83 FR 12218 - Self-Regulatory Organizations; CboeBZX Exchange, Inc.; Order Granting Approval of a Proposed Rule Change To List and Trade the Common Shares of Beneficial Interest of the PowerShares Income Builder Portfolio, a Series of PowerShares Exchange-Traded Fund Trust II

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 54 (March 20, 2018)

Page Range		12218-12221
FR Document		2018-05562

Federal Register, Volume 83 Issue 54 (Tuesday, March 20, 2018)

[Federal Register Volume 83, Number 54 (Tuesday, March 20, 2018)]
[Notices]
[Pages 12218-12221]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-05562]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82872; File No. SR-CboeBZX-2017-011]

Self-Regulatory Organizations; CboeBZX Exchange, Inc.; Order
Granting Approval of a Proposed Rule Change To List and Trade the
Common Shares of Beneficial Interest of the PowerShares Income Builder
Portfolio, a Series of PowerShares Exchange-Traded Fund Trust II

March 14, 2018.

I. Introduction

On December 1, 2017, CboeBZX Exchange, Inc. (``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade the common shares of beneficial
interest of the PowerShares Income Builder Portfolio (``Fund''), a
series of PowerShares Exchange-Traded Fund Trust II (``Trust''), under
BZX Rule 14.11(c)(3). The proposed rule change was published for
comment in the Federal Register on December 20, 2017.\3\ On January 22,
2018, pursuant to Section 19(b)(2) of the Act,\4\ the Commission
designated a longer period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to disapprove the proposed rule change.\5\ On
March 6, 2018, the Exchange filed Amendment No. 1 to the proposed rule
change.\6\ The Commission has received no comments on the proposal. The
Commission is approving the proposed rule change, as modified by
Amendment No. 1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 82328 (Dec. 14,
2017), 82 FR 60443 (Dec. 20, 2017).
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 82559 (Jan. 22,
2018), 83 FR 3820 (Jan. 26, 2018).
\6\ In Amendment No. 1, which amended and replaced the proposed
rule change in its entirety, the Exchange: (1) Corrected certain
references to its rules; (2) supplemented information regarding
requirements applicable to investment advisers, including
information with respect to firewalls and procedures designed to
prevent the use and dissemination of material, nonpublic information
regarding the Fund's portfolio; (3) corrected the definition and
usage of certain defined terms; (4) clarified that the Fund will not
be a leveraged or inverse-leveraged fund and will not use derivative
instruments to enhance leverage; (5) conformed its representations
regarding the calculation and dissemination of the Underlying Index
(as defined herein) and information relating to trading halts in
accordance with applicable BZX rules; (6) supplemented information
regarding pricing availability with respect to holdings in non-
exchange-listed securities of other investment companies; and (7)
made other technical, non-substantive, and conforming changes.
Because Amendment No. 1 does not materially alter the substance of
the proposed rule change or raise unique or novel regulatory issues,
it is not subject to notice and comment. Amendment No. 1 is
available at: https://www.sec.gov/comments/sr-cboebzx-2017-011/cboebzx2017011-3206088-162013.pdf.
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II. Exchange's Description of the Proposal \7\
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\7\ A more detailed description of the Trust, the Fund, and the
Shares, as well as information regarding the methodology of the
Underlying Index (as defined herein), the Fund's portfolio holdings,
and the Fund's investment restrictions are included in Amendment No.
1 to the proposed rule change and Registration Statement (as defined
herein). See Amendment No. 1, supra note 6; Registration Statement,
infra note 8 and accompanying text.
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The Exchange proposes to list and trade the Shares under BZX Rule
14.11(c)(5), which governs the listing and trading of Index Fund Shares
based on equity and fixed income securities. The Fund will be a
passively managed, index-based exchange-traded fund (``ETF''), and it
is a series of the Trust. The Trust is registered with the Commission
as an open-end management investment company and has filed a post-
effective amendment to its registration statement on Form N-1A
(``Registration Statement'') with the Commission.\8\ Invesco
PowerShares Capital Management LLC will be the investment adviser
(``Adviser''), and Invesco Advisers, Inc. will be the investment sub-
adviser (``Sub-Adviser''), to the Fund. The Adviser and the Sub-Adviser
are affiliated with a broker-dealer and have implemented, and will
maintain, a fire wall with respect to the broker-dealer affiliate
regarding access to information concerning the composition of, or
changes to, the Fund's portfolio.
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\8\ See Registration Statement on Form N-1A for the Trust, filed
on July 31, 2017 (File Nos. 333-138490 and 811-21977). According to
the Exchange, the Commission has issued an order granting certain
exemptive relief (``Exemptive Order'') with respect to the Trust
under the Investment Company Act of 1940 (``1940 Act''). See
Investment Company Act Release No. 27841 (May 25, 2007) (File No.
812-13335).
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The Fund's investment objective is to seek to track the investment
results (before fees and expenses) of the Goldman Sachs Bond Buyers
Equity Basket Index (``Underlying Index''). The Underlying Index is
designed to measure the performance of a hypothetical portfolio of
common equity stocks with an overlay of fully-collateralized written
put options on those stocks. Solactive AG (``Calculation Agent'')
maintains, calculates, and publishes the value of the Underlying Index
on each business day. The Calculation Agent is not registered as an
investment adviser or broker-dealer and is not affiliated with any
broker-dealers. The Calculation Agent also has implemented and will
maintain procedures designed to prevent the use and dissemination of
material, nonpublic information regarding the Underlying Index as
required under BZX Rule 14.11(c)(5)(A)(iii).
The Exchange states that it has submitted the proposed rule change
because the Underlying Index for the Fund does not meet all of the
listing requirements of BZX Rule 14.11(c)(5), which applies to Index
Fund Shares based on an index that consists of both equity securities
and fixed income securities. BZX Rule 14.11(c)(5) requires that the
equity and fixed income component securities separately meet the
criteria set forth in BZX Rules 14.11(c)(3) and (4), applicable to
equity and fixed income securities indexes,

[[Page 12219]]

respectively. Specifically, the Fund does not meet all of the listing
requirements of BZX Rule 14.11(c)(5) because the Underlying Index
partially consists of put options, in addition to equity and fixed
income securities.

A. Description of the Underlying Index

The Underlying Index will consist of a mixture of: (1) 100 U.S.
exchange-listed, large capitalization common stocks that have listed
options traded on a U.S. exchange (``Stock Component''); (2) put
options that are sold (``written'') on those same 100 stocks that make
up the Stock Component (``Options Strategy''); and (3) Treasury bills
(``Collateral''), which are intended to collateralize the Options
Strategy. The selection of common stocks for the Stock Component, the
selection of strike prices of the fully-collateralized put options for
the Options Strategy, and the asset allocation between the Stock
Component and Collateral are determined pursuant to the Underlying
Index's methodology.\9\ According to the Exchange, the Underlying Index
is designed to obtain yield from three sources: (1) The dividends and
returns on the common stocks in the Stock Component; (2) the premiums
received from the put options sold via the Options Strategy; \10\ and
(3) the yield from Treasury bills serving as Collateral.\11\
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\9\ A more detailed description of the methodology of the
Underlying Index can be found in Amendment No. 1 to the proposed
rule change and Registration Statement. See supra note 7.
\10\ A put option seller will incur a loss if the put option
expires in-the-money at the expiration date or if the in-the-money
put option is exercised by the option holder and, in each case, the
in-the-money amount is greater than the purchase price of the put
option (``premium'') collected by the put option seller. A put
option seller will recognize a realized gain if the put option
expires ``out of the money'' (i.e., the underlying stock price is
below the put option strike price).
\11\ The amount of the premiums received from selling options
largely involves the level of implied volatility of the underlying
reference security: the measurement of how much the market price of
the underlying reference security historically varied from day to
day over a specific period of time. The higher the implied
volatility, the more likely the underlying reference security will
experience large price changes. Another factor bearing on the put
option premium is the time value of the options. The more time that
remains until the expiration date of the option, the greater the
amount of time that an option trade has to become profitable due to
a favorable move in the underlying reference security. As a result,
investors are willing to pay a higher premium for more time until
the expiration date of an option (and conversely, as the expiration
date of an option approaches, the market price of the option
decreases, and down to zero if the option remains out-of-the-money
on the expiration date of the option).
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The Options Strategy writes or sells put options on the 100 stocks
included in the Stock Component. Those put options are standardized
options listed and traded on U.S. exchanges and will have terms of at
least six but no more than eighteen months as of each quarterly
rebalance date. The strike price for each put option will be selected,
in accordance with the Underlying Index's methodology, at an amount
that will generate a premium that (when annualized) is as close as
possible to the expected return of the underlying stock. The put
options related to the Options Strategy will have expirations between
six and eighteen months. All put options in the Underlying Index are
fully collateralized with Treasury bills in an amount equal to the
outstanding notional value of the put options. The Collateral may also
include the premiums collected on the put options.
The Underlying Index is rebalanced quarterly in March, June,
September, and December, typically on the Friday before the third
Saturday of the month (``rebalance date''). The 100 common stocks to be
included in the Stock Component are made available one week prior to
the rebalance date. The put option strike prices and weights of the
Underlying Index's components will be made available prior to the end
of the business day on the rebalance date.

B. Description of the Fund

Under normal market conditions,\12\ the Fund will seek to achieve
its investment objective by generally investing at least 90% of its
total assets in the components of the Underlying Index.\13\ The Fund
will use an ``indexing'' investment approach to seek to achieve its
investment objective. The Adviser will seek a correlation over time of
0.95 or better between the Fund's performance and the performance of
the Underlying Index (a correlation of 1.00 would represent perfect
correlation).\14\ The Fund generally will employ a ``full replication''
methodology, meaning that generally it will seek to invest in all of
the components of the Underlying Index (i.e., all of the stocks in the
Stock Component, the Options Strategy, and the Collateral for the put
options) in proportion to their weightings in the Underlying Index.
However, under various circumstances, it may not be possible or
practicable for the Fund to purchase all of the components of the
Underlying Index in the same weightings as the Underlying Index. In
those circumstances, the Fund may purchase a representative sample of
securities in the Underlying Index in pursuing its investment
objective.\15\
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\12\ The term ``normal market conditions'' includes, but is not
limited to, the absence of trading halts in the applicable financial
markets generally; operational issues causing dissemination of
inaccurate market information or system failures; or force majeure
type events such as natural or man-made disaster, act of God, armed
conflict, act of terrorism, riot or labor disruption, or any similar
intervening circumstance.
\13\ The Fund will operate as an index fund and will not be
actively managed. Therefore, the Fund will not adopt temporary
defensive strategies. It will continue to invest at least 90% of its
assets in the components of the Underlying Index, in accordance with
the terms of its Exemptive Order, even during unusual market
conditions, including extreme volatility or trading halts in the
financial markets generally.
\14\ Another means of evaluating the relationship between the
returns of the Fund and the Underlying Index is to assess the
``tracking error'' between the two. Tracking error means the
variation between the Fund's annual return and the return of the
Underlying Index, expressed in terms of standard deviation. The Fund
seeks to have a tracking error of less than 5%, measured on a
monthly basis over a one-year period by taking the standard
deviation of the difference in the Fund's returns versus the
Underlying Index's returns.
\15\ A ``sampling'' methodology means that the Adviser (or Sub-
Adviser) will use a quantitative analysis to select component
securities of the Underlying Index for the Fund's portfolio that are
a representative sample of securities that have, in the aggregate,
investment characteristics similar to the Underlying Index in terms
of key risk factors, performance attributes and other
characteristics. These include industry weightings, market
capitalization, return variability, earnings valuation, yield and
other financial characteristics of securities. When employing a
sampling methodology, the Adviser (or Sub-Adviser) bases the
quantity of holdings in the Fund on a number of factors, including
asset size of the Fund, and generally expects the Fund to hold less
than the total number of securities in the Underlying Index.
However, the Adviser (or Sub-Adviser) reserves the right to invest
the Fund in as many securities as it believes necessary to achieve
the Fund's investment objective.
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After investing at least 90% of its total assets in components of
the Underlying Index, the Fund may invest up to 10% of its total assets
in the following: (i) Exchange-traded U.S. equity securities not
included in the Underlying Index, but which the Adviser or Sub-Adviser
believes will help the Fund to track the Underlying Index; \16\ (ii)
high quality securities issued or guaranteed by the U.S. government (in
addition to Treasury bills) and non-U.S. governments, and each of their
agencies and instrumentalities; (iii) money market instruments,
including repurchase agreements or other funds which invest exclusively
in money market instruments (subject to applicable limitations under
the 1940 Act, or exemptions therefrom); \17\ (iv)

[[Page 12220]]

convertible securities; (v) structured notes;\18\ (vi) securities of
other investment companies (including affiliated and unaffiliated
funds, such as open-end or closed-end management investment companies,
and other ETFs) beyond the limits permitted under the 1940 Act, subject
to certain terms and conditions set forth in a Commission exemptive
order issued to the Trust pursuant to Section 12(d)(1)(J) of the 1940
Act; and (vii) over-the-counter (``OTC'') options.\19\
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\16\ For example, there may be instances in which the Adviser or
Sub-Adviser may choose to purchase or sell securities not in the
Underlying Index which the Adviser or Sub-Adviser believes are
appropriate to substitute for one or more Underlying Index
components in seeking to replicate, before fees and expenses, the
performance of the Underlying Index.
\17\ The Fund may invest in repurchase agreements with
commercial banks, brokers or dealers to generate income from its
excess cash balances and to invest securities lending cash
collateral.
\18\ Structured notes are derivative securities for which the
amount of principal repayment or interest payments is based on the
movement of one or more factors, including but not limited to,
currency exchange rates, interest rates (such as the prime lending
rate or LIBOR), referenced bonds, and stock indices.
\19\ The Fund may use OTC options, together with positions in
cash and money market instruments, to simulate full investment in
the Underlying Index. The Fund will only enter into OTC options with
counterparties that the Adviser or Sub-Adviser reasonably believes
are capable of performing under the contract, and the Fund will post
collateral as required by the counterparty and applicable
regulations. The Adviser or Sub-Adviser will attempt to mitigate the
Fund's respective credit risk by transacting, where possible, with
large, well-capitalized institutions using measures designed to
determine the creditworthiness of the counterparty. The Adviser and
Sub-Adviser will evaluate the creditworthiness of counterparties on
a regular basis. In addition to information provided by credit
agencies, the Adviser and Sub-Adviser will review approved
counterparties using various factors, which may include the
counterparty's reputation, the Adviser's or Sub-Adviser's past
experience with the counterparty, and the price and market actions
of debt of the counterparty. The Fund may also use various
techniques to minimize credit risk, including early termination or
reset and payment, using different counterparties, and limiting the
net amount due from any individual counterparty. However, the risk
of losses to the Fund resulting from counterparty default is still
possible.
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The Fund may hold up to an aggregate amount of 15% of its net
assets (calculated at the time of investment) in assets deemed illiquid
by the Adviser or Sub-Adviser.\20\ The Fund will monitor its portfolio
liquidity on an ongoing basis to determine whether, in light of current
circumstances, an adequate level of liquidity is being maintained, and
will consider taking appropriate steps in order to maintain adequate
liquidity if, through a change in values, net assets, or other
circumstances, more than 15% of the Fund's net assets are held in
illiquid securities or other illiquid assets. The Fund will not be a
leveraged or inverse leveraged fund and will not use derivative
instruments to enhance leverage.\21\
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\20\ In reaching liquidity decisions, the Adviser or Sub-Adviser
may consider the following factors: The frequency of trades and
quotes for the security; the number of dealers wishing to purchase
or sell the security and the number of other potential purchasers;
dealer undertakings to make a market in the security; and the nature
of the security and the nature of the marketplace in which it trades
(e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer).
\21\ The Exchange states that the Fund's investments will be
consistent with the Fund's investment objective. The Fund does not
presently intend to engage in any form of borrowing for investment
purposes, and will not be operated as a ``leveraged ETF'' or
``inverse leveraged ETF,'' i.e., it will not be operated in a manner
designed to seek a multiple or an inverse multiple of the
performance of an underlying reference index.
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III. Discussion and Commission Findings

After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 1, is consistent with the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\22\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act,\23\ which
requires, among other things, that the Exchange's rules be designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and, in general, to protect investors and the public interest.
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\22\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\23\ 15 U.S.C. 78f(b)(5).
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Under the proposal, the Exchange represents that, under normal
market conditions, the Fund will hold a substantial amount (at least
90%) of its net assets in the components of the Underlying Index, which
includes: (1) The Stock Component, consisting of 100 U.S. exchange-
listed, large capitalization common stocks that have listed options
traded on a U.S. exchange; (2) the Options Strategy, consisting of
standardized put options listed and traded on U.S. exchanges and that
are sold on those same 100 stocks that make up the Stock Component; and
(3) Collateral consisting of Treasury bills intended to collateralize
the Options Strategy. According to the Exchange, the Shares will be
listed and traded on the Exchange pursuant to the listing criteria in
BZX Rule 14.11(c)(5) and will therefore comply with all of the
requirements therein, except that the Underlying Index will consist, in
part, of U.S. exchange listed written put options based on U.S.
exchange-listed equity securities.
The Exchange represents that the Stock Component and the Collateral
component will satisfy the applicable listing requirements under BZX
Rule 14.11(c), including BZX Rules 14.11(c)(3) and (4) relating to
equity and fixed income securities index components, respectively. The
Commission notes that, with respect to the Options Strategy, all of the
standardized put options will be listed and traded on U.S. exchanges,
all of which are members of the Intermarket Surveillance Group
(``ISG''). In addition, all of the equity securities included in the
Stock Component will be listed and traded on U.S. exchanges, all of
which are members of ISG. The Commission further notes that, according
to the proposal, the Fund will be subject to the other requirements as
set forth in Exchange rules applicable to Index Fund Shares, including,
but not limited to, requirements relating to the dissemination of key
information such as the Net Asset Value, the Intraday Indicative Value,
rules governing the trading of equity and fixed income securities,
firewalls, trading hours, and trading halts.
Under the proposal, the value of the Underlying Index will be
calculated and widely disseminated at least once every 15 seconds
during Regular Trading Hours \24\ and will be available from major
market data vendors, provided however, that with respect to the fixed
income components of the Underlying Index, the impact on the Underlying
Index will be updated and widely disseminated at least once daily.\25\
Further, an Intraday Indicative Value will be based upon the current
value for the components of the Disclosed Portfolio and will be updated
and widely disseminated by one or more major market data vendors and
broadly displayed at least every 15 seconds during the Exchange's
Regular Trading Hours. The Fund's portfolio holdings will be disclosed
on the Fund's website daily after the close of trading on the Exchange
and prior to the opening of trading on the Exchange the following
day.\26\
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\24\ The Exchange's ``Regular Trading Hours'' are between 9:30
a.m. and 4:00 p.m. Eastern Time. See BZX Rule 1.5(w).
\25\ See BZX Rule 14.11(c)(5)(A)(ii).
\26\ See BZX Rule 14.11(c)(1)(B)(iv).
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Quotation and last-sale information for U.S. exchange-listed
options contracts cleared by The Options Clearing Corporation will be
available via the Options Price Reporting Authority. Intraday, closing,
and settlement prices of common stocks and other exchange-listed
instruments will be readily available from the exchanges trading such
securities as well as automated quotation systems, published or other
public sources, or online information services such as Bloomberg

[[Page 12221]]

or Reuters. Quotation information from brokers and dealers or pricing
services will be available for U.S. government obligations, high
quality securities issued or guaranteed by the U.S. government (in
addition to Treasury bills) and non-U.S. governments, and each of their
agencies and instrumentalities, money market instruments, convertible
securities, structured notes, non-exchange-listed securities of other
investment companies, and OTC options.
The Commission also believes that the proposal is designed to
prevent trading when a reasonable degree of transparency cannot be
assured. The Exchange states that trading in the Shares may be halted
for market conditions or for reasons that, in the view of the Exchange,
make trading inadvisable. Similarly, trading in the Shares will be
halted if an interruption to the dissemination of either of the
Intraday Indicative Value or the value of the Underlying Index persists
past the trading day in which it occurred. The Exchange will obtain a
representation from the issuer of the Shares that the NAV per Share
will be calculated daily and made available to all market participants
at the same time.\27\ If the Exchange becomes aware that the NAV for
the Shares is not being disseminated to all market participants at the
same time or the daily public website disclosure of portfolio holdings
does not occur, the Exchange will halt trading in the Shares.\28\
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\27\ See BZX Rule 14.11(c)(9)(A)(ii).
\28\ See BZX Rule 14.11(c)(1)(b)(iv).
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The Exchange has represented that its surveillance procedures are
adequate to properly monitor the trading of the Shares on the Exchange
during all trading sessions and to deter and detect violations of
Exchange rules and the applicable federal securities laws. The Exchange
has also represented that it may obtain information regarding trading
in the Shares and other exchange-traded securities and instruments held
by the Fund via the ISG from other exchanges that are members of the
ISG or with which the Exchange has entered into a comprehensive
surveillance sharing agreement.
The Exchange has represented that all statements and
representations made in this filing regarding the Underlying Index
composition; the description of the portfolio or reference assets;
limitations on portfolio holdings or reference assets; dissemination
and availability of the Underlying Index, reference asset, and intraday
indicative values; and the applicability of Exchange rules specified in
this filing shall constitute continued listing requirements for the
Shares.
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 surveil for compliance with the
continued listing requirements. If the Fund is not in compliance with
the applicable listing requirements, the Exchange will commence
delisting procedures under BZX Rule 14.12. This approval order is based
on all of the Exchange's statements and representations, including
those set forth above and in Amendment No. 1 to the proposed rule
change.
For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 1, is consistent with Section
6(b)(5) of the Act \29\ and the rules and regulations thereunder
applicable to a national securities exchange.
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\29\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\30\ that the proposed rule change (SR-CboeBZX-2017-011), as
modified by Amendment No. 1 be, and it hereby is, approved.
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\30\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\31\
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\31\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-05562 Filed 3-19-18; 8:45 am]
BILLING CODE 8011-01-P

12218 Federal Register / Vol. 83, No. 54 / Tuesday, March 20, 2018 / Notices

post all comments on the Commission’s 19b–4 thereunder,2 a proposed rule The Fund will be a passively managed,
internet website (http://www.sec.gov/ change to list and trade the common index-based exchange-traded fund
rules/sro.shtml). Copies of the shares of beneficial interest of the (‘‘ETF’’), and it is a series of the Trust.
submission, all subsequent PowerShares Income Builder Portfolio The Trust is registered with the
amendments, all written statements (‘‘Fund’’), a series of PowerShares Commission as an open-end
with respect to the proposed rule Exchange-Traded Fund Trust II management investment company and
change that are filed with the (‘‘Trust’’), under BZX Rule 14.11(c)(3). has filed a post-effective amendment to
Commission, and all written The proposed rule change was its registration statement on Form N–1A
communications relating to the published for comment in the Federal (‘‘Registration Statement’’) with the
proposed rule change between the Register on December 20, 2017.3 On Commission.8 Invesco PowerShares
Commission and any person, other than January 22, 2018, pursuant to Section Capital Management LLC will be the
those that may be withheld from the 19(b)(2) of the Act,4 the Commission investment adviser (‘‘Adviser’’), and
public in accordance with the designated a longer period within which Invesco Advisers, Inc. will be the
provisions of 5 U.S.C. 552, will be to approve the proposed rule change, investment sub-adviser (‘‘Sub-
available for website viewing and disapprove the proposed rule change, or Adviser’’), to the Fund. The Adviser and
printing in the Commission’s Public institute proceedings to determine the Sub-Adviser are affiliated with a
Reference Room, 100 F Street NE, whether to disapprove the proposed broker-dealer and have implemented,
Washington, DC 20549, on official rule change.5 On March 6, 2018, the and will maintain, a fire wall with
business days between the hours of Exchange filed Amendment No. 1 to the respect to the broker-dealer affiliate
10:00 a.m. and 3:00 p.m. Copies of the proposed rule change.6 The Commission regarding access to information
filing also will be available for has received no comments on the concerning the composition of, or
inspection and copying at the principal proposal. The Commission is approving changes to, the Fund’s portfolio.
office of the Exchange. All comments the proposed rule change, as modified The Fund’s investment objective is to
received will be posted without change. by Amendment No. 1. seek to track the investment results
Persons submitting comments are (before fees and expenses) of the
II. Exchange’s Description of the
cautioned that we do not redact or edit Goldman Sachs Bond Buyers Equity
Proposal 7
personal identifying information from Basket Index (‘‘Underlying Index’’). The
comment submissions. You should The Exchange proposes to list and Underlying Index is designed to
submit only information that you wish trade the Shares under BZX Rule measure the performance of a
to make available publicly. All 14.11(c)(5), which governs the listing hypothetical portfolio of common equity
submissions should refer to File and trading of Index Fund Shares based stocks with an overlay of fully-
Number SR–CHX–2018–001 and should on equity and fixed income securities. collateralized written put options on
be submitted on or before April 10, those stocks. Solactive AG (‘‘Calculation
2 17 CFR 240.19b–4.
2018. Agent’’) maintains, calculates, and
3 See Securities Exchange Act Release No. 82328
For the Commission, by the Division of (Dec. 14, 2017), 82 FR 60443 (Dec. 20, 2017). publishes the value of the Underlying
Trading and Markets, pursuant to delegated 4 15 U.S.C. 78s(b)(2). Index on each business day. The
authority.48 5 See Securities Exchange Act Release No. 82559 Calculation Agent is not registered as an
Eduardo A. Aleman, (Jan. 22, 2018), 83 FR 3820 (Jan. 26, 2018). investment adviser or broker-dealer and
6 In Amendment No. 1, which amended and
Assistant Secretary. is not affiliated with any broker-dealers.
replaced the proposed rule change in its entirety,
[FR Doc. 2018–05560 Filed 3–19–18; 8:45 am] the Exchange: (1) Corrected certain references to its The Calculation Agent also has
BILLING CODE 8011–01–P rules; (2) supplemented information regarding implemented and will maintain
requirements applicable to investment advisers, procedures designed to prevent the use
including information with respect to firewalls and
procedures designed to prevent the use and
and dissemination of material,
SECURITIES AND EXCHANGE dissemination of material, nonpublic information nonpublic information regarding the
COMMISSION regarding the Fund’s portfolio; (3) corrected the Underlying Index as required under
definition and usage of certain defined terms; (4) BZX Rule 14.11(c)(5)(A)(iii).
[Release No. 34–82872; File No. SR– clarified that the Fund will not be a leveraged or
CboeBZX–2017–011] inverse-leveraged fund and will not use derivative
The Exchange states that it has
instruments to enhance leverage; (5) conformed its submitted the proposed rule change
Self-Regulatory Organizations; representations regarding the calculation and because the Underlying Index for the
CboeBZX Exchange, Inc.; Order dissemination of the Underlying Index (as defined Fund does not meet all of the listing
herein) and information relating to trading halts in
Granting Approval of a Proposed Rule accordance with applicable BZX rules; (6)
requirements of BZX Rule 14.11(c)(5),
Change To List and Trade the Common supplemented information regarding pricing which applies to Index Fund Shares
Shares of Beneficial Interest of the availability with respect to holdings in non- based on an index that consists of both
PowerShares Income Builder Portfolio, exchange-listed securities of other investment equity securities and fixed income
companies; and (7) made other technical, non-
a Series of PowerShares Exchange- substantive, and conforming changes. Because
securities. BZX Rule 14.11(c)(5) requires
Traded Fund Trust II Amendment No. 1 does not materially alter the that the equity and fixed income
substance of the proposed rule change or raise component securities separately meet
March 14, 2018. unique or novel regulatory issues, it is not subject the criteria set forth in BZX Rules
to notice and comment. Amendment No. 1 is
I. Introduction 14.11(c)(3) and (4), applicable to equity
available at: https://www.sec.gov/comments/sr-
cboebzx-2017-011/cboebzx2017011-3206088- and fixed income securities indexes,
On December 1, 2017, CboeBZX
162013.pdf.
Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’)
daltland on DSKBBV9HB2PROD with NOTICES

7 A more detailed description of the Trust, the 8 See Registration Statement on Form N–1A for
filed with the Securities and Exchange Fund, and the Shares, as well as information the Trust, filed on July 31, 2017 (File Nos. 333–
Commission (‘‘Commission’’), pursuant regarding the methodology of the Underlying Index 138490 and 811–21977). According to the
to Section 19(b)(1) of the Securities (as defined herein), the Fund’s portfolio holdings, Exchange, the Commission has issued an order
and the Fund’s investment restrictions are included granting certain exemptive relief (‘‘Exemptive
Exchange Act of 1934 (‘‘Act’’) 1 and Rule in Amendment No. 1 to the proposed rule change Order’’) with respect to the Trust under the
and Registration Statement (as defined herein). See Investment Company Act of 1940 (‘‘1940 Act’’). See
48 17 CFR 200.30–3(a)(12). Amendment No. 1, supra note 6; Registration Investment Company Act Release No. 27841 (May
1 15 U.S.C. 78s(b)(1). Statement, infra note 8 and accompanying text. 25, 2007) (File No. 812–13335).

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Document Created: 2018-03-20 01:10:45
Document Modified: 2018-03-20 01:10:45

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		83 FR 12218