83 FR 46228 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Amendment No. 1 and Order Approving on an Accelerated Basis a Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Continued Listing Criteria Applicable to the Shares of the iShares California AMT Free Muni Bond ETF and iShares New York AMT-Free Muni Bond ETF

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 177 (September 12, 2018)

[Federal Register Volume 83, Number 177 (Wednesday, September 12, 2018)]
[Notices]
[Pages 46228-46230]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-19772]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84049; File No. SR-NYSEArca-2018-38]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Amendment No. 1 and Order Approving on an Accelerated Basis a 
Proposed Rule Change, as Modified by Amendment No. 1, Relating to the 
Continued Listing Criteria Applicable to the Shares of the iShares 
California AMT Free Muni Bond ETF and iShares New York AMT-Free Muni 
Bond ETF

September 6, 2018.

I. Introduction

    On May 21, 2018, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
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 
modify the continued listing criteria applicable to the shares 
(``Shares'') of the iShares California

[[Page 46229]]

AMT-Free Muni Bond ETF (``CA Fund'') and iShares New York AMT-Free Muni 
Bond ETF (``NY Fund'' and, together with the CA Fund, ``Funds''). The 
proposed rule change was published for comment in the Federal Register 
on June 11, 2018.\3\ On July 24, 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 September 5, 2018, the Exchange filed 
Amendment No. 1 to the proposed rule change,\6\ which superseded the 
proposed rule change as originally filed. The Commission received no 
comment letters on the proposed rule change. The Commission is 
publishing this notice to solicit comments on Amendment No. 1 from 
interested persons, and is approving the proposed rule change, as 
modified by Amendment No. 1, on an accelerated basis.
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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. 83381 (June 5, 
2018), 83 FR 27042 (``Notice'').
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 83694, 83 FR 36641 
(July 30, 2018). The Commission designated September 9, 2018, as the 
date by which the Commission shall approve or disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \6\ In Amendment No. 1, the Exchange (1) eliminated an issuer 
concentration requirement from the proposed continued listing 
criteria applicable to the Shares, (2) deleted the condition that 
would have required a change to the index methodology before the 
proposed continued listing criteria would apply, (3) modified its 
justification as to why the proposed rule change is consistent with 
the Act, and (4) made other technical changes. Amendment No. 1 is 
available on the Commission's website at: https://www.sec.gov/comments/sr-nysearca-2018-38/srnysearca201838-4307304-173215.pdf.
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II. Description of the Proposed Rule Change \7\
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    \7\ Additional information regarding the Shares, Funds, and 
their underlying indexes is available in Amendment No. 1, supra note 
6.
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    Blackrock Fund Advisors (``Adviser'') is the investment adviser for 
the Funds. Under normal market conditions, the CA Fund invests at least 
90% of its assets in the component securities of the S&P California 
AMT-Free Muni Bond Index (``CA Index''), which measures the performance 
of the investment-grade segment of the California municipal bond 
market.\8\ Similarly, under normal market conditions, the NY Fund 
invests at least 90% of its assets in the component securities of the 
S&P New York AMT-Free Muni Bond Index (``NY Index'' and, together with 
CA Index, ``Indexes''), which measures the performance of the 
investment-grade segment of the New York municipal bond market.\9\
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    \8\ With respect to the remaining 10% of its assets, the CA Fund 
may invest in short-term debt instruments issued by state 
governments, municipalities or local authorities, cash, exchange-
traded U.S. Treasury futures, and municipal money market funds, as 
well as municipal bond securities not included in the CA Index, but 
which the Adviser believes will help the CA Fund track the CA Index.
    \9\ With respect to the remaining 10% of its assets, the NY Fund 
may invest in short-term debt instruments issued by state 
governments, municipalities or local authorities, cash, exchange-
traded U.S. Treasury futures, and municipal money market funds, as 
well as municipal bond securities not included in the NY Index, but 
which the Adviser believes will help the NY Fund track the NY Index.
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    Currently, the Exchange lists and trades the Shares under NYSE Arca 
Rule 5.2-E(j)(3), which governs the listing and trading of Investment 
Company Units, and pursuant to an order approving the Exchange's 
proposal to list and trade the Shares.\10\ The representations made by 
the Exchange in support of that proposed rule change constitute 
continued listing requirements for the Shares.\11\ The Exchange, with 
this filing, now proposes to amend the continued listing requirements 
applicable to the Shares.
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    \10\ See Securities Exchange Act Release No. 82295 (December 12, 
2017), 82 FR 60056 (December 18, 2017) (File No. SR-NYSEArca-2017-
56) (``Listing Approval Order'').
    \11\ See NYSE Arca Rule 5.2-E(j)(3).
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    Currently, for the Exchange to list and trade shares of the CA 
Fund, each bond in the CA Index must: (1) Be a constituent of an 
offering where the original offering amount of the constituent bonds in 
the aggregate was at least $100 million; (2) have a total minimum par 
amount of $25 million; and (3) maintain a total minimum par amount 
greater than or equal to $25 million as of the next rebalancing date. 
Further, the CA Index must include at least 500 component securities.
    The Exchange proposes to amend the continued listing requirements 
for the shares of the CA Fund such that: (1) At least 90% of the weight 
of the CA Index must consist of securities that have an outstanding par 
value of at least $15 million and were issued as part of a transaction 
of at least $100 million; and (2) the CA Index must contain at least 
500 component securities.
    Currently, for the Exchange to list and trade shares of the NY 
Fund, each bond in the NY Index must: (1) Be a constituent of an 
offering where the original offering amount of the constituent bonds in 
the aggregate was at least $100 million; (2) have a minimum total par 
amount of $25 million; and (3) maintain a minimum total par amount 
greater than or equal to $25 million as of the next rebalancing date. 
Further, the NY Index must include at least 500 component securities.
    The Exchange proposes to amend the continued listing requirements 
for the shares of the NY Fund such that: (1) At least 90% of the weight 
of the NY Index must consist of securities that have an outstanding par 
value of at least $5 million and were issued as part of a transaction 
of at least $20 million; and (2) the NY Index must contain at least 500 
component securities.
    The Exchange represents that, except for Commentary .02(a)(2) to 
NYSE Arca Rule 5.2-E(j)(3), the CA Index and NY Index each will 
continue to satisfy all of the requirements under NYSE Arca Rule 5.2-
E(j)(3).\12\
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    \12\ See Amendment No. 1, supra note 6.
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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 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\13\ In particular, the 
Commission finds that the proposal is consistent with Section 6(b)(5) 
of the Act,\14\ which requires, among other things, that the rules of a 
national securities exchange be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, 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. The proposed minimum outstanding par value and 
transaction size requirements for constituents of the Indexes are 
consistent with those approved by the Commission for similar 
products.\15\ Moreover, there is no change to the current continued 
listing criterion that each Index includes at least 500 component 
securities. Further, the Exchange represents that the CA Index and NY 
Index each will continue to satisfy all of the requirements under NYSE 
Arca Rule 5.2-E(j)(3) except for Commentary .02(a)(2) to NYSE Arca

[[Page 46230]]

Rule 5.2-E(j)(3).\16\ The Commission notes that the Exchange proposes 
no other changes to the Funds. Accordingly, the Commission believes 
that the proposed continued listing requirements are adequately 
designed to help deter manipulation of the Shares.
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    \13\ 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).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ See Listing Approval Order, supra note 10 (approving the 
listing and trading of shares of the VanEck Vectors--AMT-Free Long 
Municipal Index and VanEck Vectors--High Yield Municipal Index ETFs, 
among other funds).
    \16\ See supra note 12 and accompanying text.
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    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 1, is consistent with 
Sections 6(b)(5) and 11A of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.

IV. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning Amendment No. 1. Comments may be submitted by any 
of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEArca-2018-38 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2018-38. 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 this 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 SR-NYSEArca-2018-38 and should be submitted 
on or before October 3, 2018.

V. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 1

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 1, prior to the 30th day after the 
date of publication of notice of Amendment No. 1 in the Federal 
Register. Amendment No. 1 supplements the proposal by, among other 
things, eliminating an issuer concentration requirement from the 
proposed continued listing criteria applicable to the Shares and 
deleting the condition that would require a change to the index 
methodology before the proposed continued listing criteria would apply. 
The changes and additional information in Amendment No. 1 raise no 
novel issues and assist the Commission in finding that the proposal is 
consistent with the Act. Accordingly, the Commission finds good cause, 
pursuant to Section 19(b)(2) of the Exchange Act,\17\ to approve the 
proposed rule change, as modified by Amendment No. 1, on an accelerated 
basis.
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    \17\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\18\ that the proposed rule change (SR-NYSEArca-2018-38), as 
modified by Amendment No. 1 thereto, be, and hereby is, approved on an 
accelerated basis.
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    \18\ 15 U.S.C. 78f(b)(2).
    \19\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-19772 Filed 9-11-18; 8:45 am]
 BILLING CODE 8011-01-P