for Shares that are made available
                                                subsidiary of Eaton Vance Corp. Nasdaq has entered      submitted will be automatically cancelled as of the     to the investing public follow the same display
                                                into a license agreement with NextShares Solutions      close of trading on such day. Prior to the              format.
                                                to allow for NAV- Based Trading on the Exchange         commencement of trading in the Fund, the                   21 All orders to buy or sell Shares that are not

                                                of exchange-traded managed funds that have              Exchange will inform its members in an                  executed on the day the order is submitted will be
                                                themselves entered into license agreements with         Information Circular of the effect of this              automatically cancelled as of the close of trading on
                                                NextShares Solutions.                                   characteristic on existing order types.                 such day.



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                                                                            Federal Register / Vol. 82, No. 232 / Tuesday, December 5, 2017 / Notices                                                     57513

                                                information to include final pricing.22                 contemporaneous with execution. Once                  Shares that the IIV will be calculated on
                                                After the pricing is finalized, Nasdaq                  the Fund’s daily NAV has been                         an intraday basis and provided to
                                                will deliver the Share trading data to                  calculated and disseminated, Nasdaq                   Nasdaq for dissemination via the
                                                NSCC for clearance and settlement,                      will price each Share trade entered into              Nasdaq Global Index Service (‘‘GIDS’’).
                                                following the same processes used for                   during the day at the Fund’s NAV plus/                  The IIV will be based on current
                                                the clearance and settlement of trades in               minus the trade’s executed premium/                   information regarding the value of the
                                                other exchange-traded securities.                       discount. Using the final trade price,                securities and other assets held by the
                                                                                                        each executed Share trade will then be                Fund.28 The purpose of the IIVs is to
                                                Availability of Information
                                                                                                        disseminated to member firms and                      enable investors to estimate the next-
                                                   Prior to the commencement of market                  market data services via an FTP file to               determined NAV so they can determine
                                                trading in Shares, the Fund will be                     be created for exchange-traded managed                the number of Shares to buy or sell if
                                                required to establish and maintain a                    funds and confirmed to the member                     they want to transact in an approximate
                                                public Web site through which its                       firms participating in the trade to                   dollar amount (e.g., if an investor wants
                                                current prospectus may be                               supplement the previously provided                    to acquire approximately $5,000 of the
                                                downloaded.23 The Web site will                         information to include final pricing.                 Fund, how many Shares should the
                                                include directly or through a link                         Information regarding NAV-based                    investor buy?).29
                                                additional Fund information updated on                  trading prices, best bids and offers for                The Adviser is not a registered broker-
                                                a daily basis, including the prior                      Shares, and volume of Shares traded                   dealer, or affiliated with a broker-dealer.
                                                business day’s NAV, and the following                   will be continuously available on a real-             In addition, personnel who make
                                                trading information for such business                   time basis throughout each trading day                decisions on the Fund’s portfolio
                                                day expressed as premiums/discounts to                  on brokers’ computer screens and other                composition must be subject to
                                                NAV: (a) Intraday high, low, average                    electronic services.                                  procedures designed to prevent the use
                                                and closing prices of Shares in                                                                               and dissemination of material, non-
                                                Exchange trading; (b) the midpoint of                   Initial and Continued Listing
                                                                                                                                                              public information regarding the open-
                                                the highest bid and lowest offer prices                    Shares will conform to the initial and             end fund’s portfolio.
                                                as of the close of Exchange trading,                    continued listing criteria as set forth                 In the event that (a) the Adviser
                                                expressed as a premium/discount to                      under Nasdaq Rule 5745. A minimum of                  registers as a broker-dealer or becomes
                                                NAV (the ‘‘Closing Bid/Ask Midpoint’’);                 50,000 Shares and no less than two                    newly affiliated with a broker-dealer, or
                                                and (c) the spread between highest bid                  Creation Units of the Fund will be                    (b) any new adviser or sub-adviser to the
                                                and lowest offer prices as of the close of              outstanding at the commencement of                    Fund is a registered broker-dealer or
                                                Exchange trading (the ‘‘Closing Bid/Ask                 trading on the Exchange. The Exchange                 becomes affiliated with a broker-dealer,
                                                Spread.’’).24 The Web site will also                    will obtain a representation from the                 such new adviser or sub-adviser will
                                                contain charts showing the frequency                    issuer of the Shares that the NAV per                 implement and will maintain a fire wall
                                                distribution and range of values of                     Share will be calculated daily (on each               with respect to its relevant personnel
                                                trading prices, Closing Bid/Ask                         day the New York Stock Exchange is                    and/or such broker-dealer affiliate, if
                                                Midpoints and Closing Bid/Ask Spreads                   open for trading) and provided to                     applicable, regarding access to
                                                over time.                                              Nasdaq via the Mutual Fund Quotation                  information concerning the composition
                                                   The Composition File will be                         Service (’’MFQS’’) by the fund                        and/or changes to the Fund’s portfolio
                                                disseminated through the NSCC before                    accounting agent. As soon as the NAV                  and will be subject to procedures
                                                the open of trading in Shares on each                   is entered into MFQS, Nasdaq will                     designed to prevent the use and
                                                business day and also will be made                      disseminate the value to market                       dissemination of material non-public
                                                available to the public each day on a                   participants and market data vendors                  information regarding such portfolio.
                                                free Web site as noted above.25                         via the Mutual Fund Dissemination
                                                Consistent with the disclosure                          Service (‘‘MFDS’’) so all firms will                  Trading Halts
                                                requirements that apply to traditional                  receive the NAV per Share at the same                   The Exchange may consider all
                                                open-end investment companies, a                        time. The Reporting Authority 26 also                 relevant factors in exercising its
                                                complete list of current Fund portfolio                 will ensure that the Composition File                 discretion to halt or suspend trading in
                                                positions will be made available at least               will implement and maintain, or be                    Shares. Nasdaq will halt trading in
                                                once each calendar quarter, with a                      subject to, procedures designed to                    Shares under the conditions specified in
                                                reporting lag of not more than 60 days.                 prevent the use and dissemination of                  Nasdaq Rules 4120 and in Nasdaq Rule
                                                The Fund may provide more frequent                      material non-public information                       5745(d)(2)(C). Additionally, Nasdaq may
                                                disclosures of portfolio positions at its               regarding the Fund’s portfolio positions              cease trading Shares if other unusual
                                                discretion.                                             and changes in the positions.                         conditions or circumstances exist
                                                   Reports of Share transactions will be                   An estimated value of an individual
                                                disseminated to the market and                          Share, defined in Nasdaq Rule                            28 IIVs disseminated throughout each trading day

                                                delivered to the member firms                           5745(c)(2) as the ‘‘Intraday Indicative               would be based on the same portfolio as used to
                                                participating in the trade                              Value,’’ will be calculated and                       calculate that day’s NAV. The Fund will reflect
                                                                                                                                                              purchases and sales of portfolio positions in its
                                                                                                        disseminated at intervals of not more                 NAV the next business day after trades are
                                                   22 File Transfer Protocol (‘‘FTP’’) is a standard
                                                                                                        than 15 minutes throughout the Regular                executed.
                                                network protocol used to transfer computer files on     Market Session 27 when Shares trade on                   29 Because, in NAV-Based Trading, prices of
                                                the Internet. Nasdaq will arrange for the daily                                                               executed trades are not determined until the
                                                dissemination of an FTP file with executed Share        the Exchange. The Exchange will obtain
                                                                                                                                                              reference NAV is calculated, buyers and sellers of
sradovich on DSK3GMQ082PROD with NOTICES




                                                trades to member firms and market data services.        a representation from the issuer of the               Shares during the trading day will not know the
                                                   23 The Web site containing this information will
                                                                                                                                                              final value of their purchases and sales until the
                                                be www.brandesfunds.com.                                  26 See Nasdaq Rule 5745(c)(4).                      end of the trading day. The Fund’s Registration
                                                   24 The Web site containing the Fund’s NAV will         27 See Nasdaq Rule 4120(b)(4) (describing the       Statement, Web site and any advertising or
                                                be www.brandesfunds.com. All other information          three trading sessions on the Exchange: (1) Pre-      marketing materials will include prominent
                                                listed will be made available on                        Market Session from 4 a.m. to 9:30 a.m. ET; (2)       disclosure of this fact. Although IIVs may provide
                                                www.nextshares.com, which can be accessed               Regular Market Session from 9:30 a.m. to 4 p.m. or    useful estimates of the value of intraday trades, they
                                                directly and via a link on www.brandesfunds.com.        4:15 p.m. ET; and (3) Post-Market Session from 4      cannot be used to calculate with precision the
                                                   25 Id.                                               p.m. or 4:15 p.m. to 8 p.m. ET).                      dollar value of the Shares to be bought or sold.



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                                                57514                       Federal Register / Vol. 82, No. 232 / Tuesday, December 5, 2017 / Notices

                                                which, in the opinion of Nasdaq, make                   appropriate, to review the behavior of                   As noted above, all orders to buy or
                                                further dealings on Nasdaq detrimental                  all relevant parties for all relevant                 sell Shares that are not executed on the
                                                to the maintenance of a fair and orderly                trading violations.                                   day the order is submitted will be
                                                market. To manage the risk of a non-                       FINRA, on behalf of the Exchange,                  automatically cancelled as of the close
                                                regulatory Share trading halt, Nasdaq                   will communicate as needed with other                 of trading on such day. The Information
                                                has in place back-up processes and                      markets and other entities that are                   Circular will discuss the effect of this
                                                procedures to ensure orderly trading.                   members of the Intermarket                            characteristic on existing order types.
                                                   Because, in NAV-Based Trading, all                   Surveillance Group (‘‘ISG’’) 33 regarding             The Information Circular also will
                                                trade execution prices are linked to end-               trading in Shares, and in exchange-                   identify the specific Nasdaq data feeds
                                                of-day NAV, buyers and sellers of                       traded securities and instruments held                from which intraday Share prices in
                                                Shares should be less exposed to risk of                by the Fund (to the extent such                       proxy price format may be obtained.
                                                loss due to intraday trading halts than                 exchange-traded securities and                           In addition, the Information Circular
                                                buyers and sellers of conventional                      instruments are known through the                     will advise members, prior to the
                                                exchange-traded funds (‘‘ETFs’’) and                    publication of the Composition File and               commencement of trading, of the
                                                other exchange-traded securities.                       periodic public disclosures of the                    prospectus delivery requirements
                                                   Every order to trade Shares of the                   Fund’s portfolio holdings), and FINRA                 applicable to the Fund. Members
                                                Fund is subject to the proxy price                      may obtain trading information                        purchasing Shares from the Fund for
                                                protection threshold of plus/minus                      regarding such trading from other                     resale to investors will deliver a
                                                $1.00, which determines the lower and                   markets and other entities. In addition,              summary prospectus to such investors.
                                                upper threshold for the life of the order               the Exchange may obtain information                   The Information Circular will also
                                                and whereby the order will be cancelled                 regarding trading in Shares, and in                   discuss any exemptive, no-action and
                                                at any point if it exceeds $101.00 or falls             exchange-traded securities and                        interpretive relief granted by the
                                                below $99.00, the established                           instruments held by the Fund (to the                  Commission from any rules under the
                                                thresholds.30 With certain exceptions,                  extent such exchange-traded securities                Act.
                                                each order also must contain the                                                                                 The Information Circular also will
                                                                                                        and instruments are known through the
                                                applicable order attributes, including                                                                        reference that the Fund is subject to
                                                                                                        publication of the Composition File and
                                                routing instructions and time-in-force                                                                        various fees and expenses described in
                                                                                                        periodic public disclosures of the
                                                information, as described in Nasdaq                                                                           the Registration Statement. The
                                                                                                        Fund’s portfolio holdings), from markets
                                                Rule 4703.31                                                                                                  Information Circular will also disclose
                                                                                                        and other entities that are members of
                                                                                                                                                              the trading hours of the Shares and the
                                                Trading Rules                                           ISG, which includes securities and
                                                                                                                                                              applicable NAV calculation time for the
                                                                                                        futures exchanges, or with which the
                                                  Nasdaq deems Shares to be equity                                                                            Shares. The Information Circular will
                                                                                                        Exchange has in place a comprehensive
                                                securities, thus rendering trading in                                                                         disclose that information about the
                                                                                                        surveillance sharing agreement.
                                                Shares subject to Nasdaq’s existing rules                                                                     Shares will be publicly available on the
                                                governing the trading of equity                            In addition, the Exchange also has a               Fund’s Web site.34
                                                securities. Nasdaq will allow trading in                general policy prohibiting the                          Information regarding Fund trading
                                                Shares from 9:30 a.m. until 4:00 p.m.                   distribution of material non-public                   protocols will be disseminated to
                                                Eastern Time.                                           information by its employees.                         Nasdaq members in accordance with
                                                                                                        Information Circular                                  current processes for newly listed
                                                Surveillance                                                                                                  products. Nasdaq intends to provide its
                                                   The Exchange represents that trading                    Prior to the commencement of trading               members with a detailed explanation of
                                                in Shares will be subject to the existing               in the Fund, the Exchange will inform                 NAV-Based Trading through a Trading
                                                trading surveillances, administered by                  its members in an Information Circular                Alert issued prior to the commencement
                                                both Nasdaq and the Financial Industry                  of the special characteristics and risks              of trading in Shares on the Exchange.
                                                Regulatory Authority, Inc. (‘‘FINRA’’) on               associated with trading the Shares.
                                                behalf of the Exchange, which are                       Specifically, the Information Circular                Continued Listing Representations
                                                designed to detect violations of                        will discuss the following: (1) The                      All statements and representations
                                                Exchange rules and applicable federal                   procedures for purchases and                          made in this filing regarding (a) the
                                                securities laws.32 The Exchange                         redemptions of Shares in Creation Units               description of the portfolio or reference
                                                represents that these procedures are                    (and noting that Shares are not                       assets, (b) limitations on portfolio
                                                adequate to properly monitor trading of                 individually redeemable); (2) Nasdaq                  holdings or reference assets, (c)
                                                Shares on the Exchange and to deter and                 Rule 2111A, which imposes suitability                 dissemination and availability of the
                                                detect violations of Exchange rules and                 obligations on Nasdaq members with                    reference asset or intraday indicative
                                                applicable federal securities laws.                     respect to recommending transactions in               values, or (d) the applicability of
                                                   The surveillances referred to above                  Shares to customers; (3) how                          Exchange listing rules shall constitute
                                                generally focus on detecting securities                 information regarding the IIV and                     continued listing requirements for
                                                trading outside their normal patterns,                  Composition File is disseminated; (4)                 listing the Shares on the Exchange. In
                                                which could be indicative of                            the requirement that members deliver a                addition, the issuer has represented to
                                                manipulative or other violative activity.               prospectus to investors purchasing                    the Exchange that it will advise the
                                                When such situations are detected,                      Shares prior to or concurrently with the              Exchange of any failure by the Fund to
                                                surveillance analysis follows and                       confirmation of a transaction; and (5)                comply with the continued listing
                                                                                                        information regarding NAV-Based
sradovich on DSK3GMQ082PROD with NOTICES




                                                investigations are opened, where                                                                              requirements, and, pursuant to its
                                                                                                        Trading protocols.                                    obligations under Section 19(g)(1) of the
                                                  30 SeeNasdaq Rule 5745(h).                                                                                  Act, the Exchange will monitor for
                                                  31 SeeNasdaq Rule 5745(b)(6)                            33 For a list of the current members of ISG, see
                                                                                                                                                              compliance with the continued listing
                                                  32 FINRA provides surveillance of trading on the      www.isgportal.org. The Exchange notes that not all    requirements. If the Fund is not in
                                                Exchange pursuant to a regulatory services              components of the Fund’s portfolio may trade on
                                                agreement. The Exchange is responsible for              markets that are members of ISG or with which the     compliance with the applicable listing
                                                FINRA’s performance under this regulatory services      Exchange has in place a comprehensive
                                                agreement.                                              surveillance sharing agreement.                         34 See   supra footnote 24.



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                                                                             Federal Register / Vol. 82, No. 232 / Tuesday, December 5, 2017 / Notices                                            57515

                                                requirements, the Exchange will                          of trade and to protect investors and the              confirmation with final pricing to the
                                                commence delisting procedures under                      public interest. The Exchange will                     transacting parties. At the end of the
                                                the Nasdaq 5800 Series.                                  obtain a representation from the issuer                day, Nasdaq will also post a newly
                                                                                                         of Shares that the NAV per Share will                  created FTP file with the final
                                                2. Statutory Basis
                                                                                                         be calculated on each business day that                transaction data for the trading and
                                                   The Exchange believes that its                        the New York Stock Exchange is open                    market data services. The Exchange
                                                proposal is consistent with Section 6(b)                 for trading and that the NAV will be                   expects that information regarding
                                                of the Act,35 in general, and furthers the               made available to all market                           NAV-based trading prices and volumes
                                                objectives of Section 6(b)(5) of the Act,36              participants at the same time. In                      of Shares traded will be continuously
                                                in particular, in that it is designed to                 addition, a large amount of information                available on a real-time basis throughout
                                                prevent fraudulent and manipulative                      would be publicly available regarding                  each trading day on brokers’ computer
                                                acts and practices, to promote just and                  the Fund and the Shares, thereby                       screens and other electronic services.
                                                equitable principles of trade, to foster                 promoting market transparency.                         Because Shares will trade at prices
                                                cooperation and coordination with                           Prior to the commencement of market                 based on the next-determined NAV,
                                                persons engaged in facilitating                          trading in Shares, the Fund will be                    investors will be able to buy and sell
                                                transactions in securities, and to remove                required to establish and maintain a                   individual Shares at a known premium
                                                impediments to and perfect the                           public Web site through which its                      or discount to NAV that they can limit
                                                mechanism of a free and open market                      current prospectus may be                              by transacting using limit orders at the
                                                and a national market system.                            downloaded.37 The Web site will                        time of order entry. Trading in Shares
                                                   The Exchange believes that the                        display additional Fund information                    will be subject to Nasdaq Rules
                                                proposed rule change is designed to                      updated on a daily basis, including the                5745(d)(2)(B) and (C), which provide for
                                                prevent fraudulent and manipulative                      prior business day’s NAV, and the                      the suspension of trading or trading
                                                acts and practices in that the Shares                    following trading information for such                 halts under certain circumstances,
                                                would be listed and traded on the                        business day expressed as premiums/                    including if, in the view of the
                                                Exchange pursuant to the initial and                     discounts to NAV: (a) Intraday high,                   Exchange, trading in Shares becomes
                                                continued listing criteria in Nasdaq Rule                low, average and closing prices of                     inadvisable.
                                                5745. The Exchange believes that its                     Shares in Exchange trading; (b) the                       The proposed rule change is designed
                                                surveillance procedures are adequate to                  Closing Bid/Ask Midpoint; and (c) the                  to perfect the mechanism of a free and
                                                properly monitor the trading of Shares                   Closing Bid/Ask Spread.38 The Web site                 open market and, in general, to protect
                                                on Nasdaq and to deter and detect                        will also contain charts showing the
                                                                                                                                                                investors and the public interest in that
                                                violations of Exchange rules and the                     frequency distribution and range of
                                                                                                                                                                it will facilitate the listing and trading
                                                applicable federal securities laws. The                  values of trading prices, Closing Bid/
                                                                                                                                                                of the Fund, which seeks to provide
                                                Adviser is not a registered broker-dealer,               Ask Midpoints and Closing Bid/Ask
                                                                                                                                                                investors with access to an actively
                                                and is not affiliated with a broker-                     Spreads over time.
                                                                                                            The Composition File will be                        managed investment strategy in a
                                                dealer. In addition, personnel who make
                                                                                                         disseminated through the NSCC before                   structure that offers the cost and tax
                                                decisions on the Fund’s portfolio
                                                                                                         the open of trading in Shares on each                  efficiencies and shareholder protections
                                                composition must be subject to
                                                                                                         business day and also will be made                     of ETFs, while removing the
                                                procedures designed to prevent the use
                                                                                                         available to the public each day on a                  requirement for daily portfolio holdings
                                                and dissemination of material, non-
                                                                                                         free Web site.39 The Exchange will                     disclosure to ensure a tight relationship
                                                public information regarding the open-
                                                                                                         obtain a representation from the issuer                between market trading prices and
                                                end fund’s portfolio.
                                                   In the event that (a) the Adviser                     of the Shares that the IIV will be                     NAV.
                                                registers as a broker-dealer or becomes                  calculated and disseminated on an                         For the above reasons, Nasdaq
                                                newly affiliated with a broker-dealer, or                intraday basis at intervals of not more                believes the proposed rule change is
                                                (b) any new adviser or sub-adviser to the                than 15 minutes during trading on the                  consistent with the requirements of
                                                Fund is a registered broker-dealer or                    Exchange and provided to Nasdaq for                    Section 6(b)(5) of the Act.
                                                becomes affiliated with a broker-dealer,                 dissemination via GIDS. A complete list                B. Self-Regulatory Organization’s
                                                such new adviser or sub-adviser will                     of current portfolio positions for the                 Statement on Burden on Competition
                                                implement and will maintain a fire wall                  Fund will be made available at least
                                                with respect to its relevant personnel                   once each calendar quarter, with a                        The Exchange does not believe that
                                                and/or such broker-dealer affiliate, if                  reporting lag of not more than 60 days.                the proposed rule change will result in
                                                applicable, regarding access to                          The Fund may provide more frequent                     any burden on competition that is not
                                                information concerning the composition                   disclosures of portfolio positions at its              necessary or appropriate in furtherance
                                                and/or changes to the Fund’s portfolio                   discretion.                                            of the purposes of the Act. In fact, the
                                                and will be subject to procedures                           Transactions in Shares will be                      Exchange believes that the introduction
                                                designed to prevent the use and                          reported to the Consolidated Tape at the               of the Fund would promote competition
                                                dissemination of material non-public                     time of execution in proxy price format                by making available to investors an
                                                information regarding such portfolio.                    and will be disseminated to member                     actively managed investment strategy in
                                                   The Exchange may obtain information                   firms and market data services through                 a structure that offers the cost and tax
                                                via ISG from other exchanges that are                    Nasdaq’s trading service and market                    efficiencies and shareholder protections
                                                members of ISG or with which the                         data interfaces, as defined above. Once                of ETFs, while removing the
                                                                                                                                                                requirement for daily portfolio holdings
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                                                Exchange has entered into a                              the Fund’s daily NAV has been
                                                comprehensive surveillance sharing                       calculated and the final price of its                  disclosure to ensure a tight relationship
                                                agreement, to the extent necessary.                      intraday Share trades has been                         between market trading prices and
                                                   The proposed rule change is designed                  determined, Nasdaq will deliver a                      NAV. Moreover, the Exchange believes
                                                to promote just and equitable principles                                                                        that the proposed method of Share
                                                                                                           37 See supra footnote 23.                            trading would provide investors with
                                                  35 15 U.S.C. 78f(b).                                     38 See supra footnote 24                             transparency of trading costs, and the
                                                  36 15 U.S.C. 78f(b)(5).                                  39 See supra footnote 13.                            ability to control trading costs using


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                                                57516                       Federal Register / Vol. 82, No. 232 / Tuesday, December 5, 2017 / Notices

                                                limit orders, that is not available for                 Commission and any person, other than                 (‘‘Rulebook’’) as part of its initiative to
                                                conventionally traded ETFs.                             those that may be withheld from the                   structure its Rulebook.
                                                  These developments could                              public in accordance with the                            The text of the proposed rule
                                                significantly enhance competition to the                provisions of 5 U.S.C. 552, will be                   change is available on the Exchange’s
                                                benefit of the markets and investors.                   available for Web site viewing and                    Web site at http://nasdaqgemx.
                                                                                                        printing in the Commission’s Public                   cchwallstreet.com/, at the principal
                                                C. Self-Regulatory Organization’s                                                                             office of the Exchange, and at the
                                                                                                        Reference Room, 100 F Street NE.,
                                                Statement on Comments on the                                                                                  Commission’s Public Reference Room.
                                                                                                        Washington, DC 20549, on official
                                                Proposed Rule Change Received From
                                                                                                        business days between the hours of                    II. Self-Regulatory Organization’s
                                                Members, Participants, or Others
                                                                                                        10:00 a.m. and 3:00 p.m. Copies of the                Statement of the Purpose of, and
                                                  No written comments were either                       filing also will be available for
                                                solicited or received.                                                                                        Statutory Basis for, the Proposed Rule
                                                                                                        inspection and copying at the principal               Change
                                                III. Date of Effectiveness of the                       office of the Exchange. All comments
                                                                                                        received will be posted without change.                  In its filing with the Commission, the
                                                Proposed Rule Change and Timing for                                                                           Exchange included statements
                                                Commission Action                                       Persons submitting comments are
                                                                                                        cautioned that we do not redact or edit               concerning the purpose of and basis for
                                                   Within 45 days of the date of                        personal identifying information from                 the proposed rule change and discussed
                                                publication of this notice in the Federal               comment submissions. You should                       any comments it received on the
                                                Register or within such longer period                   submit only information that you wish                 proposed rule change. The text of these
                                                up to 90 days (i) as the Commission may                 to make available publicly. All                       statements may be examined at the
                                                designate if it finds such longer period                submissions should refer to File                      places specified in Item IV below. The
                                                to be appropriate and publishes its                     Number SR–NASDAQ–2017–124 and                         Exchange has prepared summaries, set
                                                reasons for so finding or (ii) as to which              should be submitted on or before                      forth in sections A, B, and C below, of
                                                the Exchange consents, the Commission                   December 26, 2017.                                    the most significant aspects of such
                                                shall: (a) By order approve or                                                                                statements.
                                                                                                          For the Commission, by the Division of
                                                disapprove such proposed rule change,                   Trading and Markets, pursuant to delegated            A. Self-Regulatory Organization’s
                                                or (b) institute proceedings to determine               authority.40                                          Statement of the Purpose of, and
                                                whether the proposed rule change                        Eduardo A. Aleman,                                    Statutory Basis for, the Proposed Rule
                                                should be disapproved.                                  Assistant Secretary.                                  Change
                                                IV. Solicitation of Comments                            [FR Doc. 2017–26121 Filed 12–4–17; 8:45 am]
                                                                                                                                                              1. Purpose
                                                  Interested persons are invited to                     BILLING CODE 8011–01–P
                                                                                                                                                                 On March 9, 2016, Nasdaq, Inc.
                                                submit written data, views, and
                                                                                                                                                              acquired the capital stock of U.S.
                                                arguments concerning the foregoing,
                                                                                                        SECURITIES AND EXCHANGE                               Exchange Holdings, thereby indirectly
                                                including whether the proposed rule
                                                                                                        COMMISSION                                            acquiring all of the interests of the
                                                change is consistent with the Act.
                                                                                                                                                              International Securities Exchange, LLC
                                                Comments may be submitted by any of                     [Release No. 34–82171; File No. SR–GEMX–
                                                                                                        2017–54]                                              (now Nasdaq ISE, LLC), ISE Gemini,
                                                the following methods:
                                                                                                                                                              LLC (now GEMX) and ISE Mercury, LLC
                                                Electronic Comments                                     Self-Regulatory Organizations; Nasdaq                 (now Nasdaq MRX, LLC)(‘‘MRX’’).3 The
                                                  • Use the Commission’s Internet                       GEMX, LLC; Notice of Filing and                       acquisition resulted in a total of six self-
                                                comment form (http://www.sec.gov/                       Immediate Effectiveness of Proposed                   regulatory organization licenses for
                                                rules/sro.shtml); or                                    Rule Change To Adopt a Shell                          Nasdaq, Inc. which, in addition to the
                                                  • Send an email to rule-comments@                     Structure for the GEMX Rulebook                       three aforementioned exchanges, also
                                                sec.gov. Please include File Number SR–                                                                       include The Nasdaq Stock Market LLC
                                                                                                        November 29, 2017.                                    (‘‘Nasdaq’’), Nasdaq PHLX LLC (‘‘Phlx’’)
                                                NASDAQ–2017–124 on the subject line.                       Pursuant to Section 19(b)(1) of the                and Nasdaq BX, Inc. (‘‘BX’’)
                                                Paper Comments                                          Securities Exchange Act of 1934                       (collectively, ‘‘Nasdaq Entities’’).
                                                   • Send paper comments in triplicate                  (‘‘Act’’),1 and Rule 19b–4 thereunder,2                  The Exchange is planning to conform
                                                to Secretary, Securities and Exchange                   notice is hereby given that on November               the chapters of the various Nasdaq
                                                Commission, 100 F Street NE.,                           17, 2017, Nasdaq GEMX, LLC (‘‘GEMX’’                  Entity rulebooks for efficiency, and
                                                Washington, DC 20549–1090.                              or ‘‘Exchange’’) filed with the Securities            conformity of certain Nasdaq Entity
                                                                                                        and Exchange Commission                               processes. The Exchange believes that
                                                All submissions should refer to File
                                                                                                        (‘‘Commission’’) the proposed rule                    aligning the rules of the Nasdaq Entities
                                                Number SR–NASDAQ–2017–124. This
                                                                                                        change as described in Items I and II                 will assist market participants in
                                                file number should be included on the
                                                                                                        below, which Items have been prepared                 navigating the various rulebooks.
                                                subject line if email is used. To help the
                                                                                                        by the Exchange. The Commission is                    Specifically, the Exchange proposes to
                                                Commission process and review your
                                                                                                        publishing this notice to solicit                     add a shell structure which would
                                                comments more efficiently, please use
                                                                                                        comments on the proposed rule change                  reside alongside the current rulebook.
                                                only one method. The Commission will
                                                                                                        from interested persons.                              The proposed shell would outline the
                                                post all comments on the Commission’s
                                                Internet Web site (http://www.sec.gov/                  I. Self-Regulatory Organization’s                     various chapters of the future rulebook
                                                rules/sro.shtml). Copies of the                         Statement of the Terms of the Substance
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                                                                                                                                                                 3 See Securities Exchange Act Release No. 78119
                                                submission, all subsequent                              of the Proposed Rule Change
                                                                                                                                                              (June 21, 2016), 81 FR 41611 (June 27, 2016) (SR–
                                                amendments, all written statements                         The Exchange proposes to adopt a                   ISE–2016–11; SR–ISE Gemini–2016–05; SR–ISE
                                                with respect to the proposed rule                       shell structure for the GEMX rulebook                 Mercury–2016–10) (Order Granting Accelerated
                                                change that are filed with the                                                                                Approval of Proposed Rule Changes, Each as
                                                                                                                                                              Modified by Amendment No. 1 Thereto, Relating to
                                                Commission, and all written                               40 17 CFR 200.30–3(a)(12).                          a Corporate Transaction in Which Nasdaq, Inc. Will
                                                communications relating to the                            1 15 U.S.C. 78s(b)(1).                              Become the Indirect Parent of ISE, ISE Gemini, and
                                                proposed rule change between the                          2 17 CFR 240.19b–4.                                 ISE Mercury).



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Document Created: 2017-12-04 23:45:24
Document Modified: 2017-12-04 23:45:24
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 57510 

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