83 FR 927 - Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing of a Proposed Rule Change To Restore the Timeframe for Processing Credit Post-Payable Adjustments

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 5 (January 8, 2018)

Page Range		927-929
FR Document		2018-00081
Federal Register, Volume 83 Issue 5 (Monday, January 8, 2018)
[Federal Register Volume 83, Number 5 (Monday, January 8, 2018)]
[Notices]
[Pages 927-929]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-00081]



[[Page 927]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82433; File No. SR-DTC-2017-023]


Self-Regulatory Organizations; The Depository Trust Company; 
Notice of Filing of a Proposed Rule Change To Restore the Timeframe for 
Processing Credit Post-Payable Adjustments

January 2, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on December 21, 2017, The Depository Trust Company (``DTC'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II and III below, which Items have 
been prepared by the clearing agency. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Clearing Agency's Statement of the Terms of Substance of the 
Proposed Rule Change

    The proposed rule change by DTC would amend the Distributions 
Service Guide (``Guide'') \3\ to (i) restore a practice of DTC relating 
to the timeframe for accepting a request from an issuer or its agent 
(``Paying Agent'') for a post-payable adjustment (``PPA'') of principal 
and income payments (``P&I'') that results in the allocation of 
additional credits to Accounts of affected Participants (``Credit 
PPA''), and (ii) make technical changes to the Guide, as more fully 
described below.\4\
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    \3\ Available at http://www.dtcc.com/~/media/Files/Downloads/
legal/service-guides/Distributions-Service-Guide-FINAL-January-
2017.pdf.
    \4\ Each capitalized term not otherwise defined herein has its 
respective meaning as set forth in the Rules, By-Laws and 
Organization Certificate of The Depository Trust Company, available 
at http://www.dtcc.com/~/media/Files/Downloads/legal/rules/
dtc_rules.pdf; and in the Guide, supra note 3.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

    In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries, 
set forth in sections A, B, and C below, of the most significant 
aspects of such statements.

(A) Clearing Agency's Statement of the Purpose of, and Statutory Basis 
for, the Proposed Rule Change

1. Purpose
    The proposed rule change by DTC would amend the Guide to (i) 
restore a practice of DTC relating to the timeframe for accepting a 
request from a Paying Agent for a Credit PPA, and (ii) make technical 
changes to the Guide, as more fully described below.
(i) Background
    One of the core asset services provided by DTC is the daily 
collection and allocation of funds distributions on Securities held by 
DTC. Commonly referred to as P&I, these funds include dividend, 
interest, periodic principal, redemption, and maturity payments arising 
from the servicing of Securities held by DTC. DTC provides centralized 
processing to facilitate this service, and, on each Business Day, 
communicates with Paying Agents regarding the P&I due that day, 
collects payments, and allocates entitlements to Participants.
    Occasionally, a Paying Agent may request a PPA at DTC due to an 
error on the part of the Paying Agent, trustee, issuer, or a change in 
the principle factor or rate. A PPA can result in debits (``Debit 
PPA'') and/or credits to Settlement Accounts of the affected 
Participants.
    When DTC receives a request for a PPA from a Paying Agent,\5\ DTC 
processes the debit and/or credit adjustments for the misapplied 
principal or income to the Settlement Accounts of affected 
Participants. Accordingly, affected Participants will need to process 
adjustments to their customers' accounts for any misapplied principal 
or income and any associated interest. In addition, affected 
Participants may need to process adjustments against any customer that 
traded the security after the initial payment had occurred.
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    \5\ A request for a Credit PPA will only be processed by DTC on 
receipt of associated funds.
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    Debit PPAs carry particular risks. When DTC processes a Debit PPA, 
it will automatically debit the Settlement Accounts of the affected 
Participants, which in turn must seek to collect the funds from their 
customers, which in turn may need to recover from end investors. This 
recovery process gets more difficult as time passes and creates 
significant credit exposure, as customers and the end investors may no 
longer have the funds to debit, or may have closed or moved their 
accounts.
    Historically, DTC accommodated Paying Agent adjustment requests by 
processing PPAs (whether a Debit PPA, a Credit PPA, or both) up to one 
year after the initial payment was made (``One Year Cutoff''). In 2012, 
the Commission approved a DTC rule filing that implemented a practice 
whereby DTC would not accept a request for a PPA from a Paying Agent 
beyond ninety calendar days after the initial payment date (``Ninety-
Day Cutoff'').\6\ The purpose of shortening the timeframe was to 
mitigate the risks associated with PPAs, in particular Debit PPAs, by 
reducing the volume of PPAs and to allocate the accountability to the 
Paying Agents responsible for the PPAs.
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    \6\ Securities Exchange Act Release No. 67599 (August 6, 2012), 
77 FR 47898 (August 10, 2012) (SR-DTC-2012-03). The implementation 
was staggered over the course of 2014. The Ninety-Day Cutoff was 
effective as of January 1, 2015.
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    Under the current practice, if a Paying Agent wants to effectuate a 
PPA beyond the Ninety-Day Cutoff, it cannot be processed through DTC. 
The Paying Agent must request from DTC an allocation register listing 
all affected Participants and positions. Using the allocation register, 
the Paying Agent must then attempt to contact each affected Participant 
to make direct adjustments and/or payment arrangements outside of DTC.
(ii) Proposal To Restore the One Year Cutoff for Credit PPAs
    After the Ninety-Day Cutoff became effective on January 1, 2015, a 
post-payable adjustment task force (``Task Force''), formed by DTC and 
comprised of Paying Agents and representative members of the 
Association of Global Custodians (``AGC''), the American Bankers 
Association, and the Corporate Actions division of the Securities 
Industry and Financial Market Association (``SIFMA''), monitored the 
PPA landscape. From that review, the Task Force determined that all 
parties--Paying Agents, issuers, Participants, investors--would benefit 
from restoring the timeframe for the processing of Credit PPAs (but not 
Debit PPAs) from the Ninety-Day Cutoff back to the original One Year 
Cutoff. The restoration of the PPA timeframe back to a One Year Cutoff 
for Credit PPAs would allow Paying Agents more time to make correct 
allocations to Participants efficiently through DTC, rather than 
requiring the Paying Agent to make the adjustments bilaterally with 
each Participant, outside of DTC. This efficiency would allow 
Participants, their customers, and end investors to receive their funds 
more quickly.
    DTC and the Task Force determined to preserve the Ninety-Day Cutoff 
for

[[Page 928]]

Debit PPAs.\7\ As described above, Debit PPAs create significant credit 
risk exposure for Participants, customers, and investors as more time 
passes, because it becomes more difficult for Participants to recover 
debited funds from their customers that may no longer have an account, 
may not have available funds, or may no longer service the end 
investor. By retaining the Ninety-Day Cutoff for Debit PPAs, DTC would 
be (i) maintaining the appropriate allocation of risk among 
Participants, their clients, investors, issuers and Paying Agents, (ii) 
creating proactive incentives for Paying Agents and issuers to reduce 
the number of Debit PPAs, and (iii) promoting payment finality.
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    \7\ Under the proposed rule change, if DTC receives a PPA that 
would result in both credits to and debits from affected Participant 
accounts after the Ninety-Day Cutoff but before the One Year Cutoff 
for Credit PPAs, DTC would only process the credits (assuming 
associated funds were also received), and the Paying Agent would 
have to collect the debits outside of DTC.
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    For the reasons set forth above, DTC proposes to restore the 
timeframe for the processing of Credit PPAs from the Ninety-Day Cutoff 
back to a One Year Cutoff.\8\ In addition, DTC proposes to modify the 
language of the Guide to (i) reflect a One Year Cutoff for Credit PPAs 
and a Ninety-Day Cutoff for Debit PPAs, and (ii) remove outdated 
language about the date of effectiveness of the Ninety-Day Cutoff.
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    \8\ No other DTC practices with regard to PPAs would change, 
including without limitation, DTC's practice of servicing all court-
directed adjustments (with appropriate supporting documentation), 
regardless of age.
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(iii) Technical Changes to the Guide
    DTC is also proposing to modify language in the Guide to (i) remove 
the statement that PPA adjustments will appear on Participant 
Statements, as adjustments can only be viewed using CA Web, ISO 20022 
messages and CCF Files, (ii) for consistency with the term ``P&I'', add 
the word ``principal'' to the list of payments that may be subject to a 
PPA, and (iii) remove an incorrect reference to CMO/ABS securities.\9\
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    \9\ There can be a change in the principal factor or rate on any 
security, not just a CMO/ABS security.
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Outreach
    DTC discussed the Task Force's recommendation to restore the 
timeframe for the processing of Credit PPAs to a One Year Cutoff with 
the SIFMA Corporate Action Section and AGC, which have agreed with the 
recommendation.
Implementation Date
    DTC will implement the proposed rule change upon approval of this 
filing by the Commission.
2. Statutory Basis
    DTC believes that the proposed rule change is consistent with the 
requirements of Section 17A(b)(3)(F) of the Act.\10\
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    \10\ 15 U.S.C. 78q-1(b)(3)(F).
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    Section 17A(b)(3)(F) of the Act requires that the rules of the 
clearing agency be designed, inter alia, to promote the prompt and 
accurate clearance and settlement of securities transactions.\11\ By 
restoring the timeframe back to a One Year Cutoff for the processing of 
Credit PPAs through DTC, DTC is providing centralized processing for 
Credit PPAs for a longer period of time, whereas Paying Agents would 
otherwise have to process the Credit PPAs outside of DTC after ninety 
days. In addition, the proposed rule change would make technical 
changes to the Guide, as described above, which would help ensure that 
the procedures relating to PPAs are accurate and consistent. Therefore, 
DTC believes that the proposed rule change would facilitate a more 
efficient process for Paying Agents to allocate funds, and for 
Participants to receive funds owed to them, as well as allow 
Participants to have a clearer understanding of the related procedures, 
thereby removing impediments to and perfecting the mechanism of a 
national system for the prompt and accurate clearance and settlement of 
securities transactions, consistent with the requirements of the Act, 
in particular Section 17A(b)(3)(F), cited above.
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    \11\ Id.
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(B) Clearing Agency's Statement on Burden on Competition

    DTC does not believe that the proposed rule change with respect to 
the Ninety-Day Cutoff for Credit PPAs would have any impact on 
competition because it would apply to all Paying Agents and would allow 
all Participants to receive their correct P&I credit allocations in a 
more efficient manner, and therefore would not disproportionately 
impact any Paying Agent or Participant.
    DTC does not believe that the proposed rule change with respect to 
technical changes to the Guide would have any impact on competition 
because it would merely update the Guide to make changes for accuracy 
and consistency and therefore would not affect the rights and 
obligations of any Participant or other interested party.

(C) Clearing Agency's Statement on Comments on the Proposed Rule Change 
Received From Members, Participants, or Others

    Written comments relating to the proposed rule change have not been 
solicited or received. DTC will notify the Commission of any written 
comments received by DTC.

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-DTC-2017-023 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-DTC-2017-023. 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

[[Page 929]]

those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for website viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE, 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of DTC and on DTCC's 
website (http://dtcc.com/legal/sec-rule-filings.aspx). 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-DTC-2017-023 and should be submitted on 
or before January 29, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00081 Filed 1-5-18; 8:45 am]
 BILLING CODE 8011-01-P
928 Federal Register / Vol. 83, No. 5 / Monday, January 8, 2018 / Notices

Debit PPAs.7 As described above, Debit 2. Statutory Basis (C) Clearing Agency’s Statement on
PPAs create significant credit risk Comments on the Proposed Rule
exposure for Participants, customers, DTC believes that the proposed rule Change Received From Members,
and investors as more time passes, change is consistent with the Participants, or Others
because it becomes more difficult for requirements of Section 17A(b)(3)(F) of
the Act.10 Written comments relating to the
Participants to recover debited funds
proposed rule change have not been
from their customers that may no longer Section 17A(b)(3)(F) of the Act solicited or received. DTC will notify
have an account, may not have available requires that the rules of the clearing the Commission of any written
funds, or may no longer service the end agency be designed, inter alia, to comments received by DTC.
investor. By retaining the Ninety-Day promote the prompt and accurate
Cutoff for Debit PPAs, DTC would be (i) clearance and settlement of securities III. Date of Effectiveness of the
maintaining the appropriate allocation Proposed Rule Change, and Timing for
transactions.11 By restoring the
of risk among Participants, their clients, Commission Action
timeframe back to a One Year Cutoff for
investors, issuers and Paying Agents, (ii) Within 45 days of the date of
creating proactive incentives for Paying the processing of Credit PPAs through
DTC, DTC is providing centralized publication of this notice in the Federal
Agents and issuers to reduce the
processing for Credit PPAs for a longer Register or within such longer period
number of Debit PPAs, and (iii)
period of time, whereas Paying Agents up to 90 days (i) as the Commission may
promoting payment finality.
For the reasons set forth above, DTC would otherwise have to process the designate if it finds such longer period
proposes to restore the timeframe for the Credit PPAs outside of DTC after ninety to be appropriate and publishes its
processing of Credit PPAs from the days. In addition, the proposed rule reasons for so finding or (ii) as to which
Ninety-Day Cutoff back to a One Year change would make technical changes the self- regulatory organization
Cutoff.8 In addition, DTC proposes to to the Guide, as described above, which consents, the Commission will:
modify the language of the Guide to (i) (A) By order approve or disapprove
would help ensure that the procedures
reflect a One Year Cutoff for Credit such proposed rule change, or
relating to PPAs are accurate and
PPAs and a Ninety-Day Cutoff for Debit (B) institute proceedings to determine
consistent. Therefore, DTC believes that whether the proposed rule change
PPAs, and (ii) remove outdated language the proposed rule change would
about the date of effectiveness of the should be disapproved.
facilitate a more efficient process for
Ninety-Day Cutoff. Paying Agents to allocate funds, and for IV. Solicitation of Comments
(iii) Technical Changes to the Guide Participants to receive funds owed to Interested persons are invited to
DTC is also proposing to modify them, as well as allow Participants to submit written data, views and
language in the Guide to (i) remove the have a clearer understanding of the arguments concerning the foregoing,
statement that PPA adjustments will related procedures, thereby removing including whether the proposed rule
appear on Participant Statements, as impediments to and perfecting the change is consistent with the Act.
adjustments can only be viewed using mechanism of a national system for the Comments may be submitted by any of
CA Web, ISO 20022 messages and CCF prompt and accurate clearance and the following methods:
Files, (ii) for consistency with the term settlement of securities transactions, Electronic Comments
‘‘P&I’’, add the word ‘‘principal’’ to the consistent with the requirements of the
list of payments that may be subject to Act, in particular Section 17A(b)(3)(F), • Use the Commission’s internet
a PPA, and (iii) remove an incorrect cited above. comment form (http://www.sec.gov/
reference to CMO/ABS securities.9 rules/sro.shtml); or
(B) Clearing Agency’s Statement on • Send an email to rule-comments@
Outreach Burden on Competition sec.gov. Please include File Number SR–
DTC discussed the Task Force’s DTC–2017–023 on the subject line.
recommendation to restore the DTC does not believe that the
proposed rule change with respect to Paper Comments
timeframe for the processing of Credit
PPAs to a One Year Cutoff with the the Ninety-Day Cutoff for Credit PPAs • Send paper comments in triplicate
SIFMA Corporate Action Section and would have any impact on competition to Secretary, Securities and Exchange
AGC, which have agreed with the because it would apply to all Paying Commission, 100 F Street NE,
recommendation. Agents and would allow all Participants Washington, DC 20549.
to receive their correct P&I credit All submissions should refer to File
Implementation Date
allocations in a more efficient manner, Number SR–DTC–2017–023. This file
DTC will implement the proposed and therefore would not number should be included on the
rule change upon approval of this filing disproportionately impact any Paying subject line if email is used. To help the
by the Commission. Agent or Participant. Commission process and review your
7 Under the proposed rule change, if DTC receives DTC does not believe that the comments more efficiently, please use
a PPA that would result in both credits to and proposed rule change with respect to only one method. The Commission will
debits from affected Participant accounts after the technical changes to the Guide would post all comments on the Commission’s
Ninety-Day Cutoff but before the One Year Cutoff
have any impact on competition internet website (http://www.sec.gov/
for Credit PPAs, DTC would only process the rules/sro.shtml). Copies of the
credits (assuming associated funds were also because it would merely update the
submission, all subsequent
sradovich on DSK3GMQ082PROD with NOTICES

received), and the Paying Agent would have to Guide to make changes for accuracy and
collect the debits outside of DTC. amendments, all written statements
consistency and therefore would not
8 No other DTC practices with regard to PPAs with respect to the proposed rule
would change, including without limitation, DTC’s affect the rights and obligations of any change that are filed with the
practice of servicing all court-directed adjustments Participant or other interested party. Commission, and all written
(with appropriate supporting documentation),
regardless of age. communications relating to the
9 There can be a change in the principal factor or 10 15 U.S.C. 78q–1(b)(3)(F). proposed rule change between the
rate on any security, not just a CMO/ABS security. 11 Id. Commission and any person, other than

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Federal Register / Vol. 83, No. 5 / Monday, January 8, 2018 / Notices 929

those that may be withheld from the I. Self-Regulatory Organization’s Commission.4 The Adviser, as defined
public in accordance with the Statement of the Terms of Substance of below, is also registered as a Commodity
provisions of 5 U.S.C. 552, will be the Proposed Rule Change Pool Operator.
available for website viewing and First Trust Advisors L.P. is the
printing in the Commission’s Public The Exchange filed a proposal to list investment adviser (the ‘‘Adviser’’) to
Reference Room, 100 F Street NE, and trade shares of the First Trust the Funds and a commodity pool
Washington, DC 20549 on official Bitcoin Strategy ETF and the First Trust operator (‘‘CPO’’). The Funds will be
business days between the hours of Inverse Bitcoin Strategy ETF (each a operated in accordance with applicable
10:00 a.m. and 3:00 p.m. Copies of the ‘‘Fund’’ and, collectively, the ‘‘Funds’’), Commodity Futures Trading
filing also will be available for each a series of the First Trust Commission (‘‘CFTC’’) rules, as well as
inspection and copying at the principal Exchange-Traded Fund VII (the the regulatory scheme applicable to
office of DTC and on DTCC’s website ‘‘Trust’’), under Rule 14.11(i) (‘‘Managed registered investment companies.
(http://dtcc.com/legal/sec-rule- Fund Shares’’). The shares of the Funds Registration as a CPO imposes
filings.aspx). All comments received are referred to herein as the ‘‘Shares.’’ additional compliance obligations on
will be posted without change. Persons The text of the proposed rule change the Adviser and the Funds related to
submitting comments are cautioned that is available at the Exchange’s website at additional laws, regulations, and
we do not redact or edit personal www.markets.cboe.com, at the principal enforcement policies.
identifying information from comment office of the Exchange, and at the Rule 14.11(i)(7) provides that, if the
submissions. You should submit only Commission’s Public Reference Room. investment adviser to the investment
information that you wish to make II. Self-Regulatory Organization’s company issuing Managed Fund Shares
available publicly. All submissions Statement of the Purpose of, and is affiliated with a broker-dealer, such
should refer to File Number SR–DTC– Statutory Basis for, the Proposed Rule investment adviser shall erect a ‘‘fire
2017–023 and should be submitted on Change wall’’ between the investment adviser
or before January 29, 2018. and the broker-dealer with respect to
In its filing with the Commission, the access to information concerning the
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
Exchange included statements composition and/or changes to such
authority.12 concerning the purpose of and basis for investment company portfolio.5 In
Eduardo A. Aleman,
the proposed rule change and discussed
any comments it received on the 4 See Registration Statement on Form N–1A for
Assistant Secretary.
proposed rule change. The text of these the Trust, dated December 11, 2017 (File Nos. 333–
[FR Doc. 2018–00081 Filed 1–5–18; 8:45 am] 184918 and 811–22767). The descriptions of the
statements may be examined at the
BILLING CODE 8011–01–P Funds and the Shares contained herein are based,
places specified in Item IV below. The in part, on information in the Registration
Exchange has prepared summaries, set Statement. The Commission has issued an order,
forth in Sections A, B, and C below, of upon which the Trust may rely, granting certain
SECURITIES AND EXCHANGE the most significant parts of such exemptive relief under the Investment Company
COMMISSION statements.
Act of 1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) (the
‘‘Exemptive Order’’). See Investment Company Act
Release No. 30029, April 10, 2012 (File No. 812–
[Release No. 34–82429; File No. SR– (A) Self-Regulatory Organization’s 13795). In addition, on December 6, 2012, the staff
CboeBZX–2017–021] Statement of the Purpose of, and of the Commission’s Division of Investment
Statutory Basis for, the Proposed Rule Management (‘‘Division’’) issued a no-action letter
Self-Regulatory Organizations; Cboe Change (‘‘No-Action Letter’’) relating to the use of
derivatives by actively-managed exchange-traded
BZX Exchange, Inc.; Notice of Filing of
1. Purpose funds (‘‘ETFs’’). See No-Action Letter dated
a Proposed Rule Change To List and December 6, 2012 from Elizabeth G. Osterman,
Trade Shares of the First Trust Bitcoin The Exchange proposes to list and Associate Director, Office of Exemptive
Strategy ETF and the First Trust trade shares of the First Trust Bitcoin Applications, Division of Investment Management.
The No-Action Letter stated that the Division would
Inverse Bitcoin Strategy ETF, Each a Strategy ETF (the ‘‘Long Bitcoin Fund’’) not recommend enforcement action to the
Series of the First Trust Exchange- and the First Trust Inverse Bitcoin Commission under applicable provisions of and
Traded Fund VII, Under Rule 14.11(i), Strategy ETF (the ‘‘Inverse Bitcoin rules under the 1940 Act if ETFs operating in
Managed Fund Shares Fund’’) under Rule 14.11(i), which reliance on specified orders (which include the
Exemptive Order) invest in options contracts,
governs the listing and trading of futures contracts, or swap agreements provided that
January 2, 2018.
Managed Fund Shares on the they comply with certain representations stated in
Pursuant to Section 19(b)(1) of the Exchange.3 the No-Action Letter.
Securities Exchange Act of 1934 (the The Shares will be offered by the
5 An investment adviser to an open-end fund is

‘‘Act’’),1 and Rule 19b–4 thereunder,2 required to be registered under the Investment
Trust, which was organized as a Advisers Act of 1940, as amended (the ‘‘Advisers
notice is hereby given that on December Massachusetts business trust on Act’’). As a result, the Adviser and its related
19, 2017, Cboe BZX Exchange, Inc. (the November 6, 2012. The Trust is personnel are subject to the provisions of Rule
‘‘Exchange’’ or ‘‘BZX’’) filed with the registered with the Commission as an 204A–1 under the Advisers Act relating to codes of
Securities and Exchange Commission ethics. This Rule requires investment advisers to
open-end investment company and has adopt a code of ethics that reflects the fiduciary
(‘‘Commission’’) the proposed rule filed a registration statement on behalf nature of the relationship to clients as well as
change as described in Items I and II of the Funds on Form N–1A compliance with other applicable securities laws.
below, which Items have been prepared (‘‘Registration Statement’’) with the Accordingly, procedures designed to prevent the
communication and misuse of non-public
sradovich on DSK3GMQ082PROD with NOTICES

by the Exchange. The Commission is
information by an investment adviser must be
publishing this notice to solicit 3 The Commission originally approved BZX Rule consistent with Rule 204A–1 under the Advisers
comments on the proposed rule change 14.11(i) in Securities Exchange Act Release No. Act. In addition, Rule 206(4)–7 under the Advisers
from interested persons. 65225 (August 30, 2011), 76 FR 55148 (September Act makes it unlawful for an investment adviser to
6, 2011) (SR–BATS–2011–018) and subsequently provide investment advice to clients unless such
approved generic listing standards for Managed investment adviser has (i) adopted and
12 17 CFR 200.30–3(a)(12). Fund Shares under Rule 14.11(i) in Securities implemented written policies and procedures
1 15 U.S.C. 78s(b)(1). Exchange Act Release No. 78396 (July 22, 2016), 81 reasonably designed to prevent violation, by the
2 17 CFR 240.19b–4. FR 49698 (July 28, 2016) (SR–BATS–2015–100). Continued

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Document Created: 2018-01-06 02:32:02
Document Modified: 2018-01-06 02:32:02
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
FR Citation		83 FR 927