83 FR 22722 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To List and Trade Under BZX Rule 14.11(c)(4) Shares of the iShares Long-Term National Muni Bond ETF of iShares Trust
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 95 (May 16, 2018)
Federal Register Volume 83, Issue 95 (May 16, 2018)
| Page Range | 22722-22726 | |
| FR Document | 2018-10377 |
[Federal Register Volume 83, Number 95 (Wednesday, May 16, 2018)] [Notices] [Pages 22722-22726] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-10377] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-83206; File No. SR-CboeBZX-2018-033] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To List and Trade Under BZX Rule 14.11(c)(4) Shares of the iShares Long-Term National Muni Bond ETF of iShares Trust May 10, 2018. 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 May 3, 2018, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange has designated this proposal as a ``non-controversial'' proposed rule change pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)(iii) thereunder,\4\ which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ 15 U.S.C. 78s(b)(3)(A). \4\ 17 CFR 240.19b-4(f)(6)(iii). --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to list and trade under BZX Rule 14.11(c)(4) the shares of the iShares Long-Term National Muni Bond ETF (the ``Fund'') of iShares Trust (the ``Trust''). The text of the proposed rule change is available at the Exchange's website at www.markets.cboe.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to list and trade shares (``Shares'') of the Fund under BZX Rule 14.11(c)(4),\5\ which governs the listing and trading of index fund shares based on fixed income securities indexes.\6\ The Shares will be offered by the Trust, which was established as a Delaware statutory trust on December 16, 1999. The Trust is registered with the Commission as an open-end investment company and has filed a registration statement on behalf of the Fund on Form N-1A (``Registration Statement'') with the Commission.\7\ --------------------------------------------------------------------------- \5\ The Commission approved BZX Rule 14.11(c) in Securities Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 (September 6, 2011) (SR-BATS-2011-018). \6\ The Commission previously has approved proposed rule changes relating to listing and trading of funds based on municipal bond indexes. See Securities Exchange Act Release Nos. 78329 (July 14, 2016), 81 FR 47217 (July 20, 2016) (SR-BatsBZX-2016-01) (order approving the listing and trading of the following series of VanEck Vectors ETF Trust: VanEck Vectors AMT-Free 6-8 Year Municipal Index ETF; VanEck Vectors AMT-Free 8-12 Year Municipal Index ETF; and VanEck Vectors AMT-Free 12-17 Year Municipal Index ETF); 67985 (October 4, 2012), 77 FR 61804 (October 11, 2012) (SR-NYSEArca-2012- 92) (order approving proposed rule change relating to the listing and trading of iShares 2018 S&P AMT-Free Municipal Series and iShares 2019 S&P AMT-Free Municipal Series under NYSE Arca, Inc. (``NYSE Arca'') Rule 5.2(j)(3), Commentary .02); 72523 (July 2, 2014), 79 FR 39016 (July 9, 2014) (SR-NYSEArca-2014-37) (order approving proposed rule change relating to the listing and trading of iShares 2020 S&P AMT-Free Municipal Series under NYSE Arca Rule 5.2(j)(3), Commentary .02); and 75468 (July 16, 2015), 80 FR 43500 (July 22, 2015) (SR-NYSEArca-2015-25) (order approving proposed rule change relating to the listing and trading of the iShares iBonds Dec 2021 AMT-Free Muni Bond ETF and iShares iBonds Dec 2022 AMT-Free Muni Bond ETF under NYSE Arca Rule 5.2(j)(3), Commentary .02). \7\ See Registration Statement on Form N-1A for the Trust, dated January 9, 2018 (File Nos. 333-92935 and 811-09729). The descriptions of the Fund and the Shares contained herein are based, in part, on information in the Registration Statement. The Commission has issued an order granting certain exemptive relief to the Trust under the Investment Company Act of 1940 (15 U.S.C. 80a-1) (``1940 Act'') (the ``Exemptive Order''). See Investment Company Act Release No. 28021 (October 24, 2007) (File No. 812-13426). --------------------------------------------------------------------------- Rule 14.11(c)(4)(B)(i)(b) requires that component fixed income securities that, in the aggregate, account for at least 75% of the weight of the index or portfolio shall have a minimum principal amount outstanding of $100 million or more. The Exchange submits this proposal because the Underlying [[Page 22723]] Index does not meet this requirement. The Underlying Index does, however, meet all of the other requirements of Rule 14.11(c)(4). Description of the Shares and the Fund BlackRock Fund Advisors is the investment adviser (``BFA'' or ``Adviser'') to the Fund.\8\ State Street Bank and Trust Company is the administrator, custodian, and transfer agent (``Administrator,'' ``Custodian,'' and ``Transfer Agent,'' respectively) for the Trust. S&P is the index provider (the ``Index Provider'') for the Fund. BlackRock Investments, LLC serves as the distributor (``Distributor'') for the Trust. --------------------------------------------------------------------------- \8\ BFA is an indirect wholly owned subsidiary of BlackRock, Inc. --------------------------------------------------------------------------- S&P 15+ Year National AMT-Free Municipal Bond Index According to the Registration Statement, the Fund will seek to track the investment results of the S&P 15+ Year National AMT-Free Municipal Bond Index (the ``Underlying Index''), which measures the performance of the investment-grade segment of the U.S. municipal bond market with remaining maturities greater than or equal to fifteen years. The Underlying Index primarily includes municipal bonds from issuers that are state or local governments or agencies such that the interest on each such bond is exempt from U.S. federal income taxes and the federal alternative minimum tax (``AMT''). As of February 13, 2018, the Underlying Index included 3,637 component fixed income municipal bond securities from issuers in 45 different states or U.S. territories.\9\ The most heavily weighted security in the Underlying Index represented approximately 0.32% of the total weight of the Underlying Index and the aggregate weight of the top five most heavily weighted securities in the Underlying Index represented less than 1.36% of the total weight of the Underlying Index. Approximately 40.01% of the weight of the components in the Underlying Index had a minimum original principal outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the Underlying Index was approximately $239,414,133,037 and the average dollar amount outstanding of issues in the Underlying Index was approximately $65,827,367. --------------------------------------------------------------------------- \9\ Unless otherwise noted, all statistics related to the Underlying Index presented hereafter were accurate as of February 13, 2018. --------------------------------------------------------------------------- Under normal market conditions,\10\ the Fund will invest at least 90% of its assets in the component securities of the Underlying Index. With respect to the remaining 10% of its assets, the Fund may invest in certain futures, options and swap contracts, cash and cash equivalents, including shares of money market funds advised by BFA or its affiliates, as well as in securities not included in the Underlying Index, but which BFA believes will help the Fund track the Underlying Index. --------------------------------------------------------------------------- \10\ The term ``normal market conditions'' includes, but is not limited to, the absence of trading halts in the applicable financial markets generally; operational issues (e.g., systems failure) causing dissemination of inaccurate market information; or force majeure type events such as natural or manmade disaster, act of God, armed conflict, act of terrorism, riot or labor disruption or any similar intervening circumstance. --------------------------------------------------------------------------- Requirement for Index Constituents Each bond in the Underlying Index must be denominated in U.S. dollars, must be a constituent of an offering where the original offering amount was at least $100 million, and must have a minimum par amount of $25 million. To remain in the Underlying Index, bonds must maintain a minimum par amount greater than or equal to $25 million as of the next rebalancing date. The Underlying Index primarily includes municipal bonds from issuers that are state or local governments or agencies such that the interest on each such bond is exempt from U.S. federal income taxes and the federal alternative minimum tax (``AMT''). Each bond in the Underlying Index must have a rating of at least BBB- by S&P Global Ratings, Baa3 by Moody's Investors Service, Inc., or BBB- by Fitch Ratings, Inc. A bond must be rated by at least one of these three rating agencies in order to qualify for the Underlying Index, and the lowest rating will be used in determining if the bond is investment-grade. Discussion Based on the characteristics of the Underlying Index and the representations made in the Requirements for Index Constituents section above, the Exchange believes it is appropriate to allow the listing and trading of the Shares. The Underlying Index and Fund satisfy all of the generic listing requirements for Index Fund Shares based on a fixed income index, except for the minimum principal amount outstanding requirement of 14.11(c)(4)(B)(i)(b). A fundamental purpose behind the minimum principal amount outstanding requirement is to ensure that component securities of an index are sufficiently liquid such that the potential for index manipulation is reduced. With this in mind, the Exchange notes that the representations in the Requirements for Index Constituents for the Underlying Index are identical to the representations made regarding the S&P National AMT-Free Municipal Bond Index (the ``Comparable Index''), which underlies a series of Index Fund Shares that were previously approved for listing and trading by the Commission.\11\ In the Approval Order, the Commission highlighted the representations that the Comparable Index would, on a continuous basis, contain at least 500 component securities and that at least 90% of the weight of the Comparable Index will be comprised of securities that have a minimum par amount of $25 million and were a constituent of an offering where the original offering amount was at least $100 million. The Exchange believes that because these representations regarding diversification and the lack of concentration among constituent securities provides a strong degree of protection against index manipulation that is consistent with other proposals that have been approved for listing and trading by the Commission. --------------------------------------------------------------------------- \11\ The Comparable Index underlies the iShares National Muni Bond ETF. See Securities Exchange Act Release No. 82295 (December 12, 2017), 82 FR 60056 (December 18, 2017) (SR-NYSEArca-2017-56) (the ``Approval Order''). --------------------------------------------------------------------------- In addition, the Exchange represents that: (1) Except for Rule 14.11(c)(4)(B)(i)(b), the Underyling [sic] index currently satisfies all of the generic listing standards under Rule 14.11(c)(4); (2) the continued listing standards under Rule 14.11(c), as applicable to Index Fund Shares based on fixed income securities, will apply to the shares of the Fund; and (3) the issuer of the Fund is required to comply with Rule 10A-3 \12\ under the Act for the initial and continued listing of the Shares. In addition, the Exchange represents that the Fund will comply with all other requirements applicable to Index Fund Shares, including, but not limited to, requirements relating to the dissemination of key information such as the value of the Underyling [sic] Index and the Intraday Indicative Value (``IIV''),\13\ rules governing the trading of equity securities, trading hours, trading halts, surveillance, information barriers and the Information Circular, as set [[Page 22724]] forth in the Exchange rules applicable to Index Fund Shares and prior Commission orders approving the generic listing rules applicable to the listing and trading of Index Fund Shares. --------------------------------------------------------------------------- \12\ 17 CFR 240.10A-3. \13\ The IIV will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Regular Trading Hours. Currently, it is the Exchange's understanding that several major market data vendors display and/or make widely available IIVs taken from the Consolidated Tape Association (``CTA'') or other data feeds. --------------------------------------------------------------------------- The current value of the Underlying Index will be widely disseminated by one or more major market data vendors at least once per day, as required by Rule 14.11(c)(4)(C)(ii). The portfolio of securities held by the Fund will be disclosed daily on the Fund's website. Further, the Fund's website will contain the Fund's prospectus and additional data relating to net asset value (``NAV'') and other applicable quantitative information. The issuer has represented that the NAV will be calculated daily and will be made available to all market participants at the same time. The Index Provider is not a broker-dealer and is not affiliated with a broker-dealer. To the extent that the Index Provider becomes a broker-dealer or becomes affiliated with a broker-dealer, the Index Provider will implement and will maintain a ``fire wall'' around the personnel who have access to information concerning changes and adjustments to the Underlying Index and the Underlying Index shall be calculated by a third party who is not a broker-dealer or fund advisor. In addition, any advisory committee, supervisory board or similar entity that advises the Index Provider or that makes decisions on the Index, methodology and related matters, will implement and maintain, or be subject to, procedures designed to prevent the use and dissemination of material non-public information regarding the Underlying Index. The Exchange's existing rules require that the issuer of the Fund notify the Exchange of any material change to the methodology used to determine the composition of the Underlying Index and, therefore, if the methodology of the Underlying Index was changed in a manner that would materially alter its existing composition, the Exchange would have advance notice and would evaluate the modifications to determine whether the Underyling [sic] Index remained sufficiently broad-based and well diversified. Price information regarding municipal bonds, convertible securities, and non-exchange traded assets, including investment companies, derivatives, money market instruments, repurchase agreements, structured notes, participation notes, and when-issued securities is available from third party pricing services and major market data vendors. For exchange-traded assets, including investment companies, futures, warrants, and options, such intraday information is available directly from the applicable listing exchange. Surveillance The Exchange represents that trading in the shares of the Fund will be subject to the existing trading surveillances, administered by the Financial Industry Regulatory Authority (``FINRA'') on behalf of the Exchange, or by regulatory staff of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the shares of the Fund in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange.\14\ --------------------------------------------------------------------------- \14\ FINRA conducts cross-market surveillances on behalf of 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. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares and ETFs with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares and ETFs from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and ETFs from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. In addition, FINRA, on behalf of the Exchange, is able to access, as needed, trade information for certain fixed income securities held by a Fund reported to FINRA's Trade Reporting and Compliance Engine (``TRACE''). FINRA also can access data obtained from the Municipal Securities Rulemaking Board (``MSRB'') relating to municipal bond trading activity for surveillance purposes in connection with trading in the Shares. 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b) of the Act \15\ in general and Section 6(b)(5) of the Act \16\ in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78f. \16\ 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 of the Fund will be listed and traded on the Exchange pursuant to the initial and continued listing criteria for Index Fund Shares based on a fixed income index in Rule 14.11(c)(4), except for the minimum principal amount outstanding requirement of 14.11(c)(4)(B)(i)(b). The Exchange represents that trading in the shares of the Fund will be subject to the existing trading surveillances administered by the Exchange as well as cross-market surveillances administered by the FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange. The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the shares of the Fund in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the shares of the Fund with other markets that are members of the ISG. In addition, the Exchange will communicate as needed regarding trading in the shares of the Fund with other markets that are members of the ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. FINRA also can access data obtained from the Municipal Securities Rulemaking Board relating to municipal bond trading activity for surveillance purposes in connection with trading in the shares of the Fund. FINRA, on behalf of the Exchange, is able to access, as needed, trade information for certain fixed income securities held by the Fund reported to [[Page 22725]] FINRA's Trade Reporting and Compliance Engine (``TRACE''). As discussed above, the Exchange believes that the Underlying Index is sufficiently broad-based to deter potential manipulation. The Underlying Index currently includes 3,637 component securities. Whereas the Rule 14.11(c)(4)(B)(i)(e) requires that an index contain securities from a minimum of 13 non-affiliated issuers, the Underlying Index includes securities issued by municipal entities in more than 45 states or U.S. territories. Further, whereas the generic listing rules permit a single component security to represent up to 30% of the weight of an index and the top five component securities to, in aggregate, represent up to 65% of the weight of an index, the largest component security in the Underyling [sic] Index only constitutes 0.32% of the weight of the Underlying Index and the largest five component securities represent 1.36% of the weight of the Underlying Index. The Exchange believes that this significant diversification and the lack of concentration among constituent securities provides [sic] a strong degree of protection against index manipulation. The Underlying Index and Fund satisfy all of the generic listing requirements for Index Fund Shares based on a fixed income index, except for the minimum principal amount outstanding requirement of 14.11(c)(4)(B)(i)(b). A fundamental purpose behind the minimum principal amount outstanding requirement is to ensure that component securities of an index are sufficiently liquid such that the potential for index manipulation is reduced. With this in mind, the Exchange notes that the representations in the Requirements for Index Constituents for the Underlying Index are identical to the representations made regarding the Comparable Index, which underlies a series of Index Fund Shares that were previously approved for listing and trading by the Commission.\17\ In the Approval Order, the Commission highlighted the representations that the Comparable Index would, on a continuous basis, contain at least 500 component securities and that at least 90% of the weight of the Comparable Index will be comprised of securities that have a minimum par amount of $25 million and were a constituent of an offering where the original offering amount was at least $100 million. The Exchange believes that because [sic] these representations regarding diversification and the lack of concentration among constituent securities provides [sic] a strong degree of protection against index manipulation that is consistent with other proposals that have been approved for listing and trading by the Commission. --------------------------------------------------------------------------- \17\ The Comparable Index underlies the iShares National Muni Bond ETF. See Securities Exchange Act Release No. 82295 (December 12, 2017), 82 FR 60056 (December 18, 2017) (SR-NYSEArca-2017-56) (the ``Approval Order''). --------------------------------------------------------------------------- The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that a large amount of information is publicly available regarding the Funds, thereby promoting market transparency. 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. Moreover, the IIV for shares of the Fund will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Regular Trading Hours. The current value of the Index will be disseminated by one or more major market data vendors at least once per day. Information regarding market price and trading volume of the shares of the Fund will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services, and quotation and last sale information will be available via the CTA high-speed line. The website for the Fund will include the prospectus for the Fund and additional data relating to NAV and other applicable quantitative information. If the Exchange becomes aware that the Fund's NAV is not being disseminated to all market participants at the same time, it will halt trading in the shares of the Fund until such time as the NAV is available to all market participants. With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the shares of the Fund. Trading also may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the shares the Fund inadvisable. If the IIV and index value are not being disseminated for the Fund as required, the Exchange may halt trading during the day in which the interruption to the dissemination of the IIV or index value occurs. If the interruption to the dissemination of an IIV or index value persists past the trading day in which it occurred, the Exchange will halt trading. The Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund. The Exchange will halt trading in the Shares under the conditions specified in BZX Rule 11.18. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities and/or the financial instruments composing the daily disclosed portfolio of the Funds; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the Shares also will be subject to Rule 14.11(c)(1)(B)(iv), which sets forth circumstances under which Shares of a Fund may be halted. In addition, investors will have ready access to information regarding the applicable IIV, and quotation and last sale information for the shares of the Fund. Trade price and other information relating to municipal bonds is available through the Municipal Securities Rulemaking Board's Electronic Municipal Market Access (``EMMA'') system. All statements and representations made in this filing regarding the index composition, the description of the portfolio or reference assets, limitations on portfolio holdings or reference assets, dissemination and availability of index, reference asset, and intraday indicative values (as applicable), or the applicability of Exchange listing rules shall constitute continued listing requirements for listing the Shares on the Exchange. The issuer is required to 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 requirements, the Exchange will commence delisting procedures under Rule 14.12. 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 exchange-traded products that principally hold municipal bonds and that will enhance competition among market participants, to the benefit of investors and the marketplace. The Exchange has in place surveillance procedures relating to trading in the shares of the Fund and 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. In addition, [[Page 22726]] investors will have ready access to information regarding the IIV and quotation and last sale information for the shares of the Fund. For the above reasons, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act. B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of an additional exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act \18\ and Rule 19b- 4(f)(6) thereunder.\19\ --------------------------------------------------------------------------- \18\ 15 U.S.C. 78s(b)(3)(A). \19\ 17 CFR 240.19b-4(f)(6). --------------------------------------------------------------------------- At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule change should be approved or 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 CommentsUse the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or Send an email to rule-comments@sec.gov. Please include File Number CboeBZX-2018-033 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 CboeBZX-2018-033. 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 website (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 website 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 will also 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 CboeBZX-2018-033 and should be submitted on or before June 6, 2018. --------------------------------------------------------------------------- \20\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\20\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2018-10377 Filed 5-15-18; 8:45 am] BILLING CODE 8011-01-P
![22722 Federal Register / Vol. 83, No. 95 / Wednesday, May 16, 2018 / Notices
same or better conditions (in any other SECURITIES AND EXCHANGE the most significant parts of such
circumstance).8 COMMISSION statements.
5. Applicants also believe that the
limited relief from section 18(f)(1) of the [Release No. 34–83206; File No. SR– A. Self-Regulatory Organization’s
Act that is necessary to implement the CboeBZX–2018–033] Statement of the Purpose of, and
facility (because the lending Funds are Statutory Basis for, the Proposed Rule
Self-Regulatory Organizations; Cboe Change
not banks) is appropriate in light of the BZX Exchange, Inc.; Notice of Filing
conditions and safeguards described in and Immediate Effectiveness of a 1. Purpose
the application and because the open- Proposed Rule Change To List and The Exchange proposes to list and
end Funds would remain subject to the Trade Under BZX Rule 14.11(c)(4) trade shares (‘‘Shares’’) of the Fund
requirement of section 18(f)(1) that all Shares of the iShares Long-Term under BZX Rule 14.11(c)(4),5 which
borrowings of the open-end Fund, National Muni Bond ETF of iShares governs the listing and trading of index
including combined interfund loans and Trust fund shares based on fixed income
bank borrowings, have at least 300% securities indexes.6 The Shares will be
asset coverage. May 10, 2018. offered by the Trust, which was
6. Section 6(c) of the Act permits the Pursuant to Section 19(b)(1) of the established as a Delaware statutory trust
Commission to exempt any persons or Securities Exchange Act of 1934 on December 16, 1999. The Trust is
transactions from any provision of the (‘‘Act’’),1 and Rule 19b–4 thereunder,2 registered with the Commission as an
Act if such exemption is necessary or notice is hereby given that on May 3, open-end investment company and has
appropriate in the public interest and 2018, Cboe BZX Exchange, Inc. filed a registration statement on behalf
consistent with the protection of (‘‘Exchange’’ or ‘‘BZX’’) filed with the of the Fund on Form N–1A
investors and the purposes fairly Securities and Exchange Commission (‘‘Registration Statement’’) with the
intended by the policy and provisions of (‘‘Commission’’) the proposed rule Commission.7
the Act. Section 12(d)(1)(J) of the Act change as described in Items I and II Rule 14.11(c)(4)(B)(i)(b) requires that
provides that the Commission may below, which Items have been prepared component fixed income securities that,
exempt any person, security, or by the Exchange. The Exchange has in the aggregate, account for at least
transaction, or any class or classes of designated this proposal as a ‘‘non- 75% of the weight of the index or
persons, securities, or transactions, from controversial’’ proposed rule change portfolio shall have a minimum
any provision of section 12(d)(1) if the pursuant to Section 19(b)(3)(A) of the principal amount outstanding of $100
exemption is consistent with the public Act 3 and Rule 19b–4(f)(6)(iii) million or more. The Exchange submits
interest and the protection of investors. thereunder,4 which renders it effective this proposal because the Underlying
Section 17(b) of the Act authorizes the upon filing with the Commission. The
Commission to grant an order Commission is publishing this notice to 5 The Commission approved BZX Rule 14.11(c) in
permitting a transaction otherwise solicit comments on the proposed rule Securities Exchange Act Release No. 65225 (August
prohibited by section 17(a) if it finds change from interested persons. 30, 2011), 76 FR 55148 (September 6, 2011) (SR–
that (a) the terms of the proposed BATS–2011–018).
6 The Commission previously has approved
transaction are fair and reasonable and I. Self-Regulatory Organization’s
proposed rule changes relating to listing and trading
do not involve overreaching on the part Statement of the Terms of Substance of of funds based on municipal bond indexes. See
of any person concerned; (b) the the Proposed Rule Change Securities Exchange Act Release Nos. 78329 (July
proposed transaction is consistent with 14, 2016), 81 FR 47217 (July 20, 2016) (SR–
The Exchange filed a proposal to list BatsBZX–2016–01) (order approving the listing and
the policies of each registered and trade under BZX Rule 14.11(c)(4) trading of the following series of VanEck Vectors
investment company involved; and (c) the shares of the iShares Long-Term ETF Trust: VanEck Vectors AMT-Free 6–8 Year
the proposed transaction is consistent National Muni Bond ETF (the ‘‘Fund’’) Municipal Index ETF; VanEck Vectors AMT-Free 8–
with the general purposes of the Act. 12 Year Municipal Index ETF; and VanEck Vectors
of iShares Trust (the ‘‘Trust’’). AMT-Free 12–17 Year Municipal Index ETF); 67985
Rule 17d–1(b) under the Act provides The text of the proposed rule change (October 4, 2012), 77 FR 61804 (October 11, 2012)
that in passing upon an application filed is available at the Exchange’s website at (SR–NYSEArca–2012–92) (order approving
under the rule, the Commission will www.markets.cboe.com, at the principal proposed rule change relating to the listing and
consider whether the participation of trading of iShares 2018 S&P AMT-Free Municipal
office of the Exchange, and at the Series and iShares 2019 S&P AMT-Free Municipal
the registered investment company in a Commission’s Public Reference Room. Series under NYSE Arca, Inc. (‘‘NYSE Arca’’) Rule
joint enterprise, joint arrangement or 5.2(j)(3), Commentary .02); 72523 (July 2, 2014), 79
profit sharing plan on the basis II. Self-Regulatory Organization’s FR 39016 (July 9, 2014) (SR–NYSEArca–2014–37)
proposed is consistent with the Statement of the Purpose of, and (order approving proposed rule change relating to
provisions, policies and purposes of the Statutory Basis for, the Proposed Rule the listing and trading of iShares 2020 S&P AMT-
Change Free Municipal Series under NYSE Arca Rule
Act and the extent to which such 5.2(j)(3), Commentary .02); and 75468 (July 16,
participation is on a basis different from In its filing with the Commission, the 2015), 80 FR 43500 (July 22, 2015) (SR–NYSEArca–
or less advantageous than that of the Exchange included statements 2015–25) (order approving proposed rule change
relating to the listing and trading of the iShares
other participants. concerning the purpose of and basis for iBonds Dec 2021 AMT-Free Muni Bond ETF and
For the Commission, by the Division of the proposed rule change and discussed iShares iBonds Dec 2022 AMT-Free Muni Bond
Investment Management, under delegated any comments it received on the ETF under NYSE Arca Rule 5.2(j)(3), Commentary
authority. proposed rule change. The text of these .02).
7 See Registration Statement on Form N–1A for
Eduardo A. Aleman, statements may be examined at the the Trust, dated January 9, 2018 (File Nos. 333–
sradovich on DSK3GMQ082PROD with NOTICES
Assistant Secretary. places specified in Item IV below. The 92935 and 811–09729). The descriptions of the
[FR Doc. 2018–10383 Filed 5–15–18; 8:45 am] Exchange has prepared summaries, set Fund and the Shares contained herein are based, in
forth in Sections A, B, and C below, of part, on information in the Registration Statement.
BILLING CODE 8011–01–P
The Commission has issued an order granting
1 15
certain exemptive relief to the Trust under the
8 Applicants state that any pledge of securities to U.S.C. 78s(b)(1). Investment Company Act of 1940 (15 U.S.C. 80a–
2 17 CFR 240.19b–4.
secure an interfund loan could constitute a 1) (‘‘1940 Act’’) (the ‘‘Exemptive Order’’). See
3 15 U.S.C. 78s(b)(3)(A).
purchase of securities for purposes of section Investment Company Act Release No. 28021
17(a)(2) of the Act. 4 17 CFR 240.19b–4(f)(6)(iii). (October 24, 2007) (File No. 812–13426).
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![Federal Register / Vol. 83, No. 95 / Wednesday, May 16, 2018 / Notices 22723
Index does not meet this requirement. Under normal market conditions,10 reduced. With this in mind, the
The Underlying Index does, however, the Fund will invest at least 90% of its Exchange notes that the representations
meet all of the other requirements of assets in the component securities of the in the Requirements for Index
Rule 14.11(c)(4). Underlying Index. With respect to the Constituents for the Underlying Index
remaining 10% of its assets, the Fund are identical to the representations
Description of the Shares and the Fund may invest in certain futures, options made regarding the S&P National AMT-
BlackRock Fund Advisors is the and swap contracts, cash and cash Free Municipal Bond Index (the
equivalents, including shares of money ‘‘Comparable Index’’), which underlies a
investment adviser (‘‘BFA’’ or
market funds advised by BFA or its series of Index Fund Shares that were
‘‘Adviser’’) to the Fund.8 State Street
affiliates, as well as in securities not previously approved for listing and
Bank and Trust Company is the included in the Underlying Index, but trading by the Commission.11 In the
administrator, custodian, and transfer which BFA believes will help the Fund Approval Order, the Commission
agent (‘‘Administrator,’’ ‘‘Custodian,’’ track the Underlying Index. highlighted the representations that the
and ‘‘Transfer Agent,’’ respectively) for Comparable Index would, on a
the Trust. S&P is the index provider (the Requirement for Index Constituents
continuous basis, contain at least 500
‘‘Index Provider’’) for the Fund. Each bond in the Underlying Index component securities and that at least
BlackRock Investments, LLC serves as must be denominated in U.S. dollars, 90% of the weight of the Comparable
the distributor (‘‘Distributor’’) for the must be a constituent of an offering Index will be comprised of securities
Trust. where the original offering amount was that have a minimum par amount of $25
at least $100 million, and must have a million and were a constituent of an
S&P 15+ Year National AMT-Free minimum par amount of $25 million. To offering where the original offering
Municipal Bond Index remain in the Underlying Index, bonds amount was at least $100 million. The
According to the Registration must maintain a minimum par amount Exchange believes that because these
Statement, the Fund will seek to track greater than or equal to $25 million as representations regarding diversification
of the next rebalancing date. The and the lack of concentration among
the investment results of the S&P 15+
Underlying Index primarily includes constituent securities provides a strong
Year National AMT-Free Municipal
municipal bonds from issuers that are degree of protection against index
Bond Index (the ‘‘Underlying Index’’),
state or local governments or agencies manipulation that is consistent with
which measures the performance of the such that the interest on each such bond
investment-grade segment of the U.S. other proposals that have been approved
is exempt from U.S. federal income for listing and trading by the
municipal bond market with remaining taxes and the federal alternative
maturities greater than or equal to Commission.
minimum tax (‘‘AMT’’). Each bond in In addition, the Exchange represents
fifteen years. The Underlying Index the Underlying Index must have a rating that: (1) Except for Rule
primarily includes municipal bonds of at least BBB¥ by S&P Global Ratings, 14.11(c)(4)(B)(i)(b), the Underyling [sic]
from issuers that are state or local Baa3 by Moody’s Investors Service, Inc., index currently satisfies all of the
governments or agencies such that the or BBB¥ by Fitch Ratings, Inc. A bond generic listing standards under Rule
interest on each such bond is exempt must be rated by at least one of these 14.11(c)(4); (2) the continued listing
from U.S. federal income taxes and the three rating agencies in order to qualify standards under Rule 14.11(c), as
federal alternative minimum tax for the Underlying Index, and the lowest applicable to Index Fund Shares based
(‘‘AMT’’). As of February 13, 2018, the rating will be used in determining if the on fixed income securities, will apply to
Underlying Index included 3,637 bond is investment-grade. the shares of the Fund; and (3) the
component fixed income municipal issuer of the Fund is required to comply
Discussion
bond securities from issuers in 45 with Rule 10A–3 12 under the Act for the
different states or U.S. territories.9 The Based on the characteristics of the initial and continued listing of the
most heavily weighted security in the Underlying Index and the Shares. In addition, the Exchange
Underlying Index represented representations made in the represents that the Fund will comply
approximately 0.32% of the total weight Requirements for Index Constituents with all other requirements applicable
of the Underlying Index and the section above, the Exchange believes it
to Index Fund Shares, including, but not
aggregate weight of the top five most is appropriate to allow the listing and
limited to, requirements relating to the
heavily weighted securities in the trading of the Shares. The Underlying
dissemination of key information such
Underlying Index represented less than Index and Fund satisfy all of the generic
as the value of the Underyling [sic]
1.36% of the total weight of the listing requirements for Index Fund
Index and the Intraday Indicative Value
Shares based on a fixed income index,
Underlying Index. Approximately (‘‘IIV’’),13 rules governing the trading of
except for the minimum principal
40.01% of the weight of the components equity securities, trading hours, trading
amount outstanding requirement of
in the Underlying Index had a minimum halts, surveillance, information barriers
14.11(c)(4)(B)(i)(b). A fundamental
original principal outstanding of $100 and the Information Circular, as set
purpose behind the minimum principal
million or more. In addition, the total amount outstanding requirement is to
dollar amount outstanding of issues in ensure that component securities of an
11 The Comparable Index underlies the iShares
the Underlying Index was National Muni Bond ETF. See Securities Exchange
index are sufficiently liquid such that Act Release No. 82295 (December 12, 2017), 82 FR
approximately $239,414,133,037 and the potential for index manipulation is 60056 (December 18, 2017) (SR–NYSEArca–2017–
the average dollar amount outstanding 56) (the ‘‘Approval Order’’).
sradovich on DSK3GMQ082PROD with NOTICES
of issues in the Underlying Index was 10 The term ‘‘normal market conditions’’ includes,
12 17 CFR 240.10A–3.
13 The IIV will be widely disseminated by one or
approximately $65,827,367. but is not limited to, the absence of trading halts
in the applicable financial markets generally; more major market data vendors at least every 15
operational issues (e.g., systems failure) causing seconds during the Exchange’s Regular Trading
8 BFA is an indirect wholly owned subsidiary of
dissemination of inaccurate market information; or Hours. Currently, it is the Exchange’s
BlackRock, Inc. force majeure type events such as natural or understanding that several major market data
9 Unless otherwise noted, all statistics related to manmade disaster, act of God, armed conflict, act vendors display and/or make widely available IIVs
the Underlying Index presented hereafter were of terrorism, riot or labor disruption or any similar taken from the Consolidated Tape Association
accurate as of February 13, 2018. intervening circumstance. (‘‘CTA’’) or other data feeds.
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![22724 Federal Register / Vol. 83, No. 95 / Wednesday, May 16, 2018 / Notices
forth in the Exchange rules applicable to futures, warrants, and options, such 2. Statutory Basis
Index Fund Shares and prior intraday information is available
Commission orders approving the directly from the applicable listing The Exchange believes that the
generic listing rules applicable to the exchange. proposal is consistent with Section 6(b)
listing and trading of Index Fund of the Act 15 in general and Section
Shares. Surveillance 6(b)(5) of the Act 16 in particular in that
The current value of the Underlying it is designed to prevent fraudulent and
The Exchange represents that trading
Index will be widely disseminated by manipulative acts and practices, to
in the shares of the Fund will be subject
one or more major market data vendors promote just and equitable principles of
to the existing trading surveillances,
at least once per day, as required by trade, to foster cooperation and
administered by the Financial Industry
Rule 14.11(c)(4)(C)(ii). The portfolio of coordination with persons engaged in
Regulatory Authority (‘‘FINRA’’) on
securities held by the Fund will be behalf of the Exchange, or by regulatory facilitating transactions in securities, to
disclosed daily on the Fund’s website. staff of the Exchange, which are remove impediments to and perfect the
Further, the Fund’s website will contain mechanism of a free and open market
designed to detect violations of
the Fund’s prospectus and additional and a national market system and, in
Exchange rules and applicable federal
data relating to net asset value (‘‘NAV’’) general, to protect investors and the
securities laws. The Exchange
and other applicable quantitative public interest.
represents that these procedures are
information. The issuer has represented The Exchange believes that the
adequate to properly monitor Exchange
that the NAV will be calculated daily proposed rule change is designed to
trading of the shares of the Fund in all
and will be made available to all market
trading sessions and to deter and detect prevent fraudulent and manipulative
participants at the same time. The Index
violations of Exchange rules and federal acts and practices in that the shares of
Provider is not a broker-dealer and is
securities laws applicable to trading on the Fund will be listed and traded on
not affiliated with a broker-dealer. To
the Exchange.14 the Exchange pursuant to the initial and
the extent that the Index Provider
The surveillances referred to above continued listing criteria for Index Fund
becomes a broker-dealer or becomes
generally focus on detecting securities Shares based on a fixed income index in
affiliated with a broker-dealer, the Index
trading outside their normal patterns, Rule 14.11(c)(4), except for the
Provider will implement and will
which could be indicative of minimum principal amount outstanding
maintain a ‘‘fire wall’’ around the
manipulative or other violative activity. requirement of 14.11(c)(4)(B)(i)(b). The
personnel who have access to
information concerning changes and When such situations are detected, Exchange represents that trading in the
adjustments to the Underlying Index surveillance analysis follows and shares of the Fund will be subject to the
and the Underlying Index shall be investigations are opened, where existing trading surveillances
calculated by a third party who is not appropriate, to review the behavior of administered by the Exchange as well as
a broker-dealer or fund advisor. In all relevant parties for all relevant cross-market surveillances administered
addition, any advisory committee, trading violations. by the FINRA on behalf of the Exchange,
supervisory board or similar entity that which are designed to detect violations
The Exchange or FINRA, on behalf of of Exchange rules and federal securities
advises the Index Provider or that makes the Exchange, or both, will
decisions on the Index, methodology laws applicable to trading on the
communicate as needed regarding Exchange. The Exchange represents that
and related matters, will implement and trading in the Shares and ETFs with
maintain, or be subject to, procedures these procedures are adequate to
other markets and other entities that are properly monitor Exchange trading of
designed to prevent the use and members of the ISG, and the Exchange
dissemination of material non-public the shares of the Fund in all trading
or FINRA, on behalf of the Exchange, or sessions and to deter and detect
information regarding the Underlying both, may obtain trading information
Index. violations of Exchange rules and federal
regarding trading in the Shares and securities laws applicable to trading on
The Exchange’s existing rules require
ETFs from such markets and other the Exchange. The Exchange or FINRA,
that the issuer of the Fund notify the
entities. In addition, the Exchange may on behalf of the Exchange, or both, will
Exchange of any material change to the
obtain information regarding trading in communicate as needed regarding
methodology used to determine the
the Shares and ETFs from markets and trading in the shares of the Fund with
composition of the Underlying Index
other entities that are members of ISG or other markets that are members of the
and, therefore, if the methodology of the
with which the Exchange has in place ISG. In addition, the Exchange will
Underlying Index was changed in a
a comprehensive surveillance sharing communicate as needed regarding
manner that would materially alter its
existing composition, the Exchange agreement. In addition, FINRA, on trading in the shares of the Fund with
would have advance notice and would behalf of the Exchange, is able to access, other markets that are members of the
evaluate the modifications to determine as needed, trade information for certain ISG or with which the Exchange has in
whether the Underyling [sic] Index fixed income securities held by a Fund place a comprehensive surveillance
remained sufficiently broad-based and reported to FINRA’s Trade Reporting sharing agreement. FINRA also can
well diversified. and Compliance Engine (‘‘TRACE’’). access data obtained from the Municipal
Price information regarding municipal FINRA also can access data obtained Securities Rulemaking Board relating to
bonds, convertible securities, and non- from the Municipal Securities municipal bond trading activity for
exchange traded assets, including Rulemaking Board (‘‘MSRB’’) relating to surveillance purposes in connection
investment companies, derivatives, municipal bond trading activity for with trading in the shares of the Fund.
sradovich on DSK3GMQ082PROD with NOTICES
money market instruments, repurchase surveillance purposes in connection FINRA, on behalf of the Exchange, is
agreements, structured notes, with trading in the Shares. able to access, as needed, trade
participation notes, and when-issued information for certain fixed income
14 FINRA conducts cross-market surveillances on
securities is available from third party securities held by the Fund reported to
behalf of the exchange pursuant to a regulatory
pricing services and major market data services agreement. The Exchange is responsible for
vendors. For exchange-traded assets, FINRA’s performance under this regulatory services 15 15 U.S.C. 78f.
including investment companies, agreement. 16 15 U.S.C. 78f(b)(5).
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![Federal Register / Vol. 83, No. 95 / Wednesday, May 16, 2018 / Notices 22725
FINRA’s Trade Reporting and believes that because [sic] these will halt trading in the Shares under the
Compliance Engine (‘‘TRACE’’). representations regarding diversification conditions specified in BZX Rule 11.18.
As discussed above, the Exchange and the lack of concentration among Trading may be halted because of
believes that the Underlying Index is constituent securities provides [sic] a market conditions or for reasons that, in
sufficiently broad-based to deter strong degree of protection against index the view of the Exchange, make trading
potential manipulation. The Underlying manipulation that is consistent with in the Shares inadvisable. These may
Index currently includes 3,637 other proposals that have been approved include: (1) The extent to which trading
component securities. Whereas the Rule for listing and trading by the is not occurring in the securities and/or
14.11(c)(4)(B)(i)(e) requires that an Commission. the financial instruments composing the
index contain securities from a The proposed rule change is designed daily disclosed portfolio of the Funds;
minimum of 13 non-affiliated issuers, to promote just and equitable principles or (2) whether other unusual conditions
the Underlying Index includes of trade and to protect investors and the or circumstances detrimental to the
securities issued by municipal entities public interest in that a large amount of maintenance of a fair and orderly
in more than 45 states or U.S. territories. information is publicly available market are present. Trading in the
Further, whereas the generic listing regarding the Funds, thereby promoting Shares also will be subject to Rule
rules permit a single component market transparency. The Fund’s 14.11(c)(1)(B)(iv), which sets forth
security to represent up to 30% of the portfolio holdings will be disclosed on circumstances under which Shares of a
weight of an index and the top five the Fund’s website daily after the close Fund may be halted. In addition,
component securities to, in aggregate, of trading on the Exchange and prior to investors will have ready access to
represent up to 65% of the weight of an the opening of trading on the Exchange information regarding the applicable
index, the largest component security in the following day. Moreover, the IIV for IIV, and quotation and last sale
the Underyling [sic] Index only shares of the Fund will be widely information for the shares of the Fund.
constitutes 0.32% of the weight of the disseminated by one or more major Trade price and other information
Underlying Index and the largest five market data vendors at least every 15 relating to municipal bonds is available
component securities represent 1.36% seconds during the Exchange’s Regular through the Municipal Securities
of the weight of the Underlying Index. Trading Hours. The current value of the Rulemaking Board’s Electronic
The Exchange believes that this Index will be disseminated by one or Municipal Market Access (‘‘EMMA’’)
significant diversification and the lack more major market data vendors at least system.
of concentration among constituent once per day. Information regarding All statements and representations
securities provides [sic] a strong degree market price and trading volume of the made in this filing regarding the index
of protection against index shares of the Fund will be continually composition, the description of the
manipulation. The Underlying Index available on a real-time basis throughout portfolio or reference assets, limitations
and Fund satisfy all of the generic the day on brokers’ computer screens on portfolio holdings or reference assets,
listing requirements for Index Fund and other electronic services, and dissemination and availability of index,
Shares based on a fixed income index, quotation and last sale information will reference asset, and intraday indicative
except for the minimum principal be available via the CTA high-speed values (as applicable), or the
amount outstanding requirement of line. The website for the Fund will applicability of Exchange listing rules
14.11(c)(4)(B)(i)(b). A fundamental include the prospectus for the Fund and shall constitute continued listing
purpose behind the minimum principal additional data relating to NAV and requirements for listing the Shares on
amount outstanding requirement is to other applicable quantitative the Exchange. The issuer is required to
ensure that component securities of an information. advise the Exchange of any failure by
index are sufficiently liquid such that If the Exchange becomes aware that the Fund to comply with the continued
the potential for index manipulation is the Fund’s NAV is not being listing requirements, and, pursuant to
reduced. With this in mind, the disseminated to all market participants its obligations under Section 19(g)(1) of
Exchange notes that the representations at the same time, it will halt trading in the Act, the Exchange will monitor for
in the Requirements for Index the shares of the Fund until such time compliance with the continued listing
Constituents for the Underlying Index as the NAV is available to all market requirements. If the Fund is not in
are identical to the representations participants. With respect to trading compliance with the applicable listing
made regarding the Comparable Index, halts, the Exchange may consider all requirements, the Exchange will
which underlies a series of Index Fund relevant factors in exercising its commence delisting procedures under
Shares that were previously approved discretion to halt or suspend trading in Rule 14.12.
for listing and trading by the the shares of the Fund. Trading also The proposed rule change is designed
Commission.17 In the Approval Order, may be halted because of market to perfect the mechanism of a free and
the Commission highlighted the conditions or for reasons that, in the open market and, in general, to protect
representations that the Comparable view of the Exchange, make trading in investors and the public interest in that
Index would, on a continuous basis, the shares the Fund inadvisable. If the it will facilitate the listing and trading
contain at least 500 component IIV and index value are not being of exchange-traded products that
securities and that at least 90% of the disseminated for the Fund as required, principally hold municipal bonds and
weight of the Comparable Index will be the Exchange may halt trading during that will enhance competition among
comprised of securities that have a the day in which the interruption to the market participants, to the benefit of
minimum par amount of $25 million dissemination of the IIV or index value investors and the marketplace. The
sradovich on DSK3GMQ082PROD with NOTICES
and were a constituent of an offering occurs. If the interruption to the Exchange has in place surveillance
where the original offering amount was dissemination of an IIV or index value procedures relating to trading in the
at least $100 million. The Exchange persists past the trading day in which it shares of the Fund and may obtain
occurred, the Exchange will halt information via ISG from other
17 The Comparable Index underlies the iShares
trading. The Exchange may consider all exchanges that are members of ISG or
National Muni Bond ETF. See Securities Exchange
Act Release No. 82295 (December 12, 2017), 82 FR
relevant factors in exercising its with which the Exchange has entered
60056 (December 18, 2017) (SR–NYSEArca–2017– discretion to halt or suspend trading in into a comprehensive surveillance
56) (the ‘‘Approval Order’’). the Shares of the Fund. The Exchange sharing agreement. In addition,
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![22726 Federal Register / Vol. 83, No. 95 / Wednesday, May 16, 2018 / Notices
investors will have ready access to Comments may be submitted by any of SECURITIES AND EXCHANGE
information regarding the IIV and the following methods: COMMISSION
quotation and last sale information for
Electronic Comments
the shares of the Fund. [Release No. 34–83207; File No. SR–MSRB–
For the above reasons, the Exchange • Use the Commission’s internet 2018–03]
believes that the proposed rule change comment form (http://www.sec.gov/
is consistent with the requirements of Self-Regulatory Organizations;
rules/sro.shtml); or
Section 6(b)(5) of the Act. Municipal Securities Rulemaking
• Send an email to rule-comments@ Board; Notice of Filing and Immediate
B. Self-Regulatory Organization’s sec.gov. Please include File Number Effectiveness of a Proposed Rule
Statement on Burden on Competition CboeBZX–2018–033 on the subject line. Change To Revise the Language of
The Exchange does not believe that Paper Comments Certain Administrative Rules To
the proposed rule change will impose Continue To Help Ensure That They
any burden on competition that is not • Send paper comments in triplicate Reflect MSRB Practices and Improve
necessary or appropriate in furtherance to Secretary, Securities and Exchange Consistency Among the Rules
of the purpose of the Act. The Exchange Commission, 100 F Street NE,
May 10, 2018.
notes that the proposed rule change will Washington, DC 20549–1090.
facilitate the listing and trading of an Pursuant to Section 19(b)(1) of the
All submissions should refer to File Securities Exchange Act of 1934 (the
additional exchange-traded product that
Number CboeBZX–2018–033. This file ‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule
will enhance competition among market
number should be included on the 19b–4 thereunder,2 notice is hereby
participants, to the benefit of investors
subject line if email is used. To help the given that on May 1, 2018 the Municipal
and the marketplace.
Commission process and review your Securities Rulemaking Board (the
C. Self-Regulatory Organization’s comments more efficiently, please use ‘‘MSRB’’ or ‘‘Board’’) filed with the
Statement on Comments on the only one method. The Commission will Securities and Exchange Commission
Proposed Rule Change Received From post all comments on the Commission’s (‘‘Commission’’) the proposed rule
Members, Participants, or Others internet website (http://www.sec.gov/ change as described in Items I, II, and
The Exchange has neither solicited rules/sro.shtml). Copies of the III below, which Items have been
nor received written comments on the submission, all subsequent prepared by the MSRB. The
proposed rule change. amendments, all written statements Commission is publishing this notice to
with respect to the proposed rule solicit comments on the proposed rule
III. Date of Effectiveness of the change that are filed with the change from interested persons.
Proposed Rule Change and Timing for Commission, and all written
Commission Action communications relating to the I. Self-Regulatory Organization’s
proposed rule change between the Statement of the Terms of Substance of
Because the foregoing proposed rule
Commission and any person, other than the Proposed Rule Change
change does not: (i) Significantly affect
the protection of investors or the public those that may be withheld from the The MSRB filed with the Commission
interest; (ii) impose any significant public in accordance with the proposed amendments to MSRB Rule
burden on competition; and (iii) become provisions of 5 U.S.C. 552, will be A–3, on membership on the Board,
operative for 30 days from the date on available for website viewing and MSRB Rule A–4, on meetings of the
which it was filed, or such shorter time printing in the Commission’s Public Board, MSRB Rule A–5, on officers and
as the Commission may designate, it has Reference Room, 100 F Street NE, employees of the Board, and MSRB Rule
become effective pursuant to Section Washington, DC 20549, on official A–17, on confidentiality of examination
19(b)(3)(A) of the Act 18 and Rule 19b– business days between the hours of reports, to revise the language of the
4(f)(6) thereunder.19 10:00 a.m. and 3:00 p.m. Copies of the rules to continue to help ensure that
At any time within 60 days of the filing will also be available for they reflect MSRB practices and
filing of the proposed rule change, the inspection and copying at the principal improve consistency among the rules
Commission summarily may office of the Exchange. All comments (collectively, the ‘‘proposed rule
temporarily suspend such rule change if received will be posted without change. change’’). The MSRB has designated the
it appears to the Commission that such Persons submitting comments are proposed rule change as being
action is necessary or appropriate in the cautioned that we do not redact or edit immediately effective upon filing
public interest, for the protection of personal identifying information from pursuant to Section 19(b)(3)(A)(iii) of
investors, or otherwise in furtherance of comment submissions. You should the Act 3 and Rule 19b–4(f)(3) 4
the purposes of the Act. If the submit only information that you wish thereunder. The proposed rule change is
Commission takes such action, the to make available publicly. All concerned solely with the
Commission shall institute proceedings submissions should refer to File administration of the MSRB in that it
to determine whether the proposed rule Number CboeBZX–2018–033 and amends certain rules that relate
change should be approved or should be submitted on or before June exclusively to the internal operation of
disapproved. 6,2018. the Board.
For the Commission, by the Division of The text of the proposed rule change
IV. Solicitation of Comments is available on the MSRB’s website at
Trading and Markets, pursuant to delegated
sradovich on DSK3GMQ082PROD with NOTICES
Interested persons are invited to authority.20 www.msrb.org/Rules-and-
submit written data, views, and Eduardo A. Aleman, Interpretations/SEC-Filings/2018-
arguments concerning the foregoing, Filings.aspx, at the MSRB’s principal
Assistant Secretary.
including whether the proposed rule
[FR Doc. 2018–10377 Filed 5–15–18; 8:45 am]
change is consistent with the Act. 1 15 U.S.C. 78s(b)(1).
BILLING CODE 8011–01–P 2 17 CFR 240.19b–4.
18 15 U.S.C. 78s(b)(3)(A). 3 15 U.S.C. 78s(b)(3)(A)(iii).
19 17 CFR 240.19b–4(f)(6). 20 17 CFR 200.30–3(a)(12). 4 17 CFR 240.19b–4(f)(3).
VerDate Sep<11>2014 17:34 May 15, 2018 Jkt 244001 PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 E:\FR\FM\16MYN1.SGM 16MYN1](https://thefederalregister.org/doc/83_FR_22817/page/5.svg)
Document Created: 2018-11-02 09:14:03
Document Modified: 2018-11-02 09:14:03
| 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 22722 |
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