83_FR_52455 83 FR 52255 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To List and Trade Shares of the JPMorgan Municipal ETF and JPMorgan Ultra-Short Municipal ETF of the J.P. Morgan Exchange-Traded Fund Trust Under Rule 14.11(i), Managed Fund Shares

83 FR 52255 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To List and Trade Shares of the JPMorgan Municipal ETF and JPMorgan Ultra-Short Municipal ETF of the J.P. Morgan Exchange-Traded Fund Trust Under Rule 14.11(i), Managed Fund Shares

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 200 (October 16, 2018)

Page Range52255-52264
FR Document2018-22427

Federal Register, Volume 83 Issue 200 (Tuesday, October 16, 2018)
[Federal Register Volume 83, Number 200 (Tuesday, October 16, 2018)]
[Notices]
[Pages 52255-52264]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-22427]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84394; File No. SR-CboeBZX-2018-072]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To List 
and Trade Shares of the JPMorgan Municipal ETF and JPMorgan Ultra-Short 
Municipal ETF of the J.P. Morgan Exchange-Traded Fund Trust Under Rule 
14.11(i), Managed Fund Shares

October 10, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 26, 2018, Cboe BZX Exchange, Inc. (the ``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.
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    \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).
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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 shares of the 
JPMorgan Municipal ETF and JPMorgan Ultra-Short Municipal ETF (each a 
``Fund'' or, collectively, the ``Funds'') of the J.P. Morgan Exchange-
Traded Fund Trust (the ``Trust'' or the ``Issuer'') under Rule 14.11(i) 
(``Managed Fund Shares''). The shares of the Funds are referred to 
herein as the ``Shares.''
    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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade the Shares under Rule 
14.11(i), which governs the listing and trading of Managed Fund Shares 
on the Exchange.\5\ The Funds will be actively managed funds. The 
Shares will be offered by the Trust, which was established as a 
Delaware statutory trust. 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.\6\
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    \5\ The Commission approved Rule 14.11(i) in Securities Exchange 
Act Release No. 65225 (August 30, 2011), 76 FR 55148 (September 6, 
2011) (SR-BATS-2011-018).
    \6\ See Registration Statement on Form N-1A for the Trust, dated 
July 31, 2018 (File Nos. 333-191837 and 811-22903). 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. 31990 
(February 9, 2016) (File No. 811-22903).
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    Rule 14.11(i)(4)(C)(ii)(a) requires that component fixed income 
securities that, in the aggregate, account for at least 75% of the 
weight of the portfolio shall have a minimum principal amount 
outstanding of $100 million or more. The Exchange submits this proposal 
because the portfolios of the Funds will not meet this requirement. The 
Fund will, however, meet all of the other requirements of Rule 
14.11(i)(4)(C)(ii), (iii), (iv) and (v), specifically including Rule 
14.11(i)(4)(C)(iv), which provides that non-agency, non-GSE, and 
privately-issued mortgage-related and other asset-backed securities 
components of a portfolio shall not account, in the aggregate, for more 
than 20% of the weight of the fixed income portion of the portfolio, 
and 14.11(i)(4)(C)(iv)(a), which provides that in the aggregate, at 
least 90% of the weight of listed derivatives holdings shall consist of 
futures, options, and swaps for which the Exchange may obtain 
information via the Intermarket Surveillance Group (``ISG'') from other 
members or affiliates of the ISG or for which the principal market is a 
market with which the Exchange has a comprehensive surveillance sharing 
agreement, calculated using the aggregate gross notional value of such 
holdings.
Description of the Shares and the Funds
    J.P. Morgan Investment Management, Inc. is the investment adviser 
(the ``Adviser'') to the Fund. JPMorgan Chase Bank, N.A. is the 
administrator, custodian, and transfer agent (``Administrator,'' 
``Custodian,'' and ``Transfer Agent,'' respectively) for the Trust. 
JPMorgan Distribution Services, Inc. serves as the distributor 
(``Distributor'') for the Trust.
    Rule 14.11(i)(7) provides that, if the investment adviser to the 
investment company issuing Managed Fund Shares is affiliated with a 
broker-dealer, such investment adviser shall erect a ``fire wall'' 
between the investment adviser and the broker-dealer with respect to 
access to information concerning the composition and/or changes to such 
investment company portfolio.\7\ In addition, Rule 14.11(i)(7) further 
requires that personnel who make decisions on the investment company's 
portfolio composition must be subject to

[[Page 52256]]

procedures designed to prevent the use and dissemination of material 
nonpublic information regarding the applicable investment company 
portfolio. Rule 14.11(i)(7) is similar to Rule 14.11(b)(5)(A)(i), 
however, Rule 14.11(i)(7) in connection with the establishment of a 
``fire wall'' between the investment adviser and the broker-dealer 
reflects the applicable open-end fund's portfolio, not an underlying 
benchmark index, as is the case with index-based funds. The Adviser is 
not a registered broker-dealer, but is affiliated with multiple broker-
dealers and has implemented ``fire walls'' with respect to such broker-
dealers regarding access to information concerning the composition and/
or changes to a Fund's portfolio. In addition, Adviser personnel who 
make decisions regarding a Fund's portfolio are subject to procedures 
designed to prevent the use and dissemination of material nonpublic 
information regarding the Fund's portfolio. In the event that (a) the 
Adviser becomes registered as a broker-dealer or newly affiliated with 
another broker-dealer, or (b) any new adviser or sub-adviser is a 
registered broker-dealer or becomes affiliated with a broker-dealer, it 
will implement a fire wall with respect to its relevant personnel or 
such broker-dealer affiliate, as applicable, regarding access to 
information concerning the composition and/or changes to the portfolio, 
and will be subject to procedures designed to prevent the use and 
dissemination of material non-public information regarding such 
portfolio.
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    \7\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and its related personnel are 
subject to the provisions of Rule 204A-1 under the Advisers Act 
relating to codes of ethics. This Rule requires investment advisers 
to adopt a code of ethics that reflects the fiduciary nature of the 
relationship to clients as well as compliance with other applicable 
securities laws. Accordingly, procedures designed to prevent the 
communication and misuse of non-public information by an investment 
adviser must be consistent with Rule 204A-1 under the Advisers Act. 
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful 
for an investment adviser to provide investment advice to clients 
unless such investment adviser has (i) adopted and implemented 
written policies and procedures reasonably designed to prevent 
violation, by the investment adviser and its supervised persons, of 
the Advisers Act and the Commission rules adopted thereunder; (ii) 
implemented, at a minimum, an annual review regarding the adequacy 
of the policies and procedures established pursuant to subparagraph 
(i) above and the effectiveness of their implementation; and (iii) 
designated an individual (who is a supervised person) responsible 
for administering the policies and procedures adopted under 
subparagraph (i) above.
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JPMorgan Municipal ETF
    According to the Registration Statement, the Fund will seek to 
provide monthly dividends, which are excluded from gross income, and to 
protect the value of a shareholder's investment by investing primarily 
in municipal obligations. For purposes of the Fund's investment 
objective, ``gross income'' means gross income for federal income tax 
purposes. To achieve its objective, the Fund will invest, under normal 
circumstances,\8\ at least 80% of its net assets in Municipal 
Securities, as defined below, the interest from which is exempt from 
federal income tax. The Fund is not a money market fund and does not 
seek to maintain a stable net asset value of $1.00 per share. The Fund 
will be classified as a ``diversified'' investment company under the 
1940 Act.\9\
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    \8\ The term ``under normal circumstances'' includes, but is not 
limited to, the absence of adverse market, economic, political, or 
other conditions, including extreme volatility or trading halts in 
the financial markets; operational issues causing dissemination of 
inaccurate market information; or force majeure type events such as 
systems failure, natural or man-made disaster, act of God, armed 
conflict, act of terrorism, riot, or labor disruption, or any 
similar intervening circumstance.
    \9\ The diversification standard is set forth in Section 5(b)(1) 
of the 1940 Act.
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    The Fund intends to qualify each year as a regulated investment 
company (a ``RIC'') under Subchapter M of the Internal Revenue Code of 
1986, as amended. The Fund will invest its assets, and otherwise 
conduct its operations, in a manner that is intended to satisfy the 
qualifying income, diversification and distribution requirements 
necessary to establish and maintain RIC qualification under Subchapter 
M.
Principal Holdings--Municipal Securities
    To achieve its objective, the Fund will invest, under normal 
circumstances, in fixed and variable rate Municipal Securities, as 
defined below. As part of its investments in Municipal Securities, the 
Fund invests primarily in investment grade securities or the unrated 
equivalent. Investment-grade securities are rated a minimum of BBB- or 
higher by Standard & Poor's Ratings Services and/or Fitch, or Baa3 or 
higher by Moody's, or if unrated, determined by the Adviser to be of 
equivalent quality.\10\ Up to 10% of the Fund's total assets may be 
invested in securities rated below investment grade (junk bonds). Junk 
bonds are rated in the fifth or lower rated categories (for example, 
BB+ or lower by Standard & Poor's Ratings Services and Ba1 or lower by 
Moody's). Under normal circumstances, the Fund invests in a portfolio 
of Municipal Securities with an average weighted maturity of three to 
ten years. Average weighted maturity is the average of all the current 
maturities (that is, the term of the securities) of the individual 
bonds in a Fund calculated so as to count most heavily those securities 
with the highest dollar value.
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    \10\ According to the Adviser, the Adviser may determine that 
unrated securities are of ``equivalent quality'' based on such 
credit quality factors that it deems appropriate, which may include 
among other things, performing an analysis similar, to the extent 
possible, to that performed by a nationally recognized statistical 
ratings organization when rating similar securities and issuers. In 
making such a determination, the Adviser may consider internal 
analyses and risk ratings, third party research and analysis, and 
other sources of information, as deemed appropriate by the Adviser. 
The Adviser notes that the Fund may hold up to 10% of its net assets 
in fixed-rate Municipal Securities that are not investment-grade.
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    Municipal securities (``Municipal Securities'') are debt securities 
issued by or on behalf of states, territories and possessions of the 
United States, including the District of Columbia, and their respective 
authorities, political subdivisions, agencies and instrumentalities and 
other groups with the authority to act for the municipalities, the 
interest on which is exempt from federal income tax and will include 
only the following instruments: General obligation bonds,\11\ revenue 
bonds,\12\ municipal notes,\13\ municipal tax exempt commercial 
paper,\14\ tender option bonds,\15\ private activity and industrial 
development bonds, variable rate demand obligations (``VRDOs''),\16\ 
variable rate demand preferred securities, municipal mortgage-backed 
securities and other asset-backed securities, municipal lease 
obligations,\17\ stripped securities,\18\ structured securities,\19\ 
deferred payment securities, when issued

[[Page 52257]]

securities,\20\ and zero coupon securities.\21\ The Fund may invest 
more than 25% of its total assets in municipal obligations, the 
interest upon which is paid from revenues of projects within a single 
sector, such as housing or healthcare.
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    \11\ General obligation bonds are obligations involving the 
credit of an issuer possessing taxing power and are payable from 
such issuer's general revenues and not from any particular source.
    \12\ Revenue bonds are bonds that are secured by a pledge of 
revenues derived from the operations of a revenue producing 
institution (i.e., a hospital or a university), a system (i.e., a 
water system or an airport), a project, or from a special tax levy. 
Industrial development bonds are generally considered revenue bonds, 
and they are typically payable from the revenues of a corporation.
    \13\ Municipal notes are shorter-term municipal debt obligations 
that may provide interim financing in anticipation of tax 
collection, receipt of grants, bond sales, or revenue receipts. 
These include tax anticipation notes, bond anticipation notes and 
revenue anticipation notes.
    \14\ Municipal tax exempt commercial paper is generally 
unsecured debt that is issued to meet short-term financing needs.
    \15\ Tender option bonds are synthetic floating-rate or 
variable-rate securities issued when long-term bonds are purchased 
in the primary or secondary market and then deposited into a trust. 
Custodial receipts are then issued to investors, such as the Fund, 
evidencing ownership interests in the trust.
    \16\ VRDOs are tax-exempt obligations that contain a floating or 
variable interest rate adjustment formula and a right of demand on 
the part of the holder thereof to receive payment of the unpaid 
principal balance plus accrued interest upon a short notice period 
not to exceed seven days.
    \17\ Municipal lease obligations include certificates of 
participation issued by government authorities or entities to 
finance the acquisition or construction of equipment, land, and/or 
facilities.
    \18\ Stripped securities are created when an issuer separates 
the interest and principal components of an instrument and sells 
them as separate securities. In general, one security is entitled to 
receive the interest payments on the underlying assets and the other 
to receive the principal payments.
    \19\ Structured securities are privately negotiated debt 
obligations where the principal and/or interest is determined by 
reference to the performance of an underlying investment, index, or 
reference obligation, and may be issued by governmental agencies. 
While structured securities are part of the principal holdings of 
the Fund, the Issuer represents that such securities, when combined 
with those instruments held as part of the other portfolio holdings 
described below, will not exceed 20% of the Fund's net assets.
    \20\ The Fund may purchase or sell securities that it is 
entitled to receive on a when issued or delayed delivery basis as 
well as through a forward commitment.
    \21\ Zero coupon securities are securities that are sold at a 
discount to par value and do not pay interest during the life of the 
security. The discount approximates the total amount of interest the 
security will accrue and compound over the period until maturity at 
a rate of interest reflecting the market rate of the security at the 
time of issuance. Upon maturity, the holder of a zero coupon 
security is entitled to receive the par value of the security.
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Requirements for Fund Holdings
    The Fund will hold a minimum of 40 different Municipal Securities 
diversified among issuers in at least 8 different states with no more 
than 30% of the Fund's assets comprised of Municipal Securities that 
provide exposure to any single state (collectively, ``Minimum 
Requirement 1''). The Fund will hold a minimum of 75 different 
Municipal Securities when at least four creation units are outstanding 
(``Trigger Number 1A''). The Fund will hold a minimum of 100 different 
Municipal Securities diversified among issuers in at least 20 different 
states when at least eight creation units are outstanding (``Trigger 
Number 1B''). No single Municipal Security held by the Fund will exceed 
4% of the weight of the Fund's portfolio and no single issuer of 
Municipal Securities will account for more than 10% of the weight of 
the Fund's portfolio (collectively, ``Minimum Requirement 2''). The 
Fund will hold Municipal Securities of at least 20 non-affiliated 
issuers (``Minimum Requirement 3''). The Fund will hold Municipal 
Securities of at least 30 non-affiliated issuers when at least four 
creation units are outstanding (``Trigger Number 2'').\22\ To the 
extent that the Fund at one point has sufficient creation units 
outstanding necessary to trigger a diversity requirement laid out above 
(each of Trigger Numbers 1A, 1B and 2, a ``Trigger Number''), but 
subsequently has fewer creation units outstanding than the applicable 
Trigger Number, the Fund may no longer comply with the applicable 
diversity requirement.\23\
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    \22\ For purposes of this filing, each state and each separate 
political subdivision, agency, authority, or instrumentality of such 
state, each multi-state agency or authority, and each guarantor, if 
any, will be treated as separate issuers of Municipal Securities.
    \23\ While the Fund may no longer comply with the diversity 
requirements applicable to the previously applicable Trigger Number, 
the Fund will continue to comply with any diversity requirement for 
which the number of creation units outstanding continues to exceed 
the Trigger Number (i.e., Trigger Number 1A), as well as each of 
Minimum Requirements 1, 2 and 3.
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    In the absence of normal circumstances, the Fund may temporarily 
depart from its normal investment process, provided that such departure 
is, in the opinion of the Adviser, consistent with the Fund's 
investment objective and in the best interest of the Fund. For example, 
the Fund may hold a higher than normal proportion of its assets in cash 
in response to adverse market, economic or political conditions.
Other Portfolio Holdings
    The Fund may also, to a limited extent (under normal circumstances, 
less than 20% of the Fund's net assets), engage in transactions in 
United States bond futures contracts, exchange traded treasury and debt 
futures options, interest rate swaps and zero coupon swaps, interest 
rate futures, interest rate options, and swaps on Municipal Securities 
indexes.\24\ The Fund may also invest to a limited extent (under normal 
circumstances, less than 20% of the Fund's net assets) in auction rate 
securities, commercial paper (other than the municipal tax exempt 
commercial paper described above), corporate debt securities (bonds and 
other debt securities of domestic and foreign issuers), exchange traded 
and non-exchange traded investment companies (including investment 
companies advised by the Adviser or its affiliates),\25\ inflation 
linked debt securities, inverse floating rate instruments, loan 
assignments and participations, short term funding agreements, Treasury 
receipts, United States government obligations, when-issued securities, 
delayed delivery securities, forward commitments, and deferred payment 
securities. The Fund's investments will be consistent with its 
investment objective and will not be used to achieve leveraged returns 
(i.e. two times or three times the Fund's benchmark, as described in 
the Registration Statement).
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    \24\ The derivatives will be centrally cleared and they will be 
collateralized. Derivatives are not a principal investment strategy 
of the Fund.
    \25\ The Fund currently anticipates investing in only registered 
open-end investment companies, including mutual funds and the open-
end investment company funds described in Rule 14.11. The Fund may 
invest in the securities of other investment companies to the extent 
permitted by law.
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    The Fund may also enter into repurchase and reverse repurchase 
agreements (collectively, ``Repurchase Agreements''). Repurchase 
Agreements involve the sale of securities with an agreement to 
repurchase the securities at an agreed-upon price, date and interest 
payment and have the characteristics of borrowing as part of the Fund's 
principal holdings.\26\
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    \26\ The Fund's exposure to reverse repurchase agreements will 
be covered by liquid assets having a value equal to or greater than 
such commitments. The use of reverse repurchase agreements is a form 
of leverage because the proceeds derived from reverse repurchase 
agreements may be invested in additional securities. As further 
stated below, the Fund's investments will be consistent with its 
investment objective and will not be used to achieve leveraged 
returns.
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    The Fund may also invest in cash and Cash Equivalents,\27\ which 
includes shares of exchange traded and non-exchange traded investment 
companies (including investment companies advised by the Adviser or its 
affiliates) that invest principally in money market instruments.
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    \27\ As defined in Exchange Rule 14.11(i)(4)(C)(iii)(b), Cash 
Equivalents are short-term instruments with maturities of less than 
three months, which includes only the following: (i) U.S. Government 
securities, including bills, notes, and bonds differing as to 
maturity and rates of interest, which are either issued or 
guaranteed by the U.S. Treasury or by U.S. Government agencies or 
instrumentalities; (ii) certificates of deposit issued against funds 
deposited in a bank or savings and loan association; (iii) bankers 
acceptances, which are short-term credit instruments used to finance 
commercial transactions; (iv) repurchase agreements and reverse 
repurchase agreements; (v) bank time deposits, which are monies kept 
on deposit with banks or savings and loan associations for a stated 
period of time at a fixed rate of interest; (vi) commercial paper, 
which are short-term unsecured promissory notes; and (vii) money 
market funds.
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Investment Restrictions
    The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid assets (calculated at the time of investment), as 
deemed illiquid by the Adviser \28\ under the 1940 Act.\29\ The

[[Page 52258]]

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 assets. Illiquid assets include 
securities subject to contractual or other restrictions on resale and 
other instruments that lack readily available markets as determined in 
accordance with Commission staff guidance.
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    \28\ In reaching liquidity decisions, the Adviser may consider 
factors including: 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; the nature of the 
security and the nature of the marketplace trades (e.g., the time 
needed to dispose of the security, the method of soliciting offers, 
and the mechanics of transfer); any legal or contractual 
restrictions on the ability to transfer the security or asset; 
significant developments involving the issuer or counterparty 
specifically (e.g., default, bankruptcy, etc.) or the securities 
markets generally; and settlement practices, registration 
procedures, limitations on currency conversion or repatriation, and 
transfer limitations (for foreign securities or other assets).
    \29\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the Securities Act of 1933).
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JPMorgan Ultra-Short Municipal ETF
    According to the Registration Statement, the Fund will seek as high 
a level of current income exempt from federal income tax as is 
consistent with relative stability of principal. To achieve its 
objective, the Fund will invest, under normal circumstances,\30\ at 
least 80% of its net assets in Municipal Securities, as defined below, 
the interest from which is exempt from federal income tax. The Fund is 
not a money market fund and does not seek to maintain a stable net 
asset value of $1.00 per share. The Fund will be classified as a 
``diversified'' investment company under the 1940 Act.\31\
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    \30\ The term ``under normal circumstances'' includes, but is 
not limited to, the absence of adverse market, economic, political, 
or other conditions, including extreme volatility or trading halts 
in the financial markets; operational issues causing dissemination 
of inaccurate market information; or force majeure type events such 
as systems failure, natural or man-made disaster, act of God, armed 
conflict, act of terrorism, riot, or labor disruption, or any 
similar intervening circumstance.
    \31\ The diversification standard is set forth in Section 
5(b)(1) of the 1940 Act.
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    The Fund intends to qualify each year as a regulated investment 
company (a ``RIC'') under Subchapter M of the Internal Revenue Code of 
1986, as amended. The Fund will invest its assets, and otherwise 
conduct its operations, in a manner that is intended to satisfy the 
qualifying income, diversification and distribution requirements 
necessary to establish and maintain RIC qualification under Subchapter 
M.
Principal Holdings--Municipal Securities
    To achieve its objective, the Fund will invest, under normal 
circumstances, in fixed and variable rate Municipal Securities, as 
defined below. As part of its investments in Municipal Securities, the 
Fund invests primarily in investment grade securities or the unrated 
equivalent. Investment-grade securities are rated a minimum of BBB- or 
higher by Standard & Poor's Ratings Services and/or Fitch, or Baa3 or 
higher by Moody's, or if unrated, determined by the Adviser to be of 
equivalent quality.\32\ Up to 10% of the Fund's total assets may be 
invested in securities rated below investment grade (junk bonds). Junk 
bonds are rated in the fifth or lower rated categories (for example, 
BB+ or lower by Standard & Poor's Ratings Services and Ba1 or lower by 
Moody's). Under normal circumstances, the Fund invests in a portfolio 
of municipal bonds with an average weighted maturity of two years or 
less. Average weighted maturity is the average of all the current 
maturities (that is, the term of the securities) of the individual 
bonds in a Fund calculated so as to count most heavily those securities 
with the highest dollar value.
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    \32\ According to the Adviser, the Adviser may determine that 
unrated securities are of ``equivalent quality'' based on such 
credit quality factors that it deems appropriate, which may include 
among other things, performing an analysis similar, to the extent 
possible, to that performed by a nationally recognized statistical 
ratings organization when rating similar securities and issuers. In 
making such a determination, the Adviser may consider internal 
analyses and risk ratings, third party research and analysis, and 
other sources of information, as deemed appropriate by the Adviser. 
The Adviser notes that the Fund may hold up to 10% of its net assets 
in fixed-rate Municipal Securities that are not investment-grade.
---------------------------------------------------------------------------

    Municipal securities (``Municipal Securities'') are debt securities 
issued by or on behalf of states, territories and possessions of the 
United States, including the District of Columbia, and their respective 
authorities, political subdivisions, agencies and instrumentalities and 
other groups with the authority to act for the municipalities, the 
interest on which is exempt from federal income tax and will include 
only the following instruments: General obligation bonds,\33\ revenue 
bonds,\34\ municipal notes,\35\ municipal tax exempt commercial 
paper,\36\ tender option bonds,\37\ private activity and industrial 
development bonds, variable rate demand obligations (``VRDOs''),\38\ 
variable rate demand preferred securities, municipal mortgage-backed 
securities and other asset-backed securities, municipal lease 
obligations,\39\ stripped securities,\40\ structured securities,\41\ 
deferred payment securities, when issued securities,\42\ and zero 
coupon securities.\43\ The Fund may invest more than 25% of its total 
assets in municipal obligations, the interest upon which is paid from 
revenues of projects within a single sector, such as housing or 
healthcare.
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    \33\ General obligation bonds are obligations involving the 
credit of an issuer possessing taxing power and are payable from 
such issuer's general revenues and not from any particular source.
    \34\ Revenue bonds are bonds that are secured by a pledge of 
revenues derived from the operations of a revenue producing 
institution (i.e., a hospital or a university), a system (i.e., a 
water system or an airport), a project, or from a special tax levy. 
Industrial development bonds are generally considered revenue bonds, 
and they are typically payable from the revenues of a corporation.
    \35\ Municipal notes are shorter-term municipal debt obligations 
that may provide interim financing in anticipation of tax 
collection, receipt of grants, bond sales, or revenue receipts. 
These include tax anticipation notes, bond anticipation notes and 
revenue anticipation notes.
    \36\ Municipal tax exempt commercial paper is generally 
unsecured debt that is issued to meet short-term financing needs.
    \37\ Tender option bonds are synthetic floating-rate or 
variable-rate securities issued when long-term bonds are purchased 
in the primary or secondary market and then deposited into a trust. 
Custodial receipts are then issued to investors, such as the Fund, 
evidencing ownership interests in the trust.
    \38\ VRDOs are tax-exempt obligations that contain a floating or 
variable interest rate adjustment formula and a right of demand on 
the part of the holder thereof to receive payment of the unpaid 
principal balance plus accrued interest upon a short notice period 
not to exceed seven days.
    \39\ Municipal lease obligations include certificates of 
participation issued by government authorities or entities to 
finance the acquisition or construction of equipment, land, and/or 
facilities.
    \40\ Stripped securities are created when an issuer separates 
the interest and principal components of an instrument and sells 
them as separate securities. In general, one security is entitled to 
receive the interest payments on the underlying assets and the other 
to receive the principal payments.
    \41\ Structured securities are privately negotiated debt 
obligations where the principal and/or interest is determined by 
reference to the performance of an underlying investment, index, or 
reference obligation, and may be issued by governmental agencies. 
While structured securities are part of the principal holdings of 
the Fund, the Issuer represents that such securities, when combined 
with those instruments held as part of the other portfolio holdings 
described below, will not exceed 20% of the Fund's net assets.
    \42\ The Fund may purchase or sell securities that it is 
entitled to receive on a when issued or delayed delivery basis as 
well as through a forward commitment.
    \43\ Zero coupon securities are securities that are sold at a 
discount to par value and do not pay interest during the life of the 
security. The discount approximates the total amount of interest the 
security will accrue and compound over the period until maturity at 
a rate of interest reflecting the market rate of the security at the 
time of issuance. Upon maturity, the holder of a zero coupon 
security is entitled to receive the par value of the security.
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Requirements for Fund Holdings
    The Fund will hold a minimum of 40 different Municipal Securities

[[Page 52259]]

diversified among issuers in at least 8 different states with no more 
than 30% of the Fund's assets comprised of Municipal Securities that 
provide exposure to any single state (collectively, ``Minimum 
Requirement 1''). The Fund will hold a minimum of 75 different 
Municipal Securities when at least four creation units are outstanding 
(``Trigger Number 1A''). The Fund will hold a minimum of 100 different 
Municipal Securities diversified among issuers in at least 20 different 
states when at least eight creation units are outstanding (``Trigger 
Number 1B''). No single Municipal Security held by the Fund will exceed 
4% of the weight of the Fund's portfolio and no single issuer of 
Municipal Securities will account for more than 10% of the weight of 
the Fund's portfolio (collectively, ``Minimum Requirement 2''). The 
Fund will hold Municipal Securities of at least 20 non-affiliated 
issuers (``Minimum Requirement 3''). The Fund will hold Municipal 
Securities of at least 30 non-affiliated issuers when at least four 
creation units are outstanding (``Trigger Number 2'').\44\ To the 
extent that the Fund at one point has sufficient creation units 
outstanding necessary to trigger a diversity requirement laid out above 
(each of Trigger Numbers 1A, 1B and 2, a ``Trigger Number''), but 
subsequently has fewer creation units outstanding than the applicable 
Trigger Number, the Fund may no longer comply with the applicable 
diversity requirement.\45\
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    \44\ For purposes of this filing, each state and each separate 
political subdivision, agency, authority, or instrumentality of such 
state, each multi-state agency or authority, and each guarantor, if 
any, will be treated as separate issuers of Municipal Securities.
    \45\ While the Fund may no longer comply with the diversity 
requirements applicable to the previously applicable Trigger Number, 
the Fund will continue to comply with any diversity requirement for 
which the number of creation units outstanding continues to exceed 
the Trigger Number (i.e., Trigger Number 1A), as well as each of 
Minimum Requirements 1, 2 and 3.
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    In the absence of normal circumstances, the Fund may temporarily 
depart from its normal investment process, provided that such departure 
is, in the opinion of the Adviser, consistent with the Fund's 
investment objective and in the best interest of the Fund. For example, 
the Fund may hold a higher than normal proportion of its assets in cash 
in response to adverse market, economic or political conditions.
Other Portfolio Holdings
    The Fund may also, to a limited extent (under normal circumstances, 
less than 20% of the Fund's net assets), engage in transactions in 
United States bond futures contracts, exchange traded treasury and debt 
futures options, interest rate swaps and zero coupon swaps, interest 
rate futures, interest rate options, and swaps on Municipal Securities 
indexes.\46\ The Fund may also invest to a limited extent (under normal 
circumstances, less than 20% of the Fund's net assets) in auction rate 
securities, commercial paper (other than the municipal tax exempt 
commercial paper described above), corporate debt securities (bonds and 
other debt securities of domestic and foreign issuers), exchange traded 
and non-exchange traded investment companies (including investment 
companies advised by the Adviser or its affiliates),\47\ inflation 
linked debt securities, inverse floating rate instruments, loan 
assignments and participations, short term funding agreements, Treasury 
receipts, United States Government Obligations, when-issued securities, 
delayed delivery securities, forward commitments, and deferred payment 
securities. The Fund's investments will be consistent with its 
investment objective and will not be used to achieve leveraged returns 
(i.e., two times or three times the Fund's benchmark, as described in 
the Registration Statement).
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    \46\ Derivatives might be included in the Fund's investments to 
serve the investment objectives of the Fund. Such derivatives 
include only the following: Interest rate futures, interest rate 
options, interest rate swaps, and swaps on Municipal Securities 
indexes. The derivatives will be centrally cleared and they will be 
collateralized. Derivatives are not a principal investment strategy 
of the Fund.
    \47\ The Fund currently anticipates investing in only registered 
open-end investment companies, including mutual funds and the open-
end investment company funds described in Rule 14.11. The Fund may 
invest in the securities of other investment companies to the extent 
permitted by law.
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    The Fund may also enter into repurchase and reverse repurchase 
agreements (collectively, ``Repurchase Agreements''). Repurchase 
Agreements involve the sale of securities with an agreement to 
repurchase the securities at an agreed-upon price, date and interest 
payment and have the characteristics of borrowing as part of the Fund's 
principal holdings.\48\
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    \48\ The Fund's exposure to reverse repurchase agreements will 
be covered by liquid assets having a value equal to or greater than 
such commitments. The use of reverse repurchase agreements is a form 
of leverage because the proceeds derived from reverse repurchase 
agreements may be invested in additional securities. As further 
stated below, the Fund's investments will be consistent with its 
investment objective and will not be used to achieve leveraged 
returns.
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    The Fund may also invest in cash and Cash Equivalents,\49\ which 
includes shares of exchange traded and non-exchange traded investment 
companies (including investment companies advised by the Adviser or its 
affiliates) that invest principally in money market instruments.
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    \49\ As defined in Exchange Rule 14.11(i)(4)(C)(iii)(b), Cash 
Equivalents are short-term instruments with maturities of less than 
three months, which includes only the following: (i) U.S. Government 
securities, including bills, notes, and bonds differing as to 
maturity and rates of interest, which are either issued or 
guaranteed by the U.S. Treasury or by U.S. Government agencies or 
instrumentalities; (ii) certificates of deposit issued against funds 
deposited in a bank or savings and loan association; (iii) bankers 
acceptances, which are short-term credit instruments used to finance 
commercial transactions; (iv) repurchase agreements and reverse 
repurchase agreements; (v) bank time deposits, which are monies kept 
on deposit with banks or savings and loan associations for a stated 
period of time at a fixed rate of interest; (vi) commercial paper, 
which are short-term unsecured promissory notes; and (vii) money 
market funds.
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Investment Restrictions
    The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid assets (calculated at the time of investment), as 
deemed illiquid by the Adviser \50\ under the 1940 Act.\51\ 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,

[[Page 52260]]

or other circumstances, more than 15% of the Fund's net assets are held 
in illiquid assets. Illiquid assets include securities subject to 
contractual or other restrictions on resale and other instruments that 
lack readily available markets as determined in accordance with 
Commission staff guidance.
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    \50\ In reaching liquidity decisions, the Adviser may consider 
factors including: 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; the nature of the 
security and the nature of the marketplace trades (e.g., the time 
needed to dispose of the security, the method of soliciting offers, 
and the mechanics of transfer); any legal or contractual 
restrictions on the ability to transfer the security or asset; 
significant developments involving the issuer or counterparty 
specifically (e.g., default, bankruptcy, etc.) or the securities 
markets generally; and settlement practices, registration 
procedures, limitations on currency conversion or repatriation, and 
transfer limitations (for foreign securities or other assets).
    \51\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the Securities Act of 1933).
---------------------------------------------------------------------------

    The Fund may also invest up to 100% of its net assets in Municipal 
Securities that pay interest which may be subject to the Alternative 
Minimum Tax for individuals.
Discussion
    Based on the characteristics of the Funds and the representations 
made in each of the Requirements for Fund Holdings sections above, the 
Exchange believes it is appropriate to allow the listing and trading of 
the Shares. The Funds satisfy all of the generic listing requirements 
for Managed Fund Shares that hold fixed income securities, except for 
the minimum principal amount outstanding requirement in 
14.11(i)(4)(C)(ii)(a). The Exchange notes that the representations in 
the Requirements for Fund Holdings for the Funds are identical to the 
representations made regarding the iShares iBonds Dec 2024 AMT Free 
Muni Bond ETF, iShares iBonds Dec 2025 AMT Free Muni Bond ETF, and 
iShares iBonds Dec 2026 AMT Free Muni Bond ETF (collectively, the 
``Comparable Funds''), which were previously approved for listing and 
trading by the Commission.\52\ In the Approval Order, the Commission 
highlighted the representations that holdings of the Comparable Funds 
would meet Minimum Requirement 1 at all times and, as the applicable 
trigger numbers were hit, Minimum Requirement 2 and Minimum Requirement 
3. The Exchange believes that because these representations regarding 
diversification and the lack of concentration among constituent 
securities provides a strong degree of protection against manipulation 
that is consistent with other proposals that have been approved for 
listing and trading by the Commission.
---------------------------------------------------------------------------

    \52\ See Securities Exchange Act Release No. 80399 (April 7, 
2017), 82 FR 17913 (April 13, 2017) (SR-BatsBZX-2017-10) (the 
``Approval Order'').
---------------------------------------------------------------------------

    In addition, the Exchange represents that: (1) Except for Rule 
14.11(i)(4)(C)(ii)(a), the Funds will satisfy all of the generic 
listing standards under Rule 14.11(i)(4); (2) the continued listing 
standards under Rule 14.11(i), as applicable to Managed Fund Shares 
that hold fixed income securities, will apply to the shares of the 
Funds; and (3) the issuer of the Funds is required to comply with Rule 
10A-3 \53\ under the Act for the initial and continued listing of the 
Shares. In addition, the Exchange represents that the Funds will meet 
and be subject to all other requirements of the Generic Listing Rules 
and other applicable continued listing requirements for Managed Fund 
Shares under Exchange Rule 14.11(i), including those requirements 
regarding the Disclosed Portfolio (as defined in the Exchange rules) 
and the requirement that the Disclosed Portfolio and the net asset 
value (``NAV'') will be made available to all market participants at 
the same time,\54\ intraday indicative value,\55\ suspension of trading 
or removal,\56\ trading halts,\57\ disclosure,\58\ and firewalls.\59\ 
Further, at least 100,000 Shares will be outstanding upon the 
commencement of trading of each Fund.\60\
---------------------------------------------------------------------------

    \53\ 17 CFR 240.10A-3.
    \54\ See Exchange Rules 14.11(i)(4)(A)(ii) and 
14.11(i)(4)(B)(ii).
    \55\ See Exchange Rule 14.11(i)(4)(B)(i).
    \56\ See Exchange Rule 14.11(i)(4)(B)(iii).
    \57\ See Exchange Rule 14.11(i)(4)(B)(iv).
    \58\ See Exchange Rule 14.11(i)(6).
    \59\ See Exchange Rule 14.11(i)(7).
    \60\ See Exchange Rule 14.11(i)(4)(A)(i).
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The Shares
    Each Fund will issue and redeem Shares on a continuous basis at the 
NAV per Share only in large blocks of a specified number of Shares or 
multiples thereof (``Creation Units'') in transactions with authorized 
participants who have entered into agreements with the Distributor. 
Each Fund currently anticipates that a Creation Unit will consist of 
50,000 Shares, though this number may change from time to time, 
including prior to listing of the Funds. The exact number of Shares 
that will constitute a Creation Unit will be disclosed in the 
respective Registration Statement of each Fund. Once created, Shares of 
each Fund trade on the secondary market in amounts less than a Creation 
Unit.
    Additional information regarding the Shares and each Fund, 
including investment strategies, risks, creation and redemption 
procedures, fees and expenses, portfolio holdings disclosure policies, 
distributions, taxes and reports to be distributed to beneficial owners 
of the Shares can be found in the Registration Statement or on the 
website for the Funds (www.JPMorgan.com), as applicable.
Availability of Information
    The Funds' website, which will be publicly available prior to the 
public offering of Shares, will include a form of the prospectus for 
each Fund that may be downloaded. The website will include additional 
quantitative information updated on a daily basis, including, for each 
Fund: (1) Daily trading volume, the prior business day's reported 
closing price, NAV and mid-point of the bid/ask spread at the time of 
calculation of such NAV (the ``Bid/Ask Price''),\61\ and a calculation 
of the premium and discount of the Bid/Ask Price against the NAV, and 
(2) data in chart format displaying the frequency distribution of 
discounts and premiums of the daily Bid/Ask Price against the NAV, 
within appropriate ranges, for each of the four previous calendar 
quarters. On each business day, before commencement of trading in 
Shares during Regular Trading Hours \62\ on the Exchange, each Fund 
will disclose on its website the identities and quantities of the 
portfolio of securities and other assets (the ``Disclosed Portfolio'') 
held by the Fund that will form the basis for the Fund's calculation of 
NAV at the end of the business day.\63\ The Disclosed Portfolio will 
include, as applicable, the names, quantity, percentage weighting and 
market value of securities and other assets held by the Fund and the 
characteristics of such assets. The website and information will be 
publicly available at no charge.
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    \61\ The Bid/Ask Price of the Fund will be determined using the 
highest bid and the lowest offer on the Exchange as of the time of 
calculation of the Fund's NAV. The records relating to Bid/Ask 
Prices will be retained by the Fund or its service providers.
    \62\ As defined in Rule 1.5(w), the term ``Regular Trading 
Hours'' means the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
    \63\ Under accounting procedures to be followed by each Fund, 
trades made on the prior business day (``T'') will be booked and 
reflected in NAV on the current business day (``T+1''). Accordingly, 
each Fund will be able to disclose at the beginning of the business 
day the portfolio that will form the basis for the NAV calculation 
at the end of the business day.
---------------------------------------------------------------------------

    In addition, for each Fund, an estimated value, defined in Rule 
14.11(i)(3)(C) as the ``Intraday Indicative Value,'' that reflects an 
estimated intraday value of the Fund's portfolio, will be disseminated. 
Moreover, the 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 at 
least every 15 seconds during the Exchange's Regular Trading Hours.\64\
---------------------------------------------------------------------------

    \64\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available 
Intraday Indicative Values published via the Consolidated Tape 
Association (``CTA'') or other data feeds.
---------------------------------------------------------------------------

    The dissemination of the Intraday Indicative Value, together with 
the

[[Page 52261]]

Disclosed Portfolio, will allow investors to determine the value of the 
underlying portfolio of each Fund on a daily basis and provide a close 
estimate of that value throughout the trading day.
    Intraday, executable price quotations on assets held by each Fund 
are available from major broker-dealer firms and for exchange-traded 
assets, including shares of exchange traded investment companies, such 
intraday information is available directly from the applicable listing 
exchange. All such intraday price information is available through 
subscription services, such as Bloomberg, Thomson Reuters and 
International Data Corporation, which can be accessed by authorized 
participants and other investors. Pricing information for Repurchase 
Agreements and securities not listed on an exchange or national 
securities market will be available from major broker-dealer firms and/
or subscription services, such as Bloomberg, Thomson Reuters and 
International Data Corporation. Trade price and other information 
relating to Municipal Securities is available through the Municipal 
Securities Rulemaking Board's (the ``MSRB'') Electronic Municipal 
Market Access (``EMMA'') system. 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.
    Information regarding market price and volume of the Shares will be 
continually available on a real-time basis throughout the day on 
brokers' computer screens and other electronic services. The previous 
day's closing price and trading volume information for the Shares will 
be published daily in the financial section of newspapers and publicly 
available sources. Quotation and last sale information for the Shares 
will be available on the facilities of the CTA. Price information 
relating to all other securities held by the Funds will be available 
from major market data vendors. Quotations and last sale information 
for the underlying exchange traded investment companies will be 
available through CTA.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), the Fund's Shareholder Reports, and its Form N-
CSR and Form N-SAR, filed twice a year. The Trust's SAI and Shareholder 
Reports are available free upon request from the Trust, and those 
documents and the Form N-CSR and Form N-SAR may be viewed on-screen or 
downloaded from the Commission's website at www.sec.gov.
Initial and Continued Listing
    The Shares will be subject to Rule 14.11(i), which sets forth the 
initial and continued listing criteria applicable to Managed Fund 
Shares. The Exchange represents that, for initial and/or continued 
listing, each Fund must be in compliance with Rule 10A-3 under the 
Act.\65\ A minimum of 100,000 Shares of each Fund will be outstanding 
at the commencement of trading on the Exchange. The Exchange will 
obtain a representation from the issuer of the Shares that the NAV per 
Share will be calculated daily and that the NAV and the Disclosed 
Portfolio will be made available to all market participants at the same 
time.
---------------------------------------------------------------------------

    \65\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Trading Halts
    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 each Fund. The Exchange will halt trading in 
the Shares under the conditions specified in 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 Disclosed 
Portfolio of the Fund; 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(i)(4)(B)(iv), which sets forth circumstances under which trading 
in the Shares of a Fund may be halted.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. The Exchange will 
allow trading in the Shares from 8:00 a.m. until 5:00 p.m. Eastern 
Time. The Exchange has appropriate rules to facilitate transactions in 
the Shares during all trading sessions. As provided in Rule 11.11(a), 
the minimum price variation for quoting and entry of orders in Managed 
Fund Shares traded on the Exchange is $0.01, with the exception of 
securities that are priced less than $1.00, for which the minimum price 
variation for order entry is $0.0001.
Surveillance
    The Exchange believes 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. Trading of the Shares 
through the Exchange will be subject to the Exchange's surveillance 
procedures for derivative products, including Managed Fund Shares. The 
Exchange may obtain information regarding trading in the Shares and the 
underlying shares in exchange traded equity securities via the 
Intermarket Surveillance Group (``ISG''), from other exchanges that are 
members or affiliates of the ISG, or with which the Exchange has 
entered into a comprehensive surveillance sharing agreement.\66\ In 
addition, the Exchange, or FINRA, on behalf of the Exchange is able to 
access, as needed, trade information for certain fixed income 
instruments reported to FINRA's Trade Reporting and Compliance Engine 
(``TRACE'') and Municipal Securities reported to MSRB. FINRA also can 
access data obtained from the MSRB relating to municipal bond trading 
activity for surveillance purposes in connection with trading in the 
Shares.
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    \66\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for the Fund may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
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    As it relates to exchange traded investment companies, the Funds 
will only invest in investment companies that trade on markets that are 
a member of the ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
    The Exchange prohibits the distribution of material non-public 
information by its employees.
Information Circular
    Prior to the commencement of trading, the Exchange will inform its 
members in an Information Circular of the special characteristics and 
risks associated with trading the Shares. Specifically, the Information 
Circular will discuss the following: (1) The procedures for purchases 
and redemptions of Shares in Creation Units (and that Shares are not 
individually redeemable); (2) Rule 3.7, which imposes suitability 
obligations on Exchange members with respect to recommending 
transactions in the Shares to customers; (3) how information regarding 
the Intraday Indicative Value is disseminated; (4) the risks involved 
in trading the Shares during the Pre-Opening \67\ and After

[[Page 52262]]

Hours Trading Sessions \68\ when an updated Intraday Indicative Value 
will not be calculated or publicly disseminated; (5) the requirement 
that members deliver a prospectus to investors purchasing newly issued 
Shares prior to or concurrently with the confirmation of a transaction; 
and (6) trading information.
---------------------------------------------------------------------------

    \67\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m. 
Eastern Time.
    \68\ The After Hours Trading Session is from 4:00 p.m. to 5:00 
p.m. Eastern Time.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Funds. Members purchasing Shares from the Funds for 
resale to investors will deliver a prospectus to such investors. The 
Information Circular will also discuss any exemptive, no-action, and 
interpretive relief granted by the Commission from any rules under the 
Act.
    In addition, the Information Circular will reference that each Fund 
is subject to various fees and expenses described in the Registration 
Statement. The Information Circular will also disclose the trading 
hours of the Shares of the Funds and the applicable NAV Calculation 
Time for the Shares. The Information Circular will disclose that 
information about the Shares of the Funds will be publicly available on 
the Funds' website. In addition, the Information Circular will 
reference that the Trust is subject to various fees and expenses 
described in each Fund's Registration Statement.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \69\ in general and Section 6(b)(5) of the Act \70\ 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.
---------------------------------------------------------------------------

    \69\ 15 U.S.C. 78f.
    \70\ 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 will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in Rule 14.11(i). The Exchange 
believes 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. Rule 14.11(i)(7) provides that, if 
the investment adviser to the investment company issuing Managed Fund 
Shares is affiliated with a broker-dealer, such investment adviser 
shall erect a ``fire wall'' between the investment adviser and the 
broker-dealer with respect to access to information concerning the 
composition and/or changes to such investment company portfolio. The 
Adviser is not a registered broker-dealer, but is affiliated with 
multiple broker-dealers and has implemented ``fire walls'' with respect 
to such broker-dealers regarding access to information concerning the 
composition and/or changes to a Fund's portfolio. In addition, Adviser 
personnel who make decisions regarding a Fund's portfolio are subject 
to procedures designed to prevent the use and dissemination of material 
nonpublic information regarding the Fund's portfolio. The Exchange may 
obtain information regarding trading in the Shares and the underlying 
shares in exchange traded equity securities via the ISG, from other 
exchanges that are members or affiliates of the ISG, or with which the 
Exchange has entered into a comprehensive surveillance sharing 
agreement. In addition, the Exchange, or FINRA, on behalf of the 
Exchange, is able to access, as needed, trade information for certain 
fixed income instruments reported to TRACE and Municipal Securities 
reported to MSRB. FINRA also can access data obtained from the MSRB 
relating to municipal bond trading activity for surveillance purposes 
in connection with trading in the Shares. Each Fund's investments will 
be well-diversified in that each Fund will hold a minimum of 40 
different Municipal Securities diversified among issuers in at least 8 
different states with no more than 30% of the Fund's assets comprised 
of Municipal Securities that provide exposure to any single state; each 
Fund will hold a minimum of 75 different Municipal Securities when at 
least four creation units are outstanding for that Fund; each Fund will 
hold a minimum of 100 different Municipal Securities diversified among 
issuers in at least 20 different states when at least eight creation 
units are outstanding for that Fund; no single Municipal Security held 
by a Fund will exceed 4% of the weight of that Fund's portfolio and no 
single issuer of Municipal Securities will account for more than 10% of 
the weight of a Fund's portfolio; each Fund will hold Municipal 
Securities of at least 20 non-affiliated issuers; and each Fund will 
hold Municipal Securities of at least 30 non-affiliated issuers when at 
least four creation units are outstanding.
    According to the Registration Statement, each Fund will invest, 
under normal circumstances,\71\ at least 80% of its net assets in 
Municipal Securities such that the interest on each security is exempt 
from U.S. federal income taxes. Additionally, each Fund may hold up to 
an aggregate amount of 15% of its net assets in illiquid assets 
(calculated at the time of investment), as deemed illiquid by the 
Adviser \72\ under the 1940 Act.\73\ Each 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 assets. Illiquid assets include securities subject to 
contractual or other restrictions on resale and other instruments that 
lack readily available markets as determined in accordance with 
Commission staff guidance.
---------------------------------------------------------------------------

    \71\ See supra note 9.
    \72\ See supra note 29.
    \73\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the Securities Act of 1933).

---------------------------------------------------------------------------

[[Page 52263]]

    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Exchange will obtain a representation from the issuer of the 
Shares that the NAV per Share will be calculated daily and that the NAV 
and the Disclosed Portfolio will be made available to all market 
participants at the same time. In addition, a large amount of 
information is publicly available regarding the Funds and the Shares, 
thereby promoting market transparency. Moreover, the Intraday 
Indicative Value will be disseminated by one or more major market data 
vendors at least every 15 seconds during Regular Trading Hours. On each 
business day, before commencement of trading in Shares during Regular 
Trading Hours, each Fund will disclose on its website the Disclosed 
Portfolio that will form the basis for the Fund's calculation of NAV at 
the end of the business day. Pricing information will include 
additional quantitative information updated on a daily basis, 
including, for the Fund: (1) The prior business day's NAV and the 
market closing price or mid-point of the Bid/Ask Price,\74\ and a 
calculation of the premium or discount of the market closing price or 
Bid/Ask Price against the NAV; and (2) data in chart format displaying 
the frequency distribution of discounts and premiums of the daily 
market closing price or Bid/Ask Price against the NAV, within 
appropriate ranges, for each of the four previous calendar quarters. 
Additionally, information regarding market price and trading of the 
Shares 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 for the Shares will be available on 
the facilities of the CTA. The website for each Fund will include a 
form of the prospectus for the Fund and additional data relating to NAV 
and other applicable quantitative information. Trading in Shares of a 
Fund will be halted under the conditions specified in Rule 11.18. 
Trading may also be halted because of market conditions or for reasons 
that, in the view of the Exchange, make trading in the Shares 
inadvisable. Finally, trading in the Shares will be subject to Rule 
14.11(i)(4)(B)(iv), which sets forth circumstances under which Shares 
may be halted. In addition, as noted above, investors will have ready 
access to information regarding the Fund's holdings, the Intraday 
Indicative Value, the Disclosed Portfolio, and quotation and last sale 
information for the Shares.
---------------------------------------------------------------------------

    \74\ The Bid/Ask Price of a Fund will be determined using the 
highest bid and the lowest offer on the Exchange as of the time of 
calculation of the Fund's NAV. The records relating to Bid/Ask 
Prices will be retained by the Fund or its service providers.
---------------------------------------------------------------------------

    Intraday, executable price quotations on assets held by the Funds 
are available from major broker-dealer firms and for exchange-traded 
assets, including investment companies, such intraday information is 
available directly from the applicable listing exchange. All such 
intraday price information is available through subscription services, 
such as Bloomberg, Thomson Reuters and International Data Corporation, 
which can be accessed by authorized participants and other investors.
    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 
an additional type of actively-managed exchange traded product that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace. As noted above, the Exchange has in 
place surveillance procedures relating to trading in the Shares 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, the Exchange, or FINRA, on 
behalf of the Exchange, is able to access, as needed, trade information 
for certain fixed income instruments reported to TRACE and Municipal 
Securities reported to MSRB. FINRA also can access data obtained from 
the MSRB relating to municipal bond trading activity for surveillance 
purposes in connection with trading in the Shares. As noted above, 
investors will also have ready access to information regarding each 
Fund's holdings, the Intraday Indicative Value, the Disclosed 
Portfolio, and quotation and last sale information for the Shares.
    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 
additional actively-managed exchange-traded products 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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \75\ and Rule 19b-4(f)(6) thereunder.\76\ 
Because the 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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\77\
---------------------------------------------------------------------------

    \75\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \76\ 17 CFR 240.19b-4(f)(6).
    \77\ 17 CFR 240.19b-4(f)(6)(iii). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \78\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\79\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposal 
may become operative immediately upon filing. The Commission believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest. As the Exchange 
states, the Funds raise no new or novel issues and are consistent with 
funds whose shares the Commission has previously approved for listing 
and trading. Accordingly, the Commission hereby waives the 30-day 
operative

[[Page 52264]]

delay and designates the proposed rule change operative upon 
filing.\80\
---------------------------------------------------------------------------

    \78\ 17 CFR 240.19b-4(f)(6).
    \79\ 17 CFR 240.19b-4(f)(6)(iii).
    \80\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 under 
Section 19(b)(2)(B) \81\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \81\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeBZX-2018-072 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-CboeBZX-2018-072. 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-CboeBZX-2018-072 and should be submitted 
on or before November 6, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\82\
---------------------------------------------------------------------------

    \82\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-22427 Filed 10-15-18; 8:45 am]
 BILLING CODE 8011-01-P



                                                                           Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices                                                   52255

                                                For the Commission, by the Division of                office of the Exchange, and at the                     components of a portfolio shall not
                                              Trading and Markets, pursuant to delegated              Commission’s Public Reference Room.                    account, in the aggregate, for more than
                                              authority.7                                                                                                    20% of the weight of the fixed income
                                              Eduardo A. Aleman,                                      II. Self-Regulatory Organization’s
                                                                                                                                                             portion of the portfolio, and
                                                                                                      Statement of the Purpose of, and
                                              Assistant Secretary.                                                                                           14.11(i)(4)(C)(iv)(a), which provides that
                                                                                                      Statutory Basis for, the Proposed Rule
                                              [FR Doc. 2018–22429 Filed 10–15–18; 8:45 am]                                                                   in the aggregate, at least 90% of the
                                                                                                      Change
                                              BILLING CODE 8011–04–P                                                                                         weight of listed derivatives holdings
                                                                                                         In its filing with the Commission, the              shall consist of futures, options, and
                                                                                                      Exchange included statements                           swaps for which the Exchange may
                                              SECURITIES AND EXCHANGE                                 concerning the purpose of and basis for                obtain information via the Intermarket
                                              COMMISSION                                              the proposed rule change and discussed                 Surveillance Group (‘‘ISG’’) from other
                                                                                                      any comments it received on the                        members or affiliates of the ISG or for
                                              [Release No. 34–84394; File No. SR–                     proposed rule change. The text of these
                                              CboeBZX–2018–072]                                                                                              which the principal market is a market
                                                                                                      statements may be examined at the                      with which the Exchange has a
                                              Self-Regulatory Organizations; Cboe                     places specified in Item IV below. The                 comprehensive surveillance sharing
                                              BZX Exchange, Inc.; Notice of Filing                    Exchange has prepared summaries, set                   agreement, calculated using the
                                              and Immediate Effectiveness of a                        forth in Sections A, B, and C below, of                aggregate gross notional value of such
                                              Proposed Rule Change To List and                        the most significant parts of such                     holdings.
                                              Trade Shares of the JPMorgan                            statements.
                                                                                                                                                             Description of the Shares and the Funds
                                              Municipal ETF and JPMorgan Ultra-                       A. Self-Regulatory Organization’s
                                              Short Municipal ETF of the J.P. Morgan                                                                            J.P. Morgan Investment Management,
                                                                                                      Statement of the Purpose of, and the                   Inc. is the investment adviser (the
                                              Exchange-Traded Fund Trust Under                        Statutory Basis for, the Proposed Rule                 ‘‘Adviser’’) to the Fund. JPMorgan Chase
                                              Rule 14.11(i), Managed Fund Shares                      Change                                                 Bank, N.A. is the administrator,
                                              October 10, 2018.                                       1. Purpose                                             custodian, and transfer agent
                                                 Pursuant to Section 19(b)(1) of the                     The Exchange proposes to list and                   (‘‘Administrator,’’ ‘‘Custodian,’’ and
                                              Securities Exchange Act of 1934 (the                                                                           ‘‘Transfer Agent,’’ respectively) for the
                                                                                                      trade the Shares under Rule 14.11(i),
                                              ‘‘Act’’),1 and Rule 19b–4 thereunder,2                                                                         Trust. JPMorgan Distribution Services,
                                                                                                      which governs the listing and trading of
                                              notice is hereby given that on                                                                                 Inc. serves as the distributor
                                                                                                      Managed Fund Shares on the
                                              September 26, 2018, Cboe BZX                                                                                   (‘‘Distributor’’) for the Trust.
                                                                                                      Exchange.5 The Funds will be actively                     Rule 14.11(i)(7) provides that, if the
                                              Exchange, Inc. (the ‘‘Exchange’’ or                     managed funds. The Shares will be
                                              ‘‘BZX’’) filed with the Securities and                                                                         investment adviser to the investment
                                                                                                      offered by the Trust, which was                        company issuing Managed Fund Shares
                                              Exchange Commission (‘‘Commission’’)                    established as a Delaware statutory
                                              the proposed rule change as described                                                                          is affiliated with a broker-dealer, such
                                                                                                      trust. The Trust is registered with the                investment adviser shall erect a ‘‘fire
                                              in Items I and II below, which Items                    Commission as an open-end investment
                                              have been prepared by the Exchange.                                                                            wall’’ between the investment adviser
                                                                                                      company and has filed a registration                   and the broker-dealer with respect to
                                              The Exchange has designated this                        statement on behalf of the Fund on
                                              proposal as a ‘‘non-controversial’’                                                                            access to information concerning the
                                                                                                      Form N–1A (‘‘Registration Statement’’)                 composition and/or changes to such
                                              proposed rule change pursuant to                        with the Commission.6
                                              Section 19(b)(3)(A) of the Act 3 and Rule                                                                      investment company portfolio.7 In
                                                                                                         Rule 14.11(i)(4)(C)(ii)(a) requires that            addition, Rule 14.11(i)(7) further
                                              19b–4(f)(6)(iii) thereunder,4 which                     component fixed income securities that,
                                              renders it effective upon filing with the                                                                      requires that personnel who make
                                                                                                      in the aggregate, account for at least                 decisions on the investment company’s
                                              Commission. The Commission is                           75% of the weight of the portfolio shall
                                              publishing this notice to solicit                                                                              portfolio composition must be subject to
                                                                                                      have a minimum principal amount
                                              comments on the proposed rule change                    outstanding of $100 million or more.                      7 An investment adviser to an open-end fund is
                                              from interested persons.                                The Exchange submits this proposal                     required to be registered under the Investment
                                              I. Self-Regulatory Organization’s                       because the portfolios of the Funds will               Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
                                                                                                      not meet this requirement. The Fund                    result, the Adviser and its related personnel are
                                              Statement of the Terms of Substance of                                                                         subject to the provisions of Rule 204A–1 under the
                                              the Proposed Rule Change                                will, however, meet all of the other                   Advisers Act relating to codes of ethics. This Rule
                                                                                                      requirements of Rule 14.11(i)(4)(C)(ii),               requires investment advisers to adopt a code of
                                                 The Exchange filed a proposal to list                (iii), (iv) and (v), specifically including            ethics that reflects the fiduciary nature of the
                                              and trade shares of the JPMorgan                        Rule 14.11(i)(4)(C)(iv), which provides                relationship to clients as well as compliance with
                                              Municipal ETF and JPMorgan Ultra-                                                                              other applicable securities laws. Accordingly,
                                                                                                      that non-agency, non-GSE, and                          procedures designed to prevent the communication
                                              Short Municipal ETF (each a ‘‘Fund’’ or,                privately-issued mortgage-related and                  and misuse of non-public information by an
                                              collectively, the ‘‘Funds’’) of the J.P.                other asset-backed securities                          investment adviser must be consistent with Rule
                                              Morgan Exchange-Traded Fund Trust                                                                              204A–1 under the Advisers Act. In addition, Rule
                                              (the ‘‘Trust’’ or the ‘‘Issuer’’) under Rule                                                                   206(4)–7 under the Advisers Act makes it unlawful
                                                                                                        5 The Commission approved Rule 14.11(i) in
                                                                                                                                                             for an investment adviser to provide investment
                                              14.11(i) (‘‘Managed Fund Shares’’). The                 Securities Exchange Act Release No. 65225 (August      advice to clients unless such investment adviser has
                                              shares of the Funds are referred to                     30, 2011), 76 FR 55148 (September 6, 2011) (SR–        (i) adopted and implemented written policies and
                                                                                                      BATS–2011–018).                                        procedures reasonably designed to prevent
                                              herein as the ‘‘Shares.’’                                 6 See Registration Statement on Form N–1A for
                                                                                                                                                             violation, by the investment adviser and its
                                                 The text of the proposed rule change                 the Trust, dated July 31, 2018 (File Nos. 333–         supervised persons, of the Advisers Act and the
amozie on DSK3GDR082PROD with NOTICES1




                                              is available at the Exchange’s website at               191837 and 811–22903). The descriptions of the         Commission rules adopted thereunder; (ii)
                                              www.markets.cboe.com, at the principal                  Fund and the Shares contained herein are based, in     implemented, at a minimum, an annual review
                                                                                                      part, on information in the Registration Statement.    regarding the adequacy of the policies and
                                                7 17                                                  The Commission has issued an order granting            procedures established pursuant to subparagraph (i)
                                                     CFR 200.30–3(a)(12).
                                                1 15
                                                                                                      certain exemptive relief to the Trust under the        above and the effectiveness of their
                                                     U.S.C. 78s(b)(1).                                Investment Company Act of 1940 (15 U.S.C.              implementation; and (iii) designated an individual
                                                2 17 CFR 240.19b–4.
                                                                                                      80a–1) (‘‘1940 Act’’) (the ‘‘Exemptive Order’’). See   (who is a supervised person) responsible for
                                                3 15 U.S.C. 78s(b)(3)(A).
                                                                                                      Investment Company Act Release No. 31990               administering the policies and procedures adopted
                                                4 17 CFR 240.19b–4(f)(6)(iii).                        (February 9, 2016) (File No. 811–22903).               under subparagraph (i) above.



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                                              52256                        Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices

                                              procedures designed to prevent the use                  does not seek to maintain a stable net                   including the District of Columbia, and
                                              and dissemination of material                           asset value of $1.00 per share. The Fund                 their respective authorities, political
                                              nonpublic information regarding the                     will be classified as a ‘‘diversified’’                  subdivisions, agencies and
                                              applicable investment company                           investment company under the 1940                        instrumentalities and other groups with
                                              portfolio. Rule 14.11(i)(7) is similar to               Act.9                                                    the authority to act for the
                                              Rule 14.11(b)(5)(A)(i), however, Rule                      The Fund intends to qualify each year                 municipalities, the interest on which is
                                              14.11(i)(7) in connection with the                      as a regulated investment company (a                     exempt from federal income tax and
                                              establishment of a ‘‘fire wall’’ between                ‘‘RIC’’) under Subchapter M of the                       will include only the following
                                              the investment adviser and the broker-                  Internal Revenue Code of 1986, as
                                                                                                                                                               instruments: General obligation
                                              dealer reflects the applicable open-end                 amended. The Fund will invest its
                                                                                                                                                               bonds,11 revenue bonds,12 municipal
                                              fund’s portfolio, not an underlying                     assets, and otherwise conduct its
                                                                                                      operations, in a manner that is intended                 notes,13 municipal tax exempt
                                              benchmark index, as is the case with
                                              index-based funds. The Adviser is not a                 to satisfy the qualifying income,                        commercial paper,14 tender option
                                              registered broker-dealer, but is affiliated             diversification and distribution                         bonds,15 private activity and industrial
                                              with multiple broker-dealers and has                    requirements necessary to establish and                  development bonds, variable rate
                                              implemented ‘‘fire walls’’ with respect                 maintain RIC qualification under                         demand obligations (‘‘VRDOs’’),16
                                              to such broker-dealers regarding access                 Subchapter M.                                            variable rate demand preferred
                                              to information concerning the                                                                                    securities, municipal mortgage-backed
                                                                                                      Principal Holdings—Municipal                             securities and other asset-backed
                                              composition and/or changes to a Fund’s                  Securities
                                              portfolio. In addition, Adviser personnel                                                                        securities, municipal lease
                                              who make decisions regarding a Fund’s                      To achieve its objective, the Fund will               obligations,17 stripped securities,18
                                              portfolio are subject to procedures                     invest, under normal circumstances, in                   structured securities,19 deferred
                                              designed to prevent the use and                         fixed and variable rate Municipal                        payment securities, when issued
                                              dissemination of material nonpublic                     Securities, as defined below. As part of
                                              information regarding the Fund’s                        its investments in Municipal Securities,                    11 General obligation bonds are obligations

                                              portfolio. In the event that (a) the                    the Fund invests primarily in                            involving the credit of an issuer possessing taxing
                                              Adviser becomes registered as a broker-                 investment grade securities or the                       power and are payable from such issuer’s general
                                              dealer or newly affiliated with another                 unrated equivalent. Investment-grade                     revenues and not from any particular source.
                                                                                                                                                                  12 Revenue bonds are bonds that are secured by
                                              broker-dealer, or (b) any new adviser or                securities are rated a minimum of BBB-
                                                                                                                                                               a pledge of revenues derived from the operations of
                                              sub-adviser is a registered broker-dealer               or higher by Standard & Poor’s Ratings                   a revenue producing institution (i.e., a hospital or
                                              or becomes affiliated with a broker-                    Services and/or Fitch, or Baa3 or higher                 a university), a system (i.e., a water system or an
                                              dealer, it will implement a fire wall                   by Moody’s, or if unrated, determined                    airport), a project, or from a special tax levy.
                                              with respect to its relevant personnel or               by the Adviser to be of equivalent                       Industrial development bonds are generally
                                                                                                      quality.10 Up to 10% of the Fund’s total                 considered revenue bonds, and they are typically
                                              such broker-dealer affiliate, as                                                                                 payable from the revenues of a corporation.
                                              applicable, regarding access to                         assets may be invested in securities                        13 Municipal notes are shorter-term municipal

                                              information concerning the composition                  rated below investment grade (junk                       debt obligations that may provide interim financing
                                              and/or changes to the portfolio, and will               bonds). Junk bonds are rated in the fifth                in anticipation of tax collection, receipt of grants,
                                                                                                      or lower rated categories (for example,                  bond sales, or revenue receipts. These include tax
                                              be subject to procedures designed to                                                                             anticipation notes, bond anticipation notes and
                                              prevent the use and dissemination of                    BB+ or lower by Standard & Poor’s                        revenue anticipation notes.
                                              material non-public information                         Ratings Services and Ba1 or lower by                        14 Municipal tax exempt commercial paper is

                                              regarding such portfolio.                               Moody’s). Under normal circumstances,                    generally unsecured debt that is issued to meet
                                                                                                      the Fund invests in a portfolio of                       short-term financing needs.
                                              JPMorgan Municipal ETF                                  Municipal Securities with an average                        15 Tender option bonds are synthetic floating-rate

                                                                                                                                                               or variable-rate securities issued when long-term
                                                 According to the Registration                        weighted maturity of three to ten years.                 bonds are purchased in the primary or secondary
                                              Statement, the Fund will seek to                        Average weighted maturity is the                         market and then deposited into a trust. Custodial
                                              provide monthly dividends, which are                    average of all the current maturities                    receipts are then issued to investors, such as the
                                              excluded from gross income, and to                      (that is, the term of the securities) of the             Fund, evidencing ownership interests in the trust.
                                                                                                                                                                  16 VRDOs are tax-exempt obligations that contain
                                              protect the value of a shareholder’s                    individual bonds in a Fund calculated
                                                                                                                                                               a floating or variable interest rate adjustment
                                              investment by investing primarily in                    so as to count most heavily those                        formula and a right of demand on the part of the
                                              municipal obligations. For purposes of                  securities with the highest dollar value.                holder thereof to receive payment of the unpaid
                                              the Fund’s investment objective, ‘‘gross                   Municipal securities (‘‘Municipal                     principal balance plus accrued interest upon a short
                                              income’’ means gross income for federal                 Securities’’) are debt securities issued by              notice period not to exceed seven days.
                                                                                                                                                                  17 Municipal lease obligations include certificates
                                              income tax purposes. To achieve its                     or on behalf of states, territories and                  of participation issued by government authorities or
                                              objective, the Fund will invest, under                  possessions of the United States,                        entities to finance the acquisition or construction of
                                              normal circumstances,8 at least 80% of                                                                           equipment, land, and/or facilities.
                                              its net assets in Municipal Securities, as                9 The diversification standard is set forth in            18 Stripped securities are created when an issuer

                                              defined below, the interest from which                  Section 5(b)(1) of the 1940 Act.                         separates the interest and principal components of
                                                                                                        10 According to the Adviser, the Adviser may           an instrument and sells them as separate securities.
                                              is exempt from federal income tax. The                                                                           In general, one security is entitled to receive the
                                                                                                      determine that unrated securities are of ‘‘equivalent
                                              Fund is not a money market fund and                     quality’’ based on such credit quality factors that it   interest payments on the underlying assets and the
                                                                                                      deems appropriate, which may include among other         other to receive the principal payments.
                                                8 The term ‘‘under normal circumstances’’             things, performing an analysis similar, to the extent       19 Structured securities are privately negotiated

                                              includes, but is not limited to, the absence of         possible, to that performed by a nationally              debt obligations where the principal and/or interest
amozie on DSK3GDR082PROD with NOTICES1




                                              adverse market, economic, political, or other           recognized statistical ratings organization when         is determined by reference to the performance of an
                                              conditions, including extreme volatility or trading     rating similar securities and issuers. In making such    underlying investment, index, or reference
                                              halts in the financial markets; operational issues      a determination, the Adviser may consider internal       obligation, and may be issued by governmental
                                              causing dissemination of inaccurate market              analyses and risk ratings, third party research and      agencies. While structured securities are part of the
                                              information; or force majeure type events such as       analysis, and other sources of information, as           principal holdings of the Fund, the Issuer
                                              systems failure, natural or man-made disaster, act      deemed appropriate by the Adviser. The Adviser           represents that such securities, when combined
                                              of God, armed conflict, act of terrorism, riot, or      notes that the Fund may hold up to 10% of its net        with those instruments held as part of the other
                                              labor disruption, or any similar intervening            assets in fixed-rate Municipal Securities that are not   portfolio holdings described below, will not exceed
                                              circumstance.                                           investment-grade.                                        20% of the Fund’s net assets.



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                                                                           Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices                                                     52257

                                              securities,20 and zero coupon                              In the absence of normal                           involve the sale of securities with an
                                              securities.21 The Fund may invest more                   circumstances, the Fund may                          agreement to repurchase the securities
                                              than 25% of its total assets in municipal                temporarily depart from its normal                   at an agreed-upon price, date and
                                              obligations, the interest upon which is                  investment process, provided that such               interest payment and have the
                                              paid from revenues of projects within a                  departure is, in the opinion of the                  characteristics of borrowing as part of
                                              single sector, such as housing or                        Adviser, consistent with the Fund’s                  the Fund’s principal holdings.26
                                              healthcare.                                              investment objective and in the best                    The Fund may also invest in cash and
                                                                                                       interest of the Fund. For example, the               Cash Equivalents,27 which includes
                                              Requirements for Fund Holdings                                                                                shares of exchange traded and non-
                                                                                                       Fund may hold a higher than normal
                                                 The Fund will hold a minimum of 40                    proportion of its assets in cash in                  exchange traded investment companies
                                              different Municipal Securities                           response to adverse market, economic or              (including investment companies
                                              diversified among issuers in at least 8                  political conditions.                                advised by the Adviser or its affiliates)
                                              different states with no more than 30%                                                                        that invest principally in money market
                                              of the Fund’s assets comprised of                        Other Portfolio Holdings                             instruments.
                                              Municipal Securities that provide                           The Fund may also, to a limited
                                              exposure to any single state                                                                                  Investment Restrictions
                                                                                                       extent (under normal circumstances,
                                              (collectively, ‘‘Minimum Requirement                     less than 20% of the Fund’s net assets),                The Fund may hold up to an aggregate
                                              1’’). The Fund will hold a minimum of                    engage in transactions in United States              amount of 15% of its net assets in
                                              75 different Municipal Securities when                   bond futures contracts, exchange traded              illiquid assets (calculated at the time of
                                              at least four creation units are                         treasury and debt futures options,                   investment), as deemed illiquid by the
                                              outstanding (‘‘Trigger Number 1A’’).                     interest rate swaps and zero coupon                  Adviser 28 under the 1940 Act.29 The
                                              The Fund will hold a minimum of 100                      swaps, interest rate futures, interest rate
                                              different Municipal Securities                           options, and swaps on Municipal
                                                                                                                                                               26 The Fund’s exposure to reverse repurchase

                                              diversified among issuers in at least 20                                                                      agreements will be covered by liquid assets having
                                                                                                       Securities indexes.24 The Fund may also              a value equal to or greater than such commitments.
                                              different states when at least eight                     invest to a limited extent (under normal             The use of reverse repurchase agreements is a form
                                              creation units are outstanding (‘‘Trigger                circumstances, less than 20% of the                  of leverage because the proceeds derived from
                                              Number 1B’’). No single Municipal                        Fund’s net assets) in auction rate                   reverse repurchase agreements may be invested in
                                              Security held by the Fund will exceed                                                                         additional securities. As further stated below, the
                                                                                                       securities, commercial paper (other than             Fund’s investments will be consistent with its
                                              4% of the weight of the Fund’s portfolio                 the municipal tax exempt commercial                  investment objective and will not be used to
                                              and no single issuer of Municipal                        paper described above), corporate debt               achieve leveraged returns.
                                              Securities will account for more than                    securities (bonds and other debt
                                                                                                                                                               27 As defined in Exchange Rule

                                              10% of the weight of the Fund’s                                                                               14.11(i)(4)(C)(iii)(b), Cash Equivalents are short-
                                                                                                       securities of domestic and foreign                   term instruments with maturities of less than three
                                              portfolio (collectively, ‘‘Minimum                       issuers), exchange traded and non-                   months, which includes only the following: (i) U.S.
                                              Requirement 2’’). The Fund will hold                     exchange traded investment companies                 Government securities, including bills, notes, and
                                              Municipal Securities of at least 20 non-                 (including investment companies                      bonds differing as to maturity and rates of interest,
                                              affiliated issuers (‘‘Minimum                                                                                 which are either issued or guaranteed by the U.S.
                                                                                                       advised by the Adviser or its                        Treasury or by U.S. Government agencies or
                                              Requirement 3’’). The Fund will hold                     affiliates),25 inflation linked debt                 instrumentalities; (ii) certificates of deposit issued
                                              Municipal Securities of at least 30 non-                 securities, inverse floating rate                    against funds deposited in a bank or savings and
                                              affiliated issuers when at least four                    instruments, loan assignments and
                                                                                                                                                            loan association; (iii) bankers acceptances, which
                                              creation units are outstanding (‘‘Trigger                                                                     are short-term credit instruments used to finance
                                                                                                       participations, short term funding                   commercial transactions; (iv) repurchase
                                              Number 2’’).22 To the extent that the
                                                                                                       agreements, Treasury receipts, United                agreements and reverse repurchase agreements; (v)
                                              Fund at one point has sufficient creation                                                                     bank time deposits, which are monies kept on
                                                                                                       States government obligations, when-
                                              units outstanding necessary to trigger a                                                                      deposit with banks or savings and loan associations
                                                                                                       issued securities, delayed delivery                  for a stated period of time at a fixed rate of interest;
                                              diversity requirement laid out above
                                                                                                       securities, forward commitments, and                 (vi) commercial paper, which are short-term
                                              (each of Trigger Numbers 1A, 1B and 2,
                                                                                                       deferred payment securities. The Fund’s              unsecured promissory notes; and (vii) money
                                              a ‘‘Trigger Number’’), but subsequently                                                                       market funds.
                                                                                                       investments will be consistent with its
                                              has fewer creation units outstanding                                                                             28 In reaching liquidity decisions, the Adviser
                                                                                                       investment objective and will not be
                                              than the applicable Trigger Number, the                                                                       may consider factors including: The frequency of
                                                                                                       used to achieve leveraged returns (i.e.              trades and quotes for the security; The number of
                                              Fund may no longer comply with the
                                              applicable diversity requirement.23                      two times or three times the Fund’s                  dealers wishing to purchase or sell the security and
                                                                                                       benchmark, as described in the                       the number of other potential purchasers; dealer
                                                                                                                                                            undertakings to make a market in the security; the
                                                 20 The Fund may purchase or sell securities that      Registration Statement).                             nature of the security and the nature of the
                                              it is entitled to receive on a when issued or delayed       The Fund may also enter into                      marketplace trades (e.g., the time needed to dispose
                                              delivery basis as well as through a forward              repurchase and reverse repurchase                    of the security, the method of soliciting offers, and
                                              commitment.                                              agreements (collectively, ‘‘Repurchase               the mechanics of transfer); any legal or contractual
                                                 21 Zero coupon securities are securities that are                                                          restrictions on the ability to transfer the security or
                                              sold at a discount to par value and do not pay
                                                                                                       Agreements’’). Repurchase Agreements                 asset; significant developments involving the issuer
                                              interest during the life of the security. The discount                                                        or counterparty specifically (e.g., default,
                                              approximates the total amount of interest the            to comply with any diversity requirement for which   bankruptcy, etc.) or the securities markets generally;
                                              security will accrue and compound over the period        the number of creation units outstanding continues   and settlement practices, registration procedures,
                                              until maturity at a rate of interest reflecting the      to exceed the Trigger Number (i.e., Trigger Number   limitations on currency conversion or repatriation,
                                              market rate of the security at the time of issuance.     1A), as well as each of Minimum Requirements 1,      and transfer limitations (for foreign securities or
                                              Upon maturity, the holder of a zero coupon security      2 and 3.                                             other assets).
                                              is entitled to receive the par value of the security.      24 The derivatives will be centrally cleared and      29 The Commission has stated that long-standing
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                                                 22 For purposes of this filing, each state and each   they will be collateralized. Derivatives are not a   Commission guidelines have required open-end
                                              separate political subdivision, agency, authority, or    principal investment strategy of the Fund.           funds to hold no more than 15% of their net assets
                                              instrumentality of such state, each multi-state            25 The Fund currently anticipates investing in     in illiquid securities and other illiquid assets. See
                                              agency or authority, and each guarantor, if any, will    only registered open-end investment companies,       Investment Company Act Release No. 28193 (March
                                              be treated as separate issuers of Municipal              including mutual funds and the open-end              11, 2008), 73 FR 14618 (March 18, 2008), footnote
                                              Securities.                                              investment company funds described in Rule 14.11.    34. See also, Investment Company Act Release No.
                                                 23 While the Fund may no longer comply with the       The Fund may invest in the securities of other       5847 (October 21, 1969), 35 FR 19989 (December
                                              diversity requirements applicable to the previously      investment companies to the extent permitted by      31, 1970) (Statement Regarding ‘‘Restricted
                                              applicable Trigger Number, the Fund will continue        law.                                                                                               Continued




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                                              52258                        Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices

                                              Fund will monitor its portfolio liquidity               Principal Holdings—Municipal                             notes,35 municipal tax exempt
                                              on an ongoing basis to determine                        Securities                                               commercial paper,36 tender option
                                              whether, in light of current                               To achieve its objective, the Fund will               bonds,37 private activity and industrial
                                              circumstances, an adequate level of                     invest, under normal circumstances, in                   development bonds, variable rate
                                              liquidity is being maintained, and will                 fixed and variable rate Municipal                        demand obligations (‘‘VRDOs’’),38
                                              consider taking appropriate steps in                    Securities, as defined below. As part of                 variable rate demand preferred
                                              order to maintain adequate liquidity if,                its investments in Municipal Securities,                 securities, municipal mortgage-backed
                                              through a change in values, net assets,                 the Fund invests primarily in                            securities and other asset-backed
                                              or other circumstances, more than 15%                   investment grade securities or the                       securities, municipal lease
                                              of the Fund’s net assets are held in                    unrated equivalent. Investment-grade                     obligations,39 stripped securities,40
                                              illiquid assets. Illiquid assets include                securities are rated a minimum of BBB-                   structured securities,41 deferred
                                              securities subject to contractual or other              or higher by Standard & Poor’s Ratings                   payment securities, when issued
                                              restrictions on resale and other                        Services and/or Fitch, or Baa3 or higher                 securities,42 and zero coupon
                                              instruments that lack readily available                 by Moody’s, or if unrated, determined                    securities.43 The Fund may invest more
                                              markets as determined in accordance                     by the Adviser to be of equivalent                       than 25% of its total assets in municipal
                                              with Commission staff guidance.                         quality.32 Up to 10% of the Fund’s total                 obligations, the interest upon which is
                                                                                                      assets may be invested in securities                     paid from revenues of projects within a
                                              JPMorgan Ultra-Short Municipal ETF                                                                               single sector, such as housing or
                                                                                                      rated below investment grade (junk
                                                 According to the Registration                        bonds). Junk bonds are rated in the fifth                healthcare.
                                              Statement, the Fund will seek as high a                 or lower rated categories (for example,                  Requirements for Fund Holdings
                                              level of current income exempt from                     BB+ or lower by Standard & Poor’s
                                              federal income tax as is consistent with                                                                           The Fund will hold a minimum of 40
                                                                                                      Ratings Services and Ba1 or lower by
                                              relative stability of principal. To achieve                                                                      different Municipal Securities
                                                                                                      Moody’s). Under normal circumstances,
                                              its objective, the Fund will invest, under              the Fund invests in a portfolio of                          35 Municipal notes are shorter-term municipal
                                              normal circumstances,30 at least 80% of                 municipal bonds with an average                          debt obligations that may provide interim financing
                                              its net assets in Municipal Securities, as              weighted maturity of two years or less.                  in anticipation of tax collection, receipt of grants,
                                              defined below, the interest from which                  Average weighted maturity is the                         bond sales, or revenue receipts. These include tax
                                              is exempt from federal income tax. The                  average of all the current maturities                    anticipation notes, bond anticipation notes and
                                                                                                                                                               revenue anticipation notes.
                                              Fund is not a money market fund and                     (that is, the term of the securities) of the                36 Municipal tax exempt commercial paper is
                                              does not seek to maintain a stable net                  individual bonds in a Fund calculated                    generally unsecured debt that is issued to meet
                                              asset value of $1.00 per share. The Fund                so as to count most heavily those                        short-term financing needs.
                                              will be classified as a ‘‘diversified’’                 securities with the highest dollar value.                   37 Tender option bonds are synthetic floating-rate

                                              investment company under the 1940                          Municipal securities (‘‘Municipal                     or variable-rate securities issued when long-term
                                                                                                                                                               bonds are purchased in the primary or secondary
                                              Act.31                                                  Securities’’) are debt securities issued by              market and then deposited into a trust. Custodial
                                                 The Fund intends to qualify each year                or on behalf of states, territories and                  receipts are then issued to investors, such as the
                                              as a regulated investment company (a                    possessions of the United States,                        Fund, evidencing ownership interests in the trust.
                                                                                                                                                                  38 VRDOs are tax-exempt obligations that contain
                                              ‘‘RIC’’) under Subchapter M of the                      including the District of Columbia, and
                                                                                                                                                               a floating or variable interest rate adjustment
                                              Internal Revenue Code of 1986, as                       their respective authorities, political                  formula and a right of demand on the part of the
                                              amended. The Fund will invest its                       subdivisions, agencies and                               holder thereof to receive payment of the unpaid
                                              assets, and otherwise conduct its                       instrumentalities and other groups with                  principal balance plus accrued interest upon a short
                                              operations, in a manner that is intended                the authority to act for the                             notice period not to exceed seven days.
                                                                                                                                                                  39 Municipal lease obligations include certificates
                                              to satisfy the qualifying income,                       municipalities, the interest on which is
                                                                                                                                                               of participation issued by government authorities or
                                              diversification and distribution                        exempt from federal income tax and                       entities to finance the acquisition or construction of
                                              requirements necessary to establish and                 will include only the following                          equipment, land, and/or facilities.
                                              maintain RIC qualification under                        instruments: General obligation                             40 Stripped securities are created when an issuer

                                              Subchapter M.                                           bonds,33 revenue bonds,34 municipal                      separates the interest and principal components of
                                                                                                                                                               an instrument and sells them as separate securities.
                                                                                                                                                               In general, one security is entitled to receive the
                                                                                                         32 According to the Adviser, the Adviser may
                                              Securities’’); Investment Company Act Release No.                                                                interest payments on the underlying assets and the
                                              18612 (March 12, 1992), 57 FR 9828 (March 20,           determine that unrated securities are of ‘‘equivalent    other to receive the principal payments.
                                              1992) (Revisions of Guidelines to Form N–1A). A         quality’’ based on such credit quality factors that it      41 Structured securities are privately negotiated

                                              fund’s portfolio security is illiquid if it cannot be   deems appropriate, which may include among other
                                                                                                                                                               debt obligations where the principal and/or interest
                                                                                                      things, performing an analysis similar, to the extent
                                              disposed of in the ordinary course of business                                                                   is determined by reference to the performance of an
                                                                                                      possible, to that performed by a nationally
                                              within seven days at approximately the value                                                                     underlying investment, index, or reference
                                                                                                      recognized statistical ratings organization when
                                              ascribed to it by the fund. See Investment Company                                                               obligation, and may be issued by governmental
                                                                                                      rating similar securities and issuers. In making such
                                              Act Release No. 14983 (March 12, 1986), 51 FR                                                                    agencies. While structured securities are part of the
                                                                                                      a determination, the Adviser may consider internal
                                              9773 (March 21, 1986) (adopting amendments to           analyses and risk ratings, third party research and      principal holdings of the Fund, the Issuer
                                              Rule 2a–7 under the 1940 Act); Investment               analysis, and other sources of information, as           represents that such securities, when combined
                                              Company Act Release No. 17452 (April 23, 1990),         deemed appropriate by the Adviser. The Adviser           with those instruments held as part of the other
                                              55 FR 17933 (April 30, 1990) (adopting Rule 144A        notes that the Fund may hold up to 10% of its net        portfolio holdings described below, will not exceed
                                              under the Securities Act of 1933).                      assets in fixed-rate Municipal Securities that are not   20% of the Fund’s net assets.
                                                30 The term ‘‘under normal circumstances’’                                                                        42 The Fund may purchase or sell securities that
                                                                                                      investment-grade.
                                              includes, but is not limited to, the absence of            33 General obligation bonds are obligations           it is entitled to receive on a when issued or delayed
                                              adverse market, economic, political, or other           involving the credit of an issuer possessing taxing      delivery basis as well as through a forward
                                              conditions, including extreme volatility or trading     power and are payable from such issuer’s general         commitment.
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                                              halts in the financial markets; operational issues      revenues and not from any particular source.                43 Zero coupon securities are securities that are
                                              causing dissemination of inaccurate market                 34 Revenue bonds are bonds that are secured by        sold at a discount to par value and do not pay
                                              information; or force majeure type events such as       a pledge of revenues derived from the operations of      interest during the life of the security. The discount
                                              systems failure, natural or man-made disaster, act      a revenue producing institution (i.e., a hospital or     approximates the total amount of interest the
                                              of God, armed conflict, act of terrorism, riot, or      a university), a system (i.e., a water system or an      security will accrue and compound over the period
                                              labor disruption, or any similar intervening            airport), a project, or from a special tax levy.         until maturity at a rate of interest reflecting the
                                              circumstance.                                           Industrial development bonds are generally               market rate of the security at the time of issuance.
                                                31 The diversification standard is set forth in       considered revenue bonds, and they are typically         Upon maturity, the holder of a zero coupon security
                                              Section 5(b)(1) of the 1940 Act.                        payable from the revenues of a corporation.              is entitled to receive the par value of the security.



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                                                                           Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices                                                          52259

                                              diversified among issuers in at least 8                 engage in transactions in United States                    shares of exchange traded and non-
                                              different states with no more than 30%                  bond futures contracts, exchange traded                    exchange traded investment companies
                                              of the Fund’s assets comprised of                       treasury and debt futures options,                         (including investment companies
                                              Municipal Securities that provide                       interest rate swaps and zero coupon                        advised by the Adviser or its affiliates)
                                              exposure to any single state                            swaps, interest rate futures, interest rate                that invest principally in money market
                                              (collectively, ‘‘Minimum Requirement                    options, and swaps on Municipal                            instruments.
                                              1’’). The Fund will hold a minimum of                   Securities indexes.46 The Fund may also
                                                                                                                                                                 Investment Restrictions
                                              75 different Municipal Securities when                  invest to a limited extent (under normal
                                              at least four creation units are                        circumstances, less than 20% of the                           The Fund may hold up to an aggregate
                                              outstanding (‘‘Trigger Number 1A’’).                    Fund’s net assets) in auction rate                         amount of 15% of its net assets in
                                              The Fund will hold a minimum of 100                     securities, commercial paper (other than                   illiquid assets (calculated at the time of
                                              different Municipal Securities                          the municipal tax exempt commercial                        investment), as deemed illiquid by the
                                              diversified among issuers in at least 20                paper described above), corporate debt                     Adviser 50 under the 1940 Act.51 The
                                              different states when at least eight                    securities (bonds and other debt                           Fund will monitor its portfolio liquidity
                                              creation units are outstanding (‘‘Trigger               securities of domestic and foreign                         on an ongoing basis to determine
                                              Number 1B’’). No single Municipal                       issuers), exchange traded and non-                         whether, in light of current
                                              Security held by the Fund will exceed                   exchange traded investment companies                       circumstances, an adequate level of
                                              4% of the weight of the Fund’s portfolio                (including investment companies                            liquidity is being maintained, and will
                                              and no single issuer of Municipal                       advised by the Adviser or its                              consider taking appropriate steps in
                                              Securities will account for more than                   affiliates),47 inflation linked debt                       order to maintain adequate liquidity if,
                                              10% of the weight of the Fund’s                         securities, inverse floating rate                          through a change in values, net assets,
                                              portfolio (collectively, ‘‘Minimum                      instruments, loan assignments and
                                                                                                      participations, short term funding                         term instruments with maturities of less than three
                                              Requirement 2’’). The Fund will hold                                                                               months, which includes only the following: (i) U.S.
                                              Municipal Securities of at least 20 non-                agreements, Treasury receipts, United                      Government securities, including bills, notes, and
                                              affiliated issuers (‘‘Minimum                           States Government Obligations, when-                       bonds differing as to maturity and rates of interest,
                                              Requirement 3’’). The Fund will hold                    issued securities, delayed delivery                        which are either issued or guaranteed by the U.S.
                                                                                                      securities, forward commitments, and                       Treasury or by U.S. Government agencies or
                                              Municipal Securities of at least 30 non-                                                                           instrumentalities; (ii) certificates of deposit issued
                                              affiliated issuers when at least four                   deferred payment securities. The Fund’s                    against funds deposited in a bank or savings and
                                              creation units are outstanding (‘‘Trigger               investments will be consistent with its                    loan association; (iii) bankers acceptances, which
                                              Number 2’’).44 To the extent that the                   investment objective and will not be                       are short-term credit instruments used to finance
                                                                                                      used to achieve leveraged returns (i.e.,                   commercial transactions; (iv) repurchase
                                              Fund at one point has sufficient creation                                                                          agreements and reverse repurchase agreements; (v)
                                              units outstanding necessary to trigger a                two times or three times the Fund’s                        bank time deposits, which are monies kept on
                                              diversity requirement laid out above                    benchmark, as described in the                             deposit with banks or savings and loan associations
                                              (each of Trigger Numbers 1A, 1B and 2,                  Registration Statement).                                   for a stated period of time at a fixed rate of interest;
                                                                                                         The Fund may also enter into                            (vi) commercial paper, which are short-term
                                              a ‘‘Trigger Number’’), but subsequently                                                                            unsecured promissory notes; and (vii) money
                                              has fewer creation units outstanding                    repurchase and reverse repurchase                          market funds.
                                              than the applicable Trigger Number, the                 agreements (collectively, ‘‘Repurchase                        50 In reaching liquidity decisions, the Adviser

                                              Fund may no longer comply with the                      Agreements’’). Repurchase Agreements                       may consider factors including: The frequency of
                                              applicable diversity requirement.45                     involve the sale of securities with an                     trades and quotes for the security; the number of
                                                                                                      agreement to repurchase the securities                     dealers wishing to purchase or sell the security and
                                                 In the absence of normal                                                                                        the number of other potential purchasers; dealer
                                              circumstances, the Fund may                             at an agreed-upon price, date and                          undertakings to make a market in the security; the
                                              temporarily depart from its normal                      interest payment and have the                              nature of the security and the nature of the
                                              investment process, provided that such                  characteristics of borrowing as part of                    marketplace trades (e.g., the time needed to dispose
                                                                                                      the Fund’s principal holdings.48                           of the security, the method of soliciting offers, and
                                              departure is, in the opinion of the                                                                                the mechanics of transfer); any legal or contractual
                                                                                                         The Fund may also invest in cash and
                                              Adviser, consistent with the Fund’s                                                                                restrictions on the ability to transfer the security or
                                                                                                      Cash Equivalents,49 which includes                         asset; significant developments involving the issuer
                                              investment objective and in the best
                                                                                                                                                                 or counterparty specifically (e.g., default,
                                              interest of the Fund. For example, the                    46 Derivatives might be included in the Fund’s           bankruptcy, etc.) or the securities markets generally;
                                              Fund may hold a higher than normal                      investments to serve the investment objectives of          and settlement practices, registration procedures,
                                              proportion of its assets in cash in                     the Fund. Such derivatives include only the                limitations on currency conversion or repatriation,
                                              response to adverse market, economic or                 following: Interest rate futures, interest rate options,   and transfer limitations (for foreign securities or
                                                                                                      interest rate swaps, and swaps on Municipal                other assets).
                                              political conditions.                                   Securities indexes. The derivatives will be centrally         51 The Commission has stated that long-standing

                                              Other Portfolio Holdings                                cleared and they will be collateralized. Derivatives       Commission guidelines have required open-end
                                                                                                      are not a principal investment strategy of the Fund.       funds to hold no more than 15% of their net assets
                                                The Fund may also, to a limited                         47 The Fund currently anticipates investing in           in illiquid securities and other illiquid assets. See
                                              extent (under normal circumstances,                     only registered open-end investment companies,             Investment Company Act Release No. 28193 (March
                                                                                                      including mutual funds and the open-end                    11, 2008), 73 FR 14618 (March 18, 2008), footnote
                                              less than 20% of the Fund’s net assets),                investment company funds described in Rule 14.11.          34. See also, Investment Company Act Release No.
                                                                                                      The Fund may invest in the securities of other             5847 (October 21, 1969), 35 FR 19989 (December
                                                44 For purposes of this filing, each state and each   investment companies to the extent permitted by            31, 1970) (Statement Regarding ‘‘Restricted
                                              separate political subdivision, agency, authority, or   law.                                                       Securities’’); Investment Company Act Release No.
                                              instrumentality of such state, each multi-state           48 The Fund’s exposure to reverse repurchase             18612 (March 12, 1992), 57 FR 9828 (March 20,
                                              agency or authority, and each guarantor, if any, will   agreements will be covered by liquid assets having         1992) (Revisions of Guidelines to Form N–1A). A
                                              be treated as separate issuers of Municipal             a value equal to or greater than such commitments.         fund’s portfolio security is illiquid if it cannot be
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                                              Securities.                                             The use of reverse repurchase agreements is a form         disposed of in the ordinary course of business
                                                45 While the Fund may no longer comply with the       of leverage because the proceeds derived from              within seven days at approximately the value
                                              diversity requirements applicable to the previously     reverse repurchase agreements may be invested in           ascribed to it by the fund. See Investment Company
                                              applicable Trigger Number, the Fund will continue       additional securities. As further stated below, the        Act Release No. 14983 (March 12, 1986), 51 FR
                                              to comply with any diversity requirement for which      Fund’s investments will be consistent with its             9773 (March 21, 1986) (adopting amendments to
                                              the number of creation units outstanding continues      investment objective and will not be used to               Rule 2a–7 under the 1940 Act); Investment
                                              to exceed the Trigger Number (i.e., Trigger Number      achieve leveraged returns.                                 Company Act Release No. 17452 (April 23, 1990),
                                              1A), as well as each of Minimum Requirements 1,           49 As defined in Exchange Rule                           55 FR 17933 (April 30, 1990) (adopting Rule 144A
                                              2 and 3.                                                14.11(i)(4)(C)(iii)(b), Cash Equivalents are short-        under the Securities Act of 1933).



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                                              52260                        Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices

                                              or other circumstances, more than 15%                   is required to comply with Rule 10A–                  of the prospectus for each Fund that
                                              of the Fund’s net assets are held in                    3 53 under the Act for the initial and                may be downloaded. The website will
                                              illiquid assets. Illiquid assets include                continued listing of the Shares. In                   include additional quantitative
                                              securities subject to contractual or other              addition, the Exchange represents that                information updated on a daily basis,
                                              restrictions on resale and other                        the Funds will meet and be subject to                 including, for each Fund: (1) Daily
                                              instruments that lack readily available                 all other requirements of the Generic                 trading volume, the prior business day’s
                                              markets as determined in accordance                     Listing Rules and other applicable                    reported closing price, NAV and mid-
                                              with Commission staff guidance.                         continued listing requirements for                    point of the bid/ask spread at the time
                                                 The Fund may also invest up to 100%                  Managed Fund Shares under Exchange                    of calculation of such NAV (the ‘‘Bid/
                                              of its net assets in Municipal Securities               Rule 14.11(i), including those                        Ask Price’’),61 and a calculation of the
                                              that pay interest which may be subject                  requirements regarding the Disclosed                  premium and discount of the Bid/Ask
                                              to the Alternative Minimum Tax for                      Portfolio (as defined in the Exchange                 Price against the NAV, and (2) data in
                                              individuals.                                            rules) and the requirement that the                   chart format displaying the frequency
                                                                                                      Disclosed Portfolio and the net asset                 distribution of discounts and premiums
                                              Discussion
                                                                                                      value (‘‘NAV’’) will be made available to             of the daily Bid/Ask Price against the
                                                 Based on the characteristics of the                  all market participants at the same                   NAV, within appropriate ranges, for
                                              Funds and the representations made in                   time,54 intraday indicative value,55                  each of the four previous calendar
                                              each of the Requirements for Fund                       suspension of trading or removal,56                   quarters. On each business day, before
                                              Holdings sections above, the Exchange                   trading halts,57 disclosure,58 and                    commencement of trading in Shares
                                              believes it is appropriate to allow the                 firewalls.59 Further, at least 100,000                during Regular Trading Hours 62 on the
                                              listing and trading of the Shares. The                  Shares will be outstanding upon the                   Exchange, each Fund will disclose on
                                              Funds satisfy all of the generic listing                commencement of trading of each                       its website the identities and quantities
                                              requirements for Managed Fund Shares                    Fund.60                                               of the portfolio of securities and other
                                              that hold fixed income securities, except                                                                     assets (the ‘‘Disclosed Portfolio’’) held
                                                                                                      The Shares
                                              for the minimum principal amount                                                                              by the Fund that will form the basis for
                                              outstanding requirement in                                 Each Fund will issue and redeem                    the Fund’s calculation of NAV at the
                                              14.11(i)(4)(C)(ii)(a). The Exchange notes               Shares on a continuous basis at the NAV               end of the business day.63 The Disclosed
                                              that the representations in the                         per Share only in large blocks of a                   Portfolio will include, as applicable, the
                                              Requirements for Fund Holdings for the                  specified number of Shares or multiples               names, quantity, percentage weighting
                                              Funds are identical to the                              thereof (‘‘Creation Units’’) in                       and market value of securities and other
                                              representations made regarding the                      transactions with authorized                          assets held by the Fund and the
                                              iShares iBonds Dec 2024 AMT Free                        participants who have entered into                    characteristics of such assets. The
                                              Muni Bond ETF, iShares iBonds Dec                       agreements with the Distributor. Each                 website and information will be
                                              2025 AMT Free Muni Bond ETF, and                        Fund currently anticipates that a                     publicly available at no charge.
                                              iShares iBonds Dec 2026 AMT Free                        Creation Unit will consist of 50,000                     In addition, for each Fund, an
                                              Muni Bond ETF (collectively, the                        Shares, though this number may change                 estimated value, defined in Rule
                                              ‘‘Comparable Funds’’), which were                       from time to time, including prior to                 14.11(i)(3)(C) as the ‘‘Intraday Indicative
                                              previously approved for listing and                     listing of the Funds. The exact number                Value,’’ that reflects an estimated
                                              trading by the Commission.52 In the                     of Shares that will constitute a Creation             intraday value of the Fund’s portfolio,
                                              Approval Order, the Commission                          Unit will be disclosed in the respective              will be disseminated. Moreover, the
                                              highlighted the representations that                    Registration Statement of each Fund.                  Intraday Indicative Value will be based
                                              holdings of the Comparable Funds                        Once created, Shares of each Fund trade               upon the current value for the
                                              would meet Minimum Requirement 1 at                     on the secondary market in amounts                    components of the Disclosed Portfolio
                                              all times and, as the applicable trigger                less than a Creation Unit.                            and will be updated and widely
                                              numbers were hit, Minimum                                  Additional information regarding the               disseminated by one or more major
                                              Requirement 2 and Minimum                               Shares and each Fund, including                       market data vendors at least every 15
                                              Requirement 3. The Exchange believes                    investment strategies, risks, creation and            seconds during the Exchange’s Regular
                                              that because these representations                      redemption procedures, fees and                       Trading Hours.64
                                              regarding diversification and the lack of               expenses, portfolio holdings disclosure                  The dissemination of the Intraday
                                              concentration among constituent                         policies, distributions, taxes and reports            Indicative Value, together with the
                                              securities provides a strong degree of                  to be distributed to beneficial owners of
                                              protection against manipulation that is                 the Shares can be found in the                           61 The Bid/Ask Price of the Fund will be

                                                                                                      Registration Statement or on the website              determined using the highest bid and the lowest
                                              consistent with other proposals that                                                                          offer on the Exchange as of the time of calculation
                                              have been approved for listing and                      for the Funds (www.JPMorgan.com), as                  of the Fund’s NAV. The records relating to Bid/Ask
                                              trading by the Commission.                              applicable.                                           Prices will be retained by the Fund or its service
                                                                                                                                                            providers.
                                                 In addition, the Exchange represents                 Availability of Information                              62 As defined in Rule 1.5(w), the term ‘‘Regular
                                              that: (1) Except for Rule                                                                                     Trading Hours’’ means the time between 9:30 a.m.
                                                                                                        The Funds’ website, which will be
                                              14.11(i)(4)(C)(ii)(a), the Funds will                                                                         and 4:00 p.m. Eastern Time.
                                                                                                      publicly available prior to the public
                                              satisfy all of the generic listing                                                                               63 Under accounting procedures to be followed by
                                                                                                      offering of Shares, will include a form               each Fund, trades made on the prior business day
                                              standards under Rule 14.11(i)(4); (2) the
                                                                                                                                                            (‘‘T’’) will be booked and reflected in NAV on the
                                              continued listing standards under Rule                    53 17 CFR 240.10A–3.                                current business day (‘‘T+1’’). Accordingly, each
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                                              14.11(i), as applicable to Managed Fund                   54 See Exchange Rules 14.11(i)(4)(A)(ii) and        Fund will be able to disclose at the beginning of the
                                              Shares that hold fixed income                           14.11(i)(4)(B)(ii).                                   business day the portfolio that will form the basis
                                              securities, will apply to the shares of the               55 See Exchange Rule 14.11(i)(4)(B)(i).             for the NAV calculation at the end of the business
                                                                                                                                                            day.
                                              Funds; and (3) the issuer of the Funds                    56 See Exchange Rule 14.11(i)(4)(B)(iii).
                                                                                                                                                               64 Currently, it is the Exchange’s understanding
                                                                                                        57 See Exchange Rule 14.11(i)(4)(B)(iv).
                                                                                                                                                            that several major market data vendors display and/
                                                52 See Securities Exchange Act Release No. 80399        58 See Exchange Rule 14.11(i)(6).
                                                                                                                                                            or make widely available Intraday Indicative Values
                                                                                                        59 See Exchange Rule 14.11(i)(7).
                                              (April 7, 2017), 82 FR 17913 (April 13, 2017) (SR–                                                            published via the Consolidated Tape Association
                                              BatsBZX–2017–10) (the ‘‘Approval Order’’).                60 See Exchange Rule 14.11(i)(4)(A)(i).             (‘‘CTA’’) or other data feeds.



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                                                                           Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices                                                 52261

                                              Disclosed Portfolio, will allow investors               Initial and Continued Listing                         Shares on the Exchange during all
                                              to determine the value of the underlying                  The Shares will be subject to Rule                  trading sessions and to deter and detect
                                              portfolio of each Fund on a daily basis                 14.11(i), which sets forth the initial and            violations of Exchange rules and the
                                              and provide a close estimate of that                    continued listing criteria applicable to              applicable federal securities laws.
                                              value throughout the trading day.                       Managed Fund Shares. The Exchange                     Trading of the Shares through the
                                                 Intraday, executable price quotations                represents that, for initial and/or                   Exchange will be subject to the
                                              on assets held by each Fund are                         continued listing, each Fund must be in               Exchange’s surveillance procedures for
                                              available from major broker-dealer firms                compliance with Rule 10A–3 under the                  derivative products, including Managed
                                              and for exchange-traded assets,                         Act.65 A minimum of 100,000 Shares of                 Fund Shares. The Exchange may obtain
                                              including shares of exchange traded                     each Fund will be outstanding at the                  information regarding trading in the
                                              investment companies, such intraday                     commencement of trading on the                        Shares and the underlying shares in
                                              information is available directly from                  Exchange. The Exchange will obtain a                  exchange traded equity securities via
                                              the applicable listing exchange. All such               representation from the issuer of the                 the Intermarket Surveillance Group
                                              intraday price information is available                 Shares that the NAV per Share will be                 (‘‘ISG’’), from other exchanges that are
                                              through subscription services, such as                  calculated daily and that the NAV and                 members or affiliates of the ISG, or with
                                              Bloomberg, Thomson Reuters and                          the Disclosed Portfolio will be made                  which the Exchange has entered into a
                                              International Data Corporation, which                   available to all market participants at               comprehensive surveillance sharing
                                              can be accessed by authorized                           the same time.                                        agreement.66 In addition, the Exchange,
                                              participants and other investors. Pricing                                                                     or FINRA, on behalf of the Exchange is
                                              information for Repurchase Agreements                   Trading Halts                                         able to access, as needed, trade
                                              and securities not listed on an exchange                   With respect to trading halts, the                 information for certain fixed income
                                              or national securities market will be                   Exchange may consider all relevant                    instruments reported to FINRA’s Trade
                                              available from major broker-dealer firms                factors in exercising its discretion to               Reporting and Compliance Engine
                                              and/or subscription services, such as                   halt or suspend trading in the Shares of              (‘‘TRACE’’) and Municipal Securities
                                              Bloomberg, Thomson Reuters and                          each Fund. The Exchange will halt                     reported to MSRB. FINRA also can
                                              International Data Corporation. Trade                   trading in the Shares under the                       access data obtained from the MSRB
                                              price and other information relating to                 conditions specified in Rule 11.18.                   relating to municipal bond trading
                                              Municipal Securities is available                       Trading may be halted because of                      activity for surveillance purposes in
                                              through the Municipal Securities                        market conditions or for reasons that, in             connection with trading in the Shares.
                                              Rulemaking Board’s (the ‘‘MSRB’’)                       the view of the Exchange, make trading                   As it relates to exchange traded
                                              Electronic Municipal Market Access                      in the Shares inadvisable. These may                  investment companies, the Funds will
                                              (‘‘EMMA’’) system. Quotation and last                   include: (1) The extent to which trading              only invest in investment companies
                                              sale information for U.S. exchange-                     is not occurring in the securities and/or             that trade on markets that are a member
                                              listed options contracts cleared by The                 the financial instruments composing the               of the ISG or with which the Exchange
                                              Options Clearing Corporation will be                    Disclosed Portfolio of the Fund; or (2)               has in place a comprehensive
                                              available via the Options Price                         whether other unusual conditions or                   surveillance sharing agreement.
                                              Reporting Authority.                                    circumstances detrimental to the
                                                                                                                                                               The Exchange prohibits the
                                                 Information regarding market price                   maintenance of a fair and orderly
                                                                                                      market are present. Trading in the                    distribution of material non-public
                                              and volume of the Shares will be                                                                              information by its employees.
                                              continually available on a real-time                    Shares also will be subject to Rule
                                              basis throughout the day on brokers’                    14.11(i)(4)(B)(iv), which sets forth                  Information Circular
                                              computer screens and other electronic                   circumstances under which trading in
                                                                                                      the Shares of a Fund may be halted.                      Prior to the commencement of
                                              services. The previous day’s closing                                                                          trading, the Exchange will inform its
                                              price and trading volume information                    Trading Rules                                         members in an Information Circular of
                                              for the Shares will be published daily in                  The Exchange deems the Shares to be                the special characteristics and risks
                                              the financial section of newspapers and                 equity securities, thus rendering trading             associated with trading the Shares.
                                              publicly available sources. Quotation                   in the Shares subject to the Exchange’s               Specifically, the Information Circular
                                              and last sale information for the Shares                existing rules governing the trading of               will discuss the following: (1) The
                                              will be available on the facilities of the              equity securities. The Exchange will                  procedures for purchases and
                                              CTA. Price information relating to all                  allow trading in the Shares from 8:00                 redemptions of Shares in Creation Units
                                              other securities held by the Funds will                 a.m. until 5:00 p.m. Eastern Time. The                (and that Shares are not individually
                                              be available from major market data                     Exchange has appropriate rules to                     redeemable); (2) Rule 3.7, which
                                              vendors. Quotations and last sale                       facilitate transactions in the Shares                 imposes suitability obligations on
                                              information for the underlying exchange                 during all trading sessions. As provided              Exchange members with respect to
                                              traded investment companies will be                     in Rule 11.11(a), the minimum price                   recommending transactions in the
                                              available through CTA.                                  variation for quoting and entry of orders             Shares to customers; (3) how
                                                 Investors can also obtain the Trust’s                in Managed Fund Shares traded on the                  information regarding the Intraday
                                              Statement of Additional Information                     Exchange is $0.01, with the exception of              Indicative Value is disseminated; (4) the
                                              (‘‘SAI’’), the Fund’s Shareholder                       securities that are priced less than                  risks involved in trading the Shares
                                              Reports, and its Form N–CSR and Form                    $1.00, for which the minimum price                    during the Pre-Opening 67 and After
                                              N–SAR, filed twice a year. The Trust’s                  variation for order entry is $0.0001.
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                                              SAI and Shareholder Reports are                                                                                 66 For a list of the current members of ISG, see
                                              available free upon request from the                    Surveillance                                          www.isgportal.org. The Exchange notes that not all
                                              Trust, and those documents and the                        The Exchange believes that its                      components of the Disclosed Portfolio for the Fund
                                              Form N–CSR and Form N–SAR may be                                                                              may trade on markets that are members of ISG or
                                                                                                      surveillance procedures are adequate to               with which the Exchange has in place a
                                              viewed on-screen or downloaded from                     properly monitor the trading of the                   comprehensive surveillance sharing agreement.
                                              the Commission’s website at                                                                                     67 The Pre-Opening Session is from 8:00 a.m. to

                                              www.sec.gov.                                              65 See   17 CFR 240.10A–3.                          9:30 a.m. Eastern Time.



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                                              52262                        Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices

                                              Hours Trading Sessions 68 when an                       be listed and traded on the Exchange                  of 100 different Municipal Securities
                                              updated Intraday Indicative Value will                  pursuant to the initial and continued                 diversified among issuers in at least 20
                                              not be calculated or publicly                           listing criteria in Rule 14.11(i). The                different states when at least eight
                                              disseminated; (5) the requirement that                  Exchange believes that its surveillance               creation units are outstanding for that
                                              members deliver a prospectus to                         procedures are adequate to properly                   Fund; no single Municipal Security held
                                              investors purchasing newly issued                       monitor the trading of the Shares on the              by a Fund will exceed 4% of the weight
                                              Shares prior to or concurrently with the                Exchange during all trading sessions                  of that Fund’s portfolio and no single
                                              confirmation of a transaction; and (6)                  and to deter and detect violations of                 issuer of Municipal Securities will
                                              trading information.                                    Exchange rules and the applicable                     account for more than 10% of the
                                                 In addition, the Information Circular                federal securities laws. Rule 14.11(i)(7)             weight of a Fund’s portfolio; each Fund
                                              will advise members, prior to the                       provides that, if the investment adviser              will hold Municipal Securities of at
                                              commencement of trading, of the                         to the investment company issuing                     least 20 non-affiliated issuers; and each
                                              prospectus delivery requirements                        Managed Fund Shares is affiliated with                Fund will hold Municipal Securities of
                                              applicable to the Funds. Members                        a broker-dealer, such investment adviser              at least 30 non-affiliated issuers when at
                                              purchasing Shares from the Funds for                    shall erect a ‘‘fire wall’’ between the               least four creation units are outstanding.
                                              resale to investors will deliver a                      investment adviser and the broker-
                                              prospectus to such investors. The                                                                                According to the Registration
                                                                                                      dealer with respect to access to
                                              Information Circular will also discuss                                                                        Statement, each Fund will invest, under
                                                                                                      information concerning the composition
                                              any exemptive, no-action, and                                                                                 normal circumstances,71 at least 80% of
                                                                                                      and/or changes to such investment
                                              interpretive relief granted by the                                                                            its net assets in Municipal Securities
                                                                                                      company portfolio. The Adviser is not a
                                              Commission from any rules under the                                                                           such that the interest on each security
                                                                                                      registered broker-dealer, but is affiliated
                                              Act.                                                                                                          is exempt from U.S. federal income
                                                                                                      with multiple broker-dealers and has
                                                 In addition, the Information Circular                                                                      taxes. Additionally, each Fund may
                                                                                                      implemented ‘‘fire walls’’ with respect
                                              will reference that each Fund is subject                                                                      hold up to an aggregate amount of 15%
                                                                                                      to such broker-dealers regarding access
                                              to various fees and expenses described                                                                        of its net assets in illiquid assets
                                                                                                      to information concerning the
                                              in the Registration Statement. The                                                                            (calculated at the time of investment), as
                                                                                                      composition and/or changes to a Fund’s
                                              Information Circular will also disclose                                                                       deemed illiquid by the Adviser 72 under
                                                                                                      portfolio. In addition, Adviser personnel
                                              the trading hours of the Shares of the                                                                        the 1940 Act.73 Each Fund will monitor
                                                                                                      who make decisions regarding a Fund’s
                                              Funds and the applicable NAV                                                                                  its portfolio liquidity on an ongoing
                                                                                                      portfolio are subject to procedures
                                              Calculation Time for the Shares. The                                                                          basis to determine whether, in light of
                                                                                                      designed to prevent the use and
                                              Information Circular will disclose that                                                                       current circumstances, an adequate
                                                                                                      dissemination of material nonpublic
                                              information about the Shares of the                                                                           level of liquidity is being maintained,
                                                                                                      information regarding the Fund’s
                                              Funds will be publicly available on the                                                                       and will consider taking appropriate
                                                                                                      portfolio. The Exchange may obtain
                                              Funds’ website. In addition, the                                                                              steps in order to maintain adequate
                                                                                                      information regarding trading in the
                                              Information Circular will reference that                                                                      liquidity if, through a change in values,
                                                                                                      Shares and the underlying shares in
                                              the Trust is subject to various fees and                                                                      net assets, or other circumstances, more
                                                                                                      exchange traded equity securities via
                                              expenses described in each Fund’s                                                                             than 15% of the Fund’s net assets are
                                                                                                      the ISG, from other exchanges that are
                                              Registration Statement.                                                                                       held in illiquid assets. Illiquid assets
                                                                                                      members or affiliates of the ISG, or with
                                                                                                                                                            include securities subject to contractual
                                              2. Statutory Basis                                      which the Exchange has entered into a
                                                                                                                                                            or other restrictions on resale and other
                                                                                                      comprehensive surveillance sharing
                                                 The Exchange believes that the                                                                             instruments that lack readily available
                                                                                                      agreement. In addition, the Exchange, or
                                              proposal is consistent with Section 6(b)                                                                      markets as determined in accordance
                                                                                                      FINRA, on behalf of the Exchange, is
                                              of the Act 69 in general and Section                                                                          with Commission staff guidance.
                                                                                                      able to access, as needed, trade
                                              6(b)(5) of the Act 70 in particular in that
                                                                                                      information for certain fixed income
                                              it is designed to prevent fraudulent and                                                                        71 See  supra note 9.
                                                                                                      instruments reported to TRACE and                       72 See  supra note 29.
                                              manipulative acts and practices, to
                                                                                                      Municipal Securities reported to MSRB.                  73 The Commission has stated that long-standing
                                              promote just and equitable principles of
                                                                                                      FINRA also can access data obtained                   Commission guidelines have required open-end
                                              trade, to foster cooperation and
                                                                                                      from the MSRB relating to municipal                   funds to hold no more than 15% of their net assets
                                              coordination with persons engaged in
                                                                                                      bond trading activity for surveillance                in illiquid securities and other illiquid assets. See
                                              facilitating transactions in securities, to
                                                                                                      purposes in connection with trading in                Investment Company Act Release No. 28193 (March
                                              remove impediments to and perfect the                                                                         11, 2008), 73 FR 14618 (March 18, 2008), footnote
                                                                                                      the Shares. Each Fund’s investments
                                              mechanism of a free and open market                                                                           34. See also, Investment Company Act Release No.
                                                                                                      will be well-diversified in that each
                                              and a national market system and, in                                                                          5847 (October 21, 1969), 35 FR 19989 (December
                                                                                                      Fund will hold a minimum of 40
                                              general, to protect investors and the                                                                         31, 1970) (Statement Regarding ‘‘Restricted
                                                                                                      different Municipal Securities                        Securities’’); Investment Company Act Release No.
                                              public interest.
                                                                                                      diversified among issuers in at least 8               18612 (March 12, 1992), 57 FR 9828 (March 20,
                                                 The Exchange believes that the
                                                                                                      different states with no more than 30%                1992) (Revisions of Guidelines to Form N–1A). A
                                              proposed rule change is designed to
                                                                                                      of the Fund’s assets comprised of                     fund’s portfolio security is illiquid if it cannot be
                                              prevent fraudulent and manipulative                                                                           disposed of in the ordinary course of business
                                                                                                      Municipal Securities that provide
                                              acts and practices in that the Shares will                                                                    within seven days at approximately the value
                                                                                                      exposure to any single state; each Fund
                                                                                                                                                            ascribed to it by the fund. See Investment Company
                                                68 The After Hours Trading Session is from 4:00       will hold a minimum of 75 different                   Act Release No. 14983 (March 12, 1986), 51 FR
                                              p.m. to 5:00 p.m. Eastern Time.                         Municipal Securities when at least four               9773 (March 21, 1986) (adopting amendments to
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                                                69 15 U.S.C. 78f.                                     creation units are outstanding for that               Rule 2a–7 under the 1940 Act); Investment
                                                70 15 U.S.C. 78f(b)(5).                               Fund; each Fund will hold a minimum                   Company Act Release No. 17452 (April 23, 1990),
                                                                                                                                                            55 FR 17933 (April 30, 1990) (adopting Rule 144A
                                                                                                                                                            under the Securities Act of 1933).




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                                                                           Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices                                                      52263

                                                 The proposed rule change is designed                 investors will have ready access to                   to the benefit of investors and the
                                              to promote just and equitable principles                information regarding the Fund’s                      marketplace.
                                              of trade and to protect investors and the               holdings, the Intraday Indicative Value,
                                              public interest in that the Exchange will               the Disclosed Portfolio, and quotation                C. Self-Regulatory Organization’s
                                              obtain a representation from the issuer                 and last sale information for the Shares.             Statement on Comments on the
                                              of the Shares that the NAV per Share                       Intraday, executable price quotations              Proposed Rule Change Received From
                                              will be calculated daily and that the                   on assets held by the Funds are                       Members, Participants, or Others
                                              NAV and the Disclosed Portfolio will be                 available from major broker-dealer firms
                                                                                                      and for exchange-traded assets,                         The Exchange has neither solicited
                                              made available to all market
                                              participants at the same time. In                       including investment companies, such                  nor received written comments on the
                                              addition, a large amount of information                 intraday information is available                     proposed rule change.
                                              is publicly available regarding the                     directly from the applicable listing                  III. Date of Effectiveness of the
                                              Funds and the Shares, thereby                           exchange. All such intraday price                     Proposed Rule Change and Timing for
                                              promoting market transparency.                          information is available through                      Commission Action
                                              Moreover, the Intraday Indicative Value                 subscription services, such as
                                              will be disseminated by one or more                     Bloomberg, Thomson Reuters and                           The Exchange has filed the proposed
                                              major market data vendors at least every                International Data Corporation, which                 rule change pursuant to Section
                                              15 seconds during Regular Trading                       can be accessed by authorized                         19(b)(3)(A)(iii) of the Act 75 and Rule
                                              Hours. On each business day, before                     participants and other investors.                     19b–4(f)(6) thereunder.76 Because the
                                              commencement of trading in Shares                          The proposed rule change is designed               proposed rule change does not: (i)
                                              during Regular Trading Hours, each                      to perfect the mechanism of a free and
                                                                                                                                                            Significantly affect the protection of
                                              Fund will disclose on its website the                   open market and, in general, to protect
                                                                                                                                                            investors or the public interest; (ii)
                                              Disclosed Portfolio that will form the                  investors and the public interest in that
                                                                                                      it will facilitate the listing and trading            impose any significant burden on
                                              basis for the Fund’s calculation of NAV
                                                                                                      of an additional type of actively-                    competition; and (iii) become operative
                                              at the end of the business day. Pricing
                                                                                                      managed exchange traded product that                  prior to 30 days from the date on which
                                              information will include additional
                                              quantitative information updated on a                   will enhance competition among market                 it was filed, or such shorter time as the
                                              daily basis, including, for the Fund: (1)               participants, to the benefit of investors             Commission may designate, if
                                              The prior business day’s NAV and the                    and the marketplace. As noted above,                  consistent with the protection of
                                              market closing price or mid-point of the                the Exchange has in place surveillance                investors and the public interest, the
                                              Bid/Ask Price,74 and a calculation of the               procedures relating to trading in the                 proposed rule change has become
                                              premium or discount of the market                       Shares and may obtain information via                 effective pursuant to Section 19(b)(3)(A)
                                              closing price or Bid/Ask Price against                  ISG, from other exchanges that are                    of the Act and Rule 19b–4(f)(6)(iii)
                                              the NAV; and (2) data in chart format                   members of ISG, or with which the                     thereunder.77
                                              displaying the frequency distribution of                Exchange has entered into a                              A proposed rule change filed under
                                              discounts and premiums of the daily                     comprehensive surveillance sharing
                                                                                                                                                            Rule 19b–4(f)(6) 78 normally does not
                                              market closing price or Bid/Ask Price                   agreement. In addition, the Exchange, or
                                                                                                                                                            become operative prior to 30 days after
                                              against the NAV, within appropriate                     FINRA, on behalf of the Exchange, is
                                                                                                      able to access, as needed, trade                      the date of the filing. However, pursuant
                                              ranges, for each of the four previous
                                                                                                      information for certain fixed income                  to Rule 19b–4(f)(6)(iii),79 the
                                              calendar quarters. Additionally,
                                                                                                      instruments reported to TRACE and                     Commission may designate a shorter
                                              information regarding market price and
                                              trading of the Shares will be continually               Municipal Securities reported to MSRB.                time if such action is consistent with the
                                              available on a real-time basis throughout               FINRA also can access data obtained                   protection of investors and the public
                                              the day on brokers’ computer screens                    from the MSRB relating to municipal                   interest. The Exchange has asked the
                                              and other electronic services, and                      bond trading activity for surveillance                Commission to waive the 30-day
                                              quotation and last sale information for                 purposes in connection with trading in                operative delay so that the proposal may
                                              the Shares will be available on the                     the Shares. As noted above, investors                 become operative immediately upon
                                              facilities of the CTA. The website for                  will also have ready access to                        filing. The Commission believes that
                                              each Fund will include a form of the                    information regarding each Fund’s                     waiver of the 30-day operative delay is
                                              prospectus for the Fund and additional                  holdings, the Intraday Indicative Value,              consistent with the protection of
                                              data relating to NAV and other                          the Disclosed Portfolio, and quotation                investors and the public interest. As the
                                              applicable quantitative information.                    and last sale information for the Shares.             Exchange states, the Funds raise no new
                                              Trading in Shares of a Fund will be                        For the above reasons, the Exchange                or novel issues and are consistent with
                                              halted under the conditions specified in                believes that the proposed rule change                funds whose shares the Commission has
                                              Rule 11.18. Trading may also be halted                  is consistent with the requirements of                previously approved for listing and
                                              because of market conditions or for                     Section 6(b)(5) of the Act.                           trading. Accordingly, the Commission
                                              reasons that, in the view of the                        B. Self-Regulatory Organization’s                     hereby waives the 30-day operative
                                              Exchange, make trading in the Shares                    Statement on Burden on Competition
                                              inadvisable. Finally, trading in the                                                                            75 15  U.S.C. 78s(b)(3)(A)(iii).
                                              Shares will be subject to Rule                             The Exchange does not believe that                   76 17  CFR 240.19b–4(f)(6).
                                              14.11(i)(4)(B)(iv), which sets forth                    the proposed rule change will impose                     77 17 CFR 240.19b–4(f)(6)(iii). As required under
                                              circumstances under which Shares may                    any burden on competition that is not
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                                                                                                                                                            Rule 19b–4(f)(6)(iii), the Exchange provided the
                                              be halted. In addition, as noted above,                 necessary or appropriate in furtherance               Commission with written notice of its intent to file
                                                                                                      of the purpose of the Act. The Exchange               the proposed rule change, along with a brief
                                                74 The Bid/Ask Price of a Fund will be                notes that the proposed rule change will              description and text of the proposed rule change,
                                                                                                                                                            at least five business days prior to the date of filing
                                              determined using the highest bid and the lowest         facilitate the listing and trading of                 of the proposed rule change, or such shorter time
                                              offer on the Exchange as of the time of calculation     additional actively-managed exchange-
                                              of the Fund’s NAV. The records relating to Bid/Ask                                                            as designated by the Commission.
                                              Prices will be retained by the Fund or its service      traded products that will enhance                        78 17 CFR 240.19b–4(f)(6).

                                              providers.                                              competition among market participants,                   79 17 CFR 240.19b–4(f)(6)(iii).




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                                              52264                        Federal Register / Vol. 83, No. 200 / Tuesday, October 16, 2018 / Notices

                                              delay and designates the proposed rule                  Reference Room, 100 F Street NE,                      comment letter on the proposal.5 On
                                              change operative upon filing.80                         Washington, DC 20549, on official                     September 17, 2018, pursuant to Section
                                                 At any time within 60 days of the                    business days between the hours of                    19(b)(3)(C) of the Act, the Commission:
                                              filing of such proposed rule change, the                10:00 a.m. and 3:00 p.m. Copies of this               (1) Temporarily suspended the
                                              Commission summarily may                                filing will also be available for                     proposed rule change; and (2) instituted
                                              temporarily suspend such rule change if                 inspection and copying at the principal               proceedings to determine whether to
                                              it appears to the Commission that such                  office of the Exchange. All comments                  approve or disapprove the proposal.6
                                              action is necessary or appropriate in the               received will be posted without change.               On October 5, 2018, the Exchange
                                              public interest, for the protection of                  Persons submitting comments are                       withdrew the proposed rule change
                                              investors, or otherwise in furtherance of               cautioned that we do not redact or edit               (SR–MIAX–2018–19).
                                              the purposes of the Act. If the                         personal identifying information from
                                              Commission takes such action, the                       comment submissions. You should                         For the Commission, by the Division of
                                              Commission shall institute proceedings                                                                        Trading and Markets, pursuant to delegated
                                                                                                      submit only information that you wish
                                              under Section 19(b)(2)(B) 81 of the Act to                                                                    authority.7
                                                                                                      to make available publicly. All
                                              determine whether the proposed rule                     submissions should refer to File                      Eduardo A. Aleman,
                                              change should be approved or                            Number SR–CboeBZX–2018–072 and                        Assistant Secretary.
                                              disapproved.                                            should be submitted on or before                      [FR Doc. 2018–22431 Filed 10–15–18; 8:45 am]
                                              IV. Solicitation of Comments                            November 6, 2018.                                     BILLING CODE 8011–01–P

                                                Interested persons are invited to                       For the Commission, by the Division of
                                                                                                      Trading and Markets, pursuant to delegated
                                              submit written data, views, and                         authority.82                                          SECURITIES AND EXCHANGE
                                              arguments concerning the foregoing,
                                                                                                      Eduardo A. Aleman,                                    COMMISSION
                                              including whether the proposed rule
                                              change is consistent with the Act.                      Assistant Secretary.
                                              Comments may be submitted by any of                     [FR Doc. 2018–22427 Filed 10–15–18; 8:45 am]          [Release No. 34–84393; File No. SR–
                                              the following methods:                                  BILLING CODE 8011–01–P                                CboeEDGX–2018–043]

                                              Electronic Comments                                                                                           Self-Regulatory Organizations; Cboe
                                                • Use the Commission’s internet                       SECURITIES AND EXCHANGE                               EDGX Exchange, Inc.; Notice of Filing
                                              comment form (http://www.sec.gov/                       COMMISSION                                            of a Proposed Rule Change To Amend
                                              rules/sro.shtml); or                                    [Release No. 34–84398; File No. SR–MIAX–              the Exchange’s Rulebook To Allow the
                                                • Send an email to rule-comments@                     2018–19]                                              Post Only Order Instruction on
                                              sec.gov. Please include File Number SR–                                                                       Complex Orders That Route to Its
                                              CboeBZX–2018–072 on the subject line.                   Self-Regulatory Organizations; Miami                  Electronic Book for Trading Options
                                                                                                      International Securities Exchange LLC;
                                              Paper Comments                                                                                                October 10, 2018.
                                                                                                      Notice of Withdrawal of a Proposed
                                                 • Send paper comments in triplicate                  Rule Change To Amend the Fee                             Pursuant to Section 19(b)(1) of the
                                              to Secretary, Securities and Exchange                   Schedule Regarding Connectivity Fees                  Securities Exchange Act of 1934 (the
                                              Commission, 100 F Street NE,                            for Members and Non-Members                           ‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                              Washington, DC 20549–1090.                                                                                    notice is hereby given that on October
                                              All submissions should refer to File                    October 10, 2018.
                                                                                                         On July 31, 2018, Miami International              1, 2018, Cboe EDGX Exchange, Inc. (the
                                              Number SR–CboeBZX–2018–072. This                                                                              ‘‘Exchange’’ or ‘‘EDGX’’) filed with the
                                              file number should be included on the                   Securities Exchange LLC (‘‘MIAX’’ or
                                                                                                      the ‘‘Exchange’’) filed with the                      Securities and Exchange Commission
                                              subject line if email is used. To help the                                                                    (‘‘Commission’’) the proposed rule
                                              Commission process and review your                      Securities and Exchange Commission
                                                                                                      (‘‘Commission’’), pursuant to Section                 change as described in Items I, II, and
                                              comments more efficiently, please use                                                                         III below, which Items have been
                                              only one method. The Commission will                    19(b)(1) of the Securities Exchange Act
                                                                                                      of 1934 (‘‘Act’’),1 and Rule 19b–4                    prepared by the Exchange. The
                                              post all comments on the Commission’s                                                                         Commission is publishing this notice to
                                              internet website (http://www.sec.gov/                   thereunder,2 a proposed rule change to
                                                                                                      amend the MIAX Fee Schedule to                        solicit comments on the proposed rule
                                              rules/sro.shtml). Copies of the                                                                               change from interested persons.
                                              submission, all subsequent                              increase certain connectivity fees. The
                                              amendments, all written statements                      proposed rule change was immediately                  I. Self-Regulatory Organization’s
                                              with respect to the proposed rule                       effective upon filing with the                        Statement of the Terms of Substance of
                                              change that are filed with the                          Commission pursuant to Section                        the Proposed Rule Change
                                              Commission, and all written                             19(b)(3)(A) of the Act.3 The proposed
                                              communications relating to the                          rule change was published for comment                    The Exchange is proposing to amend
                                              proposed rule change between the                        in the Federal Register on August 13,                 the Exchange’s rulebook to allow the
                                              Commission and any person, other than                   2018.4 The Commission received one                    Post Only Order instruction on complex
                                              those that may be withheld from the                                                                           orders that route to its electronic book
                                              public in accordance with the
                                                                                                        82 17  CFR 200.30–3(a)(12).                         for trading options (‘‘EDGX Options’’).
                                                                                                        1 15  U.S.C. 78s(b)(1).
                                              provisions of 5 U.S.C. 552, will be                        2 17 CFR 240.19b–4.                                   The text of the proposed rule change
                                              available for website viewing and                                                                             is available at the Exchange’s website at
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                                                                                                         3 15 U.S.C. 78s(b)(3)(A).
                                              printing in the Commission’s Public                        4 See Securities Exchange Act Release No. 83786    www.markets.cboe.com, at the principal
                                                                                                      (August 7, 2018), 83 FR 40106.                        office of the Exchange, and at the
                                                 80 For purposes only of waiving the 30-day              5 See Letter from Tyler Gellasch, Executive
                                                                                                                                                            Commission’s Public Reference Room.
                                              operative delay, the Commission has also                Director, The Healthy Markets Association, to Brent
                                              considered the proposed rule’s impact on                J. Fields, Secretary, Commission, dated September
                                                                                                                                                              7 17 CFR 200.30–3(a)(12).
                                              efficiency, competition, and capital formation. See     4, 2018.
                                              15 U.S.C. 78c(f).                                          6 See Securities Exchange Act Release No. 84175,     1 15 U.S.C. 78s(b)(1).
                                                 81 15 U.S.C. 78s(b)(2)(B).                           83 FR 47955 (September 21, 2018).                       2 17 CFR 240.19b–4.




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Document Created: 2018-10-15 23:42:11
Document Modified: 2018-10-15 23:42:11
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation83 FR 52255 

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