Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To List and Trade Under BZX Rule 14.11(c)(4) the Shares of the VanEck Vectors AMT-Free National Municipal Index ETF of VanEck Vectors ETF Trust, 10615-10623 [2017-02910]

Download as PDF Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices the municipal entity or obligated person client will be approximately 0.25 hours. Thus, the Commission estimates that the total annual burden borne by respondents seeking to rely on the independent registered municipal advisor exemption will be approximately 1,850 hours.14 sradovich on DSK3GMQ082PROD with NOTICES Definition of Municipal Escrow Investments Exemption The Commission estimates that approximately 700 respondents will seek to rely on the municipal escrow investments exemption. The Commission further estimates that the one-time burden of creating a template document to use in obtaining the written representations necessary to rely on the exemption will be approximately one hour. Thus, the Commission estimates that the total one-time burden borne by respondents developing a template document will be approximately 700 hours.15 The Commission also recognizes that respondents will be subject to a recurring burden each time they seek to rely on the exemption. The Commission estimates the respondents will seek to rely on the exemption with approximately 8,620 municipal entity clients. The Commission further estimates that the burden of obtaining the required written representations from the respondent’s client will be approximately 0.25 hours. Thus, the Commission estimates that the total annual burden borne by respondents seeking to rely on the municipal escrow investments exemption will be approximately 2,155 hours.16 Definition of Proceeds of Municipal Securities Exemption The Commission estimates that approximately 880 respondents will seek to rely on the proceeds of municipal securities exemption. The Commission further estimates that the one-time burden of creating a template document to use in obtaining the written representations necessary to rely on the exemption will be approximately one hour. Thus, the Commission estimates that the total one-time burden borne by respondents developing a template document will be approximately 880 hours.17 The Commission also recognizes that respondents will be subject to a recurring burden each time they seek to rely on the exemption. The Commission estimates that respondents will seek to transactions × 0.25 hours. respondents × 1 hour. 16 8,620 clients × 0.25 hours. 17 880 respondents × 1 hour. rely on the exemption in connection with services provided to approximately 25,420 clients. The Commission further estimates that the burden of obtaining the required written consents from the respondent’s client will be approximately 0.25 hours. Thus, the Commission estimates that the total annual burden borne by respondents seeking to rely on proceeds of municipal securities exemption will be approximately 6,355 hours.18 Written comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b) the accuracy of the Commission’s estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 30 days of this publication. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number. Please direct your written comments to: Pamela C. Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington, DC 20549 or send an email to: PRA_ Mailbox@sec.gov. SECURITIES AND EXCHANGE COMMISSION Dated: February 8, 2017. Eduardo A. Aleman, Assistant Secretary. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change [FR Doc. 2017–02933 Filed 2–13–17; 8:45 am] BILLING CODE 8011–01–P [Release No. 34–79989; File No. SR– BatsBZX–2017–07] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To List and Trade Under BZX Rule 14.11(c)(4) the Shares of the VanEck Vectors AMTFree National Municipal Index ETF of VanEck Vectors ETF Trust February 8, 2017. 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 January 27, 2017, Bats BZX Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange filed a proposal to list and trade under BZX Rule 14.11(c)(4) the shares of the VanEck Vectors AMTFree National Municipal Index ETF (the ‘‘Fund’’) of VanEck Vectors ETF Trust (the ‘‘Trust’’). The text of the proposed rule change is available at the Exchange’s Web site at www.bats.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 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. 14 7,400 15 700 VerDate Sep<11>2014 16:48 Feb 13, 2017 1 15 18 25,420 Jkt 241001 10615 PO 00000 clients × 0.25 hours. Frm 00054 Fmt 4703 Sfmt 4703 2 17 E:\FR\FM\14FEN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 14FEN1 10616 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change sradovich on DSK3GMQ082PROD with NOTICES 1. Purpose The Exchange proposes to list and trade shares (‘‘Shares’’) of the Fund under BZX Rule 14.11(c)(4),3 which governs the listing and trading of index fund shares based on fixed income securities indexes.4 The Shares will be offered by the Trust, which was established as a Delaware statutory trust on March 15, 2001. 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.5 All statements and 3 The Commission approved BZX Rule 14.11(c) in Securities Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 (September 6, 2011) (SR– BATS–2011–018). 4 The Commission previously has approved a proposed rule change [sic] relating to listing and trading of funds based on municipal bond indexes. See Securities Exchange Act Release Nos. 78329 (July 14, 2016), 81 FR 47217 (July 20, 2016) (SR– BatsBZX–2016–01) (order approving the listing and trading of the following series of VanEck Vectors ETF Trust: VanEck Vectors AMT-Free 6–8 Year Municipal Index ETF; VanEck Vectors AMT-Free 8– 12 Year Municipal Index ETF; and VanEck Vectors AMT-Free 12–17 Year Municipal Index ETF); 67985 (October 4, 2012), 77 FR 61804 (October 11, 2012) (SR–NYSEArca–2012–92) (order approving proposed rule change relating to the listing and trading of iShares 2018 S&P AMT-Free Municipal Series and iShares 2019 S&P AMT-Free Municipal Series under NYSE Arca, Inc. (‘‘NYSE Arca’’) Rule 5.2(j)(3), Commentary .02); 72523 (July 2, 2014), 79 FR 39016 (July 9, 2014) (SR–NYSEArca–2014–37) (order approving proposed rule change relating to the listing and trading of iShares 2020 S&P AMTFree Municipal Series under NYSE Arca Rule 5.2(j)(3), Commentary .02); and 75468 (July 16, 2015), 80 FR 43500 (July 22, 2015) (SR–NYSEArca– 2015–25) (order approving proposed rule change relating to the listing and trading of the iShares iBonds Dec 2021 AMT-Free Muni Bond ETF and iShares iBonds Dec 2022 AMT-Free Muni Bond ETF under NYSE Arca Rule 5.2(j)(3), Commentary .02). The Commission also has issued a notice of filing and immediate effectiveness of a proposed rule change relating to listing and trading on the Exchange [sic] of the iShares Taxable Municipal Bond Fund. See Securities Exchange Act Release No. 63176 (October 25, 2010), 75 FR 66815 (October 29, 2010) (SR–NYSEArca–2010–94). The Commission has approved two actively managed funds of the PIMCO ETF Trust that hold municipal bonds. See Securities Exchange Act Release No. 60981 (November 10, 2009), 74 FR 59594 (November 18, 2009) (SR–NYSEArca–2009–79) (order approving listing and trading of PIMCO ShortTerm Municipal Bond Strategy Fund and PIMCO Intermediate Municipal Bond Strategy Fund, among others). The Commission also has approved listing and trading of the SPDR Nuveen S&P High Yield Municipal Bond Fund. See Securities Exchange Act Release No. 63881 (February 9, 2011), 76 FR 9065 (February 16, 2011) (SR–NYSEArca–2010–120). 5 See Registration Statement on Form N–1A for the Trust, dated October 31, 2016 (File Nos. 333– 123257 and 811–10325). The descriptions of the Fund and the Shares contained herein are based, in VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 representations made in this filing regarding (a) the description of the portfolio, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange. Description of the Shares and the Fund Van Eck Associates Corporation will be the investment adviser (‘‘Adviser’’) to the Fund.6 The Adviser will serve as the administrator for the Fund (the ‘‘Administrator’’). The Bank of New York Mellon will serve as the custodian (‘‘Custodian’’) and transfer agent (‘‘Transfer Agent’’) for the Fund. Van Eck Securities Corporation (the ‘‘Distributor’’) will be the distributor of the Shares. Bloomberg Finance L.P. and its affiliates will be the index provider (‘‘Index Provider’’). VanEck Vectors AMT-Free National Municipal Index ETF According to the Registration Statement, the Fund will seek to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bloomberg Barclays AMT-Free National Municipal Index (the ‘‘Index’’). As of November 30, 2016, there were 50,615 issues in the Index. Unless otherwise noted, all statistics related to the Index presented hereafter were accurate as of November 30, 2016. part, on information in the Registration Statement. The Commission has issued an order granting certain exemptive relief to the Trust under the Investment Company Act of 1940 (15 U.S.C. 80a– 1) (‘‘1940 Act’’) (the ‘‘Exemptive Order’’). See Investment Company Act Release No. 28021 (October 24, 2007) (File No. 812–13426). 6 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 all 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. PO 00000 Frm 00055 Fmt 4703 Sfmt 4703 The Index tracks the municipal bond market with a 75% weight in investment grade municipal bonds (i.e., rated Baa3/BBB¥ or higher) through the Muni Investment-Grade Rated/$75 Million Deal Size Index and the high yield municipal bond market with a 25% weight in non-investment grade municipal bonds (i.e., unrated or rated Ba1/BB+ or lower) through the Muni High Yield/$20 Million Deal Size Index. To be included in the Muni InvestmentGrade Rated/$75 Million Deal Size Index, a bond must be rated Baa3/BBB¥ or higher by at least two of the following rating agencies if all three agencies rate the bond: Moody’s Investors Service (‘‘Moody’s’’), Standard & Poor’s Ratings Services (‘‘S&P’’) and Fitch Ratings, Inc. (‘‘Fitch’’). If only two of the three agencies rate the bond, the lower rating is used to determine index eligibility. If only one of the three agencies rates the bond, the rating must be Baa3/BBB¥ or higher. Bonds in the Muni InvestmentGrade Rated/$75 Million Deal Size Index must have an outstanding par value of at least $7 million and be issued as part of a transaction of at least $75 million. To be included in the Muni High Yield/$20 Million Deal Size Index, a bond must be unrated or rated Ba1/ BB+ or lower by at least two of the following rating agencies if all three agencies rate the bond: Moody’s, S&P and Fitch. If only two of the three agencies rate the bond, the lower rating is used to determine index eligibility. If only one of the three agencies rates the bond, the rating must be Ba1/BB+ or lower. Bonds in the Muni High Yield/ $20 Million Deal Size Index must have an outstanding par value of at least $3 million and be issued as part of a transaction of at least $20 million. All bonds included in the Index must have a fixed rate, a dated date (i.e., the date when interest begins to accrue) after December 31, 1990, and a nominal maturity of 1 to 30 years. Bonds subject to the alternative minimum tax, taxable municipal bonds, bonds with floating rates, derivatives and municipal bonds of issuers from the territories of the United States (e.g., Puerto Rico) are excluded from the Index. The composition of the Index is rebalanced monthly. Interest and principal payments earned by the component securities are held in the Index without a reinvestment return until month end when they are removed from the Index. Qualifying securities issued, but not necessarily settled, on or before the month end rebalancing date qualify for inclusion in the Index in the following month. The Fund normally invests at least 80% of its total assets in securities that E:\FR\FM\14FEN1.SGM 14FEN1 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices comprise the Fund’s benchmark index. The Index is comprised of publicly traded municipal bonds that cover the U.S. dollar-denominated investment grade and high yield tax-exempt bond market. The Fund’s 80% investment policy is non-fundamental and may be changed without shareholder approval upon 60 days’ prior written notice to shareholders.7 The Fund also has adopted a fundamental investment policy to invest at least 80% of its assets in municipal securities.8 Currently, when issued transactions (‘‘WIs’’) 9 representing securities eligible for inclusion in the Index may be used by the Fund in seeking performance that corresponds to the Index and in such cases would count towards the Fund’s 80% Investment Policy. sradovich on DSK3GMQ082PROD with NOTICES Other Portfolio Holdings While the Fund normally will invest at least 80% of its total assets in securities that compose the Index, as described above, the Fund may invest its remaining assets in other financial instruments, as described below. The Fund may invest its remaining assets in securities not included in the 7 As noted herein, the Fund’s policy to invest 80% of its total assets in securities that comprise the Fund’s benchmark index (the ‘‘80% Investment Policy’’) is non-fundamental and may be changed without shareholder approval upon 60 days’ prior written notice to shareholders. The Exchange notes that, notwithstanding the foregoing, all statements and representations made in this filing regarding (a) the description of the portfolios [sic], (b) limitations on portfolio holdings or reference assets (including, for example, the Fund’s 80% Investment Policy), or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange. As noted below, the issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements (or any changes made with respect to the Fund’s 80% Investment Policy), and, pursuant to its obligations under Section 19(g)(1) of the Exchange Act, the Exchange will surveil for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Exchange Rule 14.12. 8 The Fund’s policy to invest 80% of its assets in municipal securities (the ‘‘Secondary 80% Policy’’) is a fundamental investment policy. Fundamental investment policies, including the Secondary 80% Policy, cannot be changed without the approval of the holders of a majority of the Fund’s outstanding voting securities. For purposes of the 1940 Act, a majority of the outstanding voting securities of the Fund means the vote, at an annual or a special meeting of the security holders of the Trust, of the lesser of (1) 67% or more of the voting securities of the Fund present at such meeting, if the holders of more than 50% of the outstanding voting securities of the Fund are present or represented by proxy, or (2) more than 50% of the outstanding voting securities of the Fund. 9 When issued is a transaction that is made conditionally because a security has been authorized but not yet issued. Treasury securities, stock splits, and new issues of stocks and bonds are all traded on a when-issued basis. VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 Index including only the following instruments: Municipal bonds not described above; money market instruments, including repurchase agreements or other funds which invest exclusively in money market instruments; convertible securities; structured notes (notes on which the amount of principal repayment and interest payments are based on the movement of one or more specified factors, such as the movement of a particular stock or stock index); 10 certain derivative instruments described below; and, to the extent permitted by the 1940 Act, affiliated and unaffiliated funds, such as open-end or closed-end management investment companies, including other exchange-traded funds (‘‘ETFs’’).11 In addition to the use described above, WIs not included in the Index may also be used by the Fund in managing cash flows. The Fund may invest in repurchase agreements with commercial banks, brokers or dealers to generate income from its excess cash balances and to invest securities lending cash collateral. The Fund may use exchange-traded futures contracts and exchange-traded options thereon, together with positions in cash and money market instruments, to simulate full investment in the Index. The Fund may use cleared or noncleared index, interest rate or credit default swap agreements. Swap agreements are contracts between parties in which one party agrees to make payments to the other party based on the change in market value or level of a specified index or asset. Currently, interest rate swaps and credit default swaps on indexes may be cleared, however, credit default swaps on a specific security are currently uncleared. The Fund may invest in exchangetraded warrants, which are equity securities in the form of options issued by a corporation which give the holder the right to purchase stock, usually at a 10 Structured notes are derivative securities for which the amount of principal repayment and/or interest payments is based on the movement of one or more factors, including, but not limited to, currency exchange rates, interest rates (such as the prime lending rate or LIBOR), referenced bonds and stock indices. 11 For purposes of this filing, ETFs include Index Fund Shares (as described in Rule 14.11(c)); Portfolio Depositary Receipts (as described in Rule 14.11(b)); and Managed Fund Shares (as described in Rule 14.11(i)). The ETFs all will be listed and traded in the U.S. on registered exchanges. The Fund may invest in the securities of ETFs registered under the 1940 Act consistent with the requirements of Section 12(d)(1) of the 1940 Act, or any rule, regulation or order of the Commission or interpretation thereof. While the Fund may invest in inverse ETFs, the Fund will not invest in leveraged (e.g., 2X, –2X, 3X or –3X) ETFs. PO 00000 Frm 00056 Fmt 4703 Sfmt 4703 10617 price that is higher than the market price at the time the warrant is issued. The Fund may invest in participation notes, which are issued by banks or broker-dealers and are designed to offer a return linked to the performance of a particular underlying equity security or market. The Fund will only enter into transactions in derivative instruments with counterparties that the Adviser reasonably believes are capable of performing under the contract and will post collateral as required by the counterparty.12 Index Overview The Exchange is submitting this proposed rule change because the Index for the Fund does not meet all of the ‘‘generic’’ listing requirements of Rule 14.11(c)(4) applicable to the listing of index fund shares based on fixed income securities indexes. The Index meets all such requirements except for those set forth in Rule 14.11(c)(4)(B)(i)(b).13 Specifically, as of November 30, 2016, 25.04% of the weight of the Index components have a minimum original principal amount outstanding of $100 million or more. As of November 30, 2016, 86.49% of the weight of the Index components was comprised of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding $100 million or more for all maturities of the offering. In addition, the total dollar amount outstanding of issues in the Index was approximately $1.5 trillion and the average dollar amount outstanding of issues in the Index was approximately $30.4 million. Further, the most heavily weighted component represented 1.57% of the weight of the Index and the five most heavily weighted components represented 3.93% of the weight of the Index.14 12 The Fund will seek, where possible, to use counterparties, as applicable, whose financial status is such that the risk of default is reduced; however, the risk of losses resulting from default is still possible. The Adviser will evaluate the creditworthiness of counterparties on a regular basis. In addition to information provided by credit agencies, the Adviser will review approved counterparties using various factors, which may include the counterparty’s reputation, the Adviser’s past experience with the counterparty and the price/market actions of debt of the counterparty. 13 Rule 14.11(c)(4)(B)(i)(b) provides that components that in the aggregate account for at least 75% of the weight of the index or portfolio each shall have a minimum original principal amount outstanding of $100 million or more. 14 Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed-income security (excluding Treasury Securities, as defined therein) shall represent more than 30% of the weight of the index or portfolio, and the five most heavily weighted E:\FR\FM\14FEN1.SGM Continued 14FEN1 10618 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES Therefore, the Exchange believes that, notwithstanding that the Index does not satisfy the criterion in Rule 14.11(c)(4)(B)(i)(b), the Index is sufficiently broad-based to deter potential manipulation, given that it is comprised of approximately 50,615 issues. In addition, the Index securities are sufficiently liquid to deter potential manipulation in that a substantial portion (86.49%) of the Index weight is comprised of maturities that are part of a minimum original principal amount outstanding of $100 million or more, and in view of the substantial total dollar amount outstanding and the average dollar amount outstanding of the Index issues, as referenced above.15 63.8% of the Index weight consisted of issues with a rating of AA/Aa2 or higher. The Index value, calculated and disseminated at least once daily, as well as the components of the Index and their percentage weighting, will be available from major market data vendors. In addition, the portfolio of securities held by the Fund will be disclosed on the Fund’s Web site at www.vaneck.com/etfs. Correlation Among Municipal Bond Instruments With Common Characteristics With respect to the Fund, the Adviser represents that the nature of the municipal bond market and municipal bond instruments makes it feasible to categorize individual issues represented by CUSIPs (i.e., the specific identifying number for a security) into categories according to common characteristics, specifically, rating, geographical region, purpose, and maturity. Bonds that share similar characteristics tend to trade similarly to one another; therefore, within these categories, the issues may be considered fungible from a portfolio management perspective, allowing one CUSIP to be represented by another that shares similar characteristics for purposes of developing an investment strategy. Therefore, while 25.04% of the weight of the Index components have a minimum original principal amount outstanding of $100 million or more, the nature of the municipal bond market makes the issues relatively fungible for investment purposes when aggregated into categories such as ratings, geographical region, purpose and component fixed-income securities in the index or portfolio shall not in the aggregate account for more than 65% of the weight of the index or portfolio. 15 The Adviser represents that when bonds are close substitutes for one another, pricing vendors can use executed trade information from all similar bonds as pricing inputs for an individual security. This can make individual securities more liquid. VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 maturity. In addition, within a single municipal bond issuer, there are often multiple contemporaneous or sequential issuances that have the same rating, structure and maturity, but have different CUSIPs; these separate issues by the same issuer are also likely to trade similarly to one another. The Adviser represents that the Fund are [sic] managed utilizing the principle that municipal bond issues are generally fungible in nature when sharing common characteristics, and specifically make use of the four categories referred to above. In addition, this principle is used in, and consistent with, the portfolio construction process in order to facilitate the creation and redemption process, and to enhance liquidity (among other benefits, such as reducing transaction costs), while still allowing the Fund to closely track the Index. Net Asset Value According to the Registration Statement, the net asset value (‘‘NAV’’) of the Fund will be determined each business day as of the close of trading (ordinarily 4:00 p.m. Eastern time) on the Exchange. The values of the Fund’s portfolio securities are based on the securities’ closing prices, when available. In the absence of a last reported sales price, or if no sales were reported, and for other assets for which market quotes are not readily available, values may be based on quotes obtained from a quotation reporting system, established market makers or by an outside independent pricing service. Fixed income securities, repurchase agreements and money market instruments with maturities of more than 60 days are normally valued on the basis of quotes from brokers or dealers, established market makers or an outside independent pricing service. Prices obtained by an outside independent pricing service may use information provided by market makers or estimates of market values obtained from yield data related to investments or securities with similar characteristics and may use a computerized grid matrix of securities and its evaluations in determining what it believes is the fair value of the portfolio securities. Any assets or liabilities denominated in currencies other than the U.S. dollar are converted into U.S. dollars at the current market rates on the date of valuation as quoted by one or more sources. Short-term investments and money market instruments having a maturity of 60 days or less are valued at amortized cost. Futures contracts will be valued at the settlement price established each day by the board or PO 00000 Frm 00057 Fmt 4703 Sfmt 4703 exchange on which they are traded. Exchange-traded options will be valued at the closing price in the market where such contracts are principally traded. Swaps, structured notes, participation notes, convertible securities, and WIs will be valued based on valuations provided by independent, third-party pricing agents. Securities of nonexchange-traded investment companies will be valued at NAV. Exchange-traded instruments, including investment companies and warrants, will be valued at the last reported sale price on the primary exchange or market on which they are traded. If a market quotation for a security or other asset is not readily available or the Adviser believes it does not otherwise accurately reflect the market value of the security or asset at the time the Fund calculates its NAV, the security or asset will be fair valued by the Adviser in accordance with the Trust’s valuation policies and procedures approved by the Board of Trustees and in accordance with the 1940 Act. The Fund may also use fair value pricing in a variety of circumstances, including but not limited to, situations when the value of a security in the Fund’s portfolio has been materially affected by events occurring after the close of the market on which the security is principally traded (such as a corporate action or other news that may materially affect the price of a security) or trading in a security has been suspended or halted. The Fund currently expects that futures contracts will be valued at the settlement price established each day by the board or exchange on which they are traded and exchange. Exchange-traded options will be valued at the closing price in the market where such contracts are principally traded. Additionally, the Fund currently expects that swaps, structured notes, participation notes, convertible securities, and WIs will be valued at the closing price, if exchange listed, or based on valuations provided by independent, third-party pricing agents. Securities of non-exchange-traded investment companies will be valued at NAV. Exchange-traded instruments, including investment companies and warrants, will be valued at the last reported sale price on the primary exchange or market on which they are traded. Creation and Redemption of Shares The NAV of the Fund will be determined each business day as of the close of trading, (normally 4:00 p.m. Eastern time) on the exchange. The Fund currently anticipates that a ‘‘Creation Unit’’ will consist of 50,000 E:\FR\FM\14FEN1.SGM 14FEN1 sradovich on DSK3GMQ082PROD with NOTICES Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices Shares, though this number may change from time to time, including prior to the listing of the Fund. The exact number of Shares that will comprise a Creation Unit will be disclosed in the Registration Statement of the Fund. The Trust will issue and sell Shares of the Fund only in Creation Units on a continuous basis through the Distributor, without an initial sales load (but subject to transaction fees), at their NAV per Share next determined after receipt, on any business day, of an order in proper form. The consideration for purchase of a Creation Unit of the Fund generally will consist of either (i) the in-kind deposit of a designated portfolio of fixed income securities (the ‘‘Deposit Securities’’) per each Creation Unit and the Cash Component (defined below), computed as described below, or (ii) as permitted or required by the Fund, of cash. The Cash Component together with the Deposit Securities, as applicable, are referred to as the ‘‘Fund Deposit,’’ which represents the minimum initial and subsequent investment amount for Shares. The Cash Component represents the difference between the NAV of a Creation Unit and the market value of Deposit Securities and may include a Dividend Equivalent Payment. The ‘‘Dividend Equivalent Payment’’ enables the Fund to make a complete distribution of dividends on the next dividend payment date, and is an amount equal, on a per Creation Unit basis, to the dividends on all the securities held by each [sic] of the Fund (‘‘Fund Securities’’) with ex-dividend dates within the accumulation period for such distribution (the ‘‘Accumulation Period’’), net of expenses and liabilities for such period, as if all of the Fund Securities had been held by the Trust for the entire Accumulation Period. The Accumulation Period begins on the exdividend date for the Fund and ends on the next ex-dividend date. The Administrator, through the National Securities Clearing Corporation (‘‘NSCC’’), makes available on each business day, immediately prior to the opening of business on the Exchange (currently 9:30 a.m. Eastern time), the list of the names and the required number of shares of each Deposit Security to be included in the current Fund Deposit (based on information at the end of the previous business day) as well as the Cash Component for the Fund. Such Fund Deposit is applicable, subject to any adjustments as described below, in order to effect creations of Creation Units of the Fund until such time as the next-announced Fund Deposit composition is made available. VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 Shares may be redeemed only in Creation Units at their NAV next determined after receipt of a redemption request in proper form by the Distributor,16 only on a business day and only through a Participating Party or DTC Participant who has executed a Participation Agreement. The Administrator, through NSCC, makes available immediately prior to the opening of business on the Exchange (currently 9:30 a.m. Eastern time) on each day that the Exchange is open for business, the Fund Securities that will be applicable (subject to possible amendment or correction) to redemption requests received in proper form (as defined below) on that day. Unless cash redemptions are permitted or required for the Fund, the redemption proceeds for a Creation Unit generally consist of Fund Securities as announced by the Administrator on the business day of the request for redemption, plus cash in an amount equal to the difference between the NAV of the Shares being redeemed, as next determined after a receipt of a request in proper form, and the value of the Fund Securities, less the redemption transaction fee and variable fees described below. Should the Fund Securities have a value greater than the NAV of the Shares being redeemed, a compensating cash payment to the Trust equal to the differential plus the applicable redemption transaction fee will be required to be arranged for by or on behalf of the redeeming shareholder. The Fund reserves the right to honor a redemption request by delivering a basket of securities or cash that differs from the Fund Securities.17 Orders to redeem Creation Units of the Fund must be delivered through a DTC Participant that has executed the Participant Agreement with the Distributor and with the Trust. A DTC Participant who wishes to place an order for redemption of Creation Units of the Fund to be effected need not be 16 To be eligible to place orders with the Distributor to create Creation Units of the Funds [sic], an entity or person either must be: (1) A ‘‘Participating Party,’’ i.e., a broker-dealer or other participant in the Clearing Process through the Continuous Net Settlement System of the NSCC; or (2) a DTC Participant (as defined below); and, in either case, must have executed an agreement with the Distributor and the Transfer Agent (as it may be amended from time to time in accordance with its terms) (‘‘Participant Agreement’’). DTC Participants are participants of the Depository Trust Company (‘‘DTC’’) that acts as securities depositary for Index Fund Shares. A Participating Party and DTC Participant are collectively referred to as an ‘‘Authorized Participant.’’ 17 The Adviser represents that, to the extent that the Trust permits or requires a ‘‘cash in lieu’’ amount, such transactions will be effected in the same or equitable manner for all Authorized Participants. PO 00000 Frm 00058 Fmt 4703 Sfmt 4703 10619 a Participating Party, but such orders must state that redemption of Creation Units of the Fund will instead be effected through transfer of Creation Units of the Fund directly through DTC. An order to redeem Creation Units of the Fund is deemed received by the Administrator on the transmittal date if (i) such order is received by the Administrator not later than 4:00 p.m. Eastern time on such transmittal date; (ii) such order is preceded or accompanied by the requisite number of Shares of Creation Units specified in such order, which delivery must be made through DTC to the Administrator no later than 11:00 a.m. Eastern time, on such transmittal date (the ‘‘DTC Cut-OffTime’’); and (iii) all other procedures set forth in the Participant Agreement are properly followed. After the Administrator has deemed an order for redemption received, the Administrator will initiate procedures to transfer the requisite Fund Securities (or contracts to purchase such Fund Securities) which are expected to be delivered within three business days and the cash redemption payment to the redeeming beneficial owner by the third business day following the transmittal date on which such redemption order is deemed received by the Administrator. Availability of Information The Fund’s Web site, which will be publicly available prior to the public offering of Shares, will include a form of the prospectus for the Fund that may be downloaded. The Web site will include additional quantitative information updated on a daily basis, including, for the Fund: (1) The prior business day’s reported NAV, daily trading volume, 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. Daily trading volume information for the Fund will also be available in the financial section of newspapers, through subscription services such as Bloomberg, Thomson Reuters, and International Data Corporation, which can be accessed by authorized participants and other investors, as well as through other electronic services, including major public Web sites. On each business day, before commencement of trading in Shares during Regular Trading Hours 18 18 Regular Trading Hours are 9:30 a.m. to 4:00 p.m. Eastern Time. E:\FR\FM\14FEN1.SGM 14FEN1 sradovich on DSK3GMQ082PROD with NOTICES 10620 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices on the Exchange, the Fund will disclose on its Web site the identities and quantities of the portfolio of securities and other assets in the daily disclosed portfolio held by the Fund that formed the basis for the Fund’s calculation of NAV at the end of the previous business day. The daily disclosed portfolio will include, as applicable: The ticker symbol; CUSIP number or other identifier, if any; a description of the holding (including the type of holding, such as the type of swap); the identity of the security, index or other asset or instrument underlying the holding, if any; for options, the option strike price; quantity held (as measured by, for example, par value, notional value or number of shares, contracts, or units); maturity date, if any; coupon rate, if any; effective date, if any; market value of the holding; and the percentage weighting of the holding in the Fund’s portfolio. The Web site and information will be publicly available at no charge. The value, components, and percentage weightings of each of the Indices will be calculated and disseminated at least once daily and will be available from major market data vendors. Rules governing the Indices are available on Barclays’ Web site and in each respective Fund’s prospectus. In addition, an estimated value, defined in BZX Rule 14.11(c)(6)(A) 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 daily 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.19 In addition, the quotations of certain of the Fund’s holdings may not be updated during U.S. trading hours if updated prices cannot be ascertained. The dissemination of the Intraday Indicative Value, together with the daily disclosed portfolio, will allow investors to determine the value of the underlying portfolio of the Fund on a daily basis and provide a close estimate of that value throughout the trading day. Quotation and last sale information for the Shares of the Fund will be available via the CTA high speed line. Quotation information for investment company securities (excluding ETFs) may be obtained through nationally recognized pricing services through 19 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. VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 subscription agreements or from brokers and dealers who make markets in such securities. Price information regarding municipal bonds, convertible securities, and non-exchange traded assets, including investment companies, derivatives, money market instruments, repurchase agreements, structured notes, participation notes, and WIs is available from third party pricing services and major market data vendors. For exchange-traded assets, including investment companies, futures, warrants, and options, such intraday information is available directly from the applicable listing exchange. Initial and Continued Listing The Shares of the Fund will conform to the initial and continued listing criteria under BZX Rule 14.11(c)(4), except for those set forth in 14.11(c)(4)(B)(i)(b). The Exchange represents that, for initial and/or continued listing, the Fund and the Trust must be in compliance with Rule 10A–3 under the Act. 20 A minimum of 50,000 Shares of the 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 for the Fund will be calculated daily and will be made available to all market participants at the same time. 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 the Fund. The Exchange will halt trading in the Shares under the conditions specified in BZX Rule 11.18. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities and/or the financial instruments composing the daily disclosed portfolio of the 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(c)(1)(B)(iv), which sets forth circumstances under which Shares of the 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 20 See PO 00000 17 CFR 240.10A–3. Frm 00059 Fmt 4703 Sfmt 4703 allow trading in the Shares from 8:00 a.m. until 5:00 p.m. Eastern Time and has the appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in BZX Rule 11.11(a), the minimum price variation for quoting and entry of orders in securities 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 Index Fund Shares. The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Exchange Act, the Exchange will surveil for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under Exchange Rule 14.12. 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.21 In addition, 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’’). FINRA also can access data obtained from the Municipal Securities Rulemaking Board (‘‘MSRB’’) relating to municipal bond trading activity for surveillance purposes in connection with trading in the Shares. In addition, the Exchange may obtain information regarding trading in the Shares and the underlying shares in exchange-traded investment companies, futures, options, and warrants from markets or other entities that are members of ISG or with which 21 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. E:\FR\FM\14FEN1.SGM 14FEN1 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices sradovich on DSK3GMQ082PROD with NOTICES 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) BZX 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 22 and After Hours Trading Sessions 23 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. In addition, the Information Circular will advise members, prior to the commencement of trading, of the prospectus delivery requirements applicable to the Fund. Members purchasing Shares from the Fund 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 the 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 Fund and the applicable NAV calculation time for the Shares. The Information Circular will disclose that information about the Shares of the Fund will be publicly available on the Fund’s Web site. In addition, the Information Circular will reference that the Trust is subject to various fees and expenses described in the Fund’s Registration Statement. 22 The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m. Eastern Time. 23 The After Hours Trading Session is from 4:00 p.m. to 5:00 p.m. Eastern Time. VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 2. Statutory Basis The Exchange believes that the proposal is consistent with Section 6(b) of the Act 24 in general and Section 6(b)(5) of the Act 25 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. 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 listing criteria in BZX Rule 14.11(c). The Exchange believes that its surveillances, which generally focus on detecting securities trading outside of their normal patterns which could be indicative of manipulative or other violative activity, and associated surveillance procedures are adequate to properly monitor the trading of the Shares on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws. The Exchange will communicate as needed regarding trading in the Shares with other markets or other entities that are members of the Intermarket Surveillance group (‘‘ISG’’), and may obtain trading information regarding trading in the Shares from such markets or entities. The Exchange can also access data obtained from the Municipal Securities Rulemaking Board relating to municipal bond trading activity for surveillance purposes in connection with trading in the Shares. The Exchange is able to access, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA’s TRACE. FINRA also can access data obtained from the Municipal Securities Rulemaking Board (‘‘MSRB’’) relating to municipal bond trading activity for surveillance purposes in connection with trading in the Shares. In addition, the Exchange may obtain information regarding trading in the Shares and the underlying shares in exchange-traded investment companies, futures, options, and warrants from markets or other entities that are members of ISG or with which the Exchange has in place a 24 15 25 15 PO 00000 U.S.C. 78f. U.S.C. 78f(b)(5). Frm 00060 Fmt 4703 Sfmt 4703 10621 comprehensive surveillance sharing agreement. The Index Provider is not a brokerdealer, but is affiliated with a brokerdealer and has implemented a ‘‘fire wall’’ with respect to such broker-dealer regarding access to information concerning the composition and/or changes to the Indices. The Index Provider has also implemented procedures designed to prevent the use and dissemination of material, nonpublic information regarding the Indices. As of November 30, 2016, 86.49% of the weight of the Index components was comprised of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding $100 million or more for all maturities of the offering. In addition, the total dollar amount outstanding of issues in the Index was approximately $1.5 trillion and the average dollar amount outstanding of issues in the Index was approximately $30.4 million. Further, the most heavily weighted component represented 1.57% of the weight of the Index and the five most heavily weighted components represented 3.93% of the weight of the Index.26 Therefore, the Exchange believes that, notwithstanding that the Index does not satisfy the criterion in Rule 14.11(c)(4)(B)(i)(b), the Index is sufficiently broad-based to deter potential manipulation, given that it is comprised of approximately 50,615 issues. The value, components, and percentage weightings of each of the Indices will be calculated and disseminated at least once daily and will be available from major market data vendors. In addition, the portfolio of securities held by the Fund will be disclosed on the Fund’s Web site at www.vaneck.com/etfs. The intraday indicative value for Shares of the Fund will be disseminated by one or more major market data vendors, updated at least every 15 seconds during Regular Trading Hours. The Adviser represents that bonds that share similar characteristics, as described above, tend to trade similarly to one another; therefore, within these categories, the issues may be considered fungible from a portfolio management perspective. Within a single municipal bond issuer, 26 Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed-income security (excluding Treasury Securities, as defined therein) shall represent more than 30% of the weight of the index or portfolio, and the five most heavily weighted component fixed-income securities in the index or portfolio shall not in the aggregate account for more than 65% of the weight of the index or portfolio. E:\FR\FM\14FEN1.SGM 14FEN1 sradovich on DSK3GMQ082PROD with NOTICES 10622 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices Adviser represents that separate issues by the same issuer are also likely to trade similarly to one another. The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that a large amount of information will be publicly available regarding the Fund and the Shares, thereby promoting market transparency. The Fund’s portfolio holdings will be disclosed on the Fund’s Web site daily after the close of trading on the Exchange and prior to the opening of trading on the Exchange the following day. Moreover, the IIV will be widely disseminated by one or more major market data vendors at least every 15 seconds during Regular Trading Hours. The current value of each of the Indices will be disseminated by one or more major market data vendors at least once per day. Information regarding market price and trading volume of the Shares will be continually available on a realtime basis throughout the day on brokers’ computer screens and other electronic services, and quotation and last sale information will be available via the CTA high-speed line. The Web site for the Fund will include the prospectus for the Fund and additional data relating to NAV and other applicable quantitative information. Moreover, 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. If the Exchange becomes aware that the NAV is not being disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV is available to all market participants. With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund. Trading also may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities and/or the financial instruments composing the daily disclosed portfolio of the 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(c)(1)(B)(iv), which sets forth circumstances under which Shares of the Fund may be halted. If the IIV of any [sic] of the Fund or value of the Indices are not being disseminated as required, the Exchange may halt trading during VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 the day in which the interruption to the dissemination of the IIV or index value occurs. 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 additional types of exchange-traded funds that holds [sic] municipal bonds and 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 in the Shares and the underlying shares in exchange-traded investment companies, futures, options, and warrants 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, investors will have ready access to information regarding the IIV 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 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 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 the proposed rule change, or PO 00000 Frm 00061 Fmt 4703 Sfmt 4703 (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 proposal 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 No. SR– BatsBZX–2017–07 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 No. SR–BatsBZX–2017–07. 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 Web site (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 Web site 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 such filing will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR–BatsBZX– 2017–07 and should be submitted on or before March 7, 2017. E:\FR\FM\14FEN1.SGM 14FEN1 Federal Register / Vol. 82, No. 29 / Tuesday, February 14, 2017 / Notices For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.27 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–02910 Filed 2–13–17; 8:45 am] Percent Non-Profit Organizations Without Credit Available Elsewhere ..................................... 2.500 The number assigned to this disaster for physical damage is 15041C and for economic injury is 15042C. BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION [Disaster Declaration #15041 and #15042] (Catalog of Federal Domestic Assistance Number 59008) James E. Rivera, Associate Administrator for Disaster Assistance. Mississippi Disaster #MS–00098 U.S. Small Business Administration. ACTION: Notice. [FR Doc. 2017–02908 Filed 2–13–17; 8:45 am] This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Mississippi (FEMA–4295– DR), dated 02/06/2017. Incident: Severe Storms, Tornadoes, Straight-line Winds, and Flooding. Incident Period: 01/20/2017 through 01/21/2017. Effective Date: 02/06/2017. Physical Loan Application Deadline Date: 04/07/2017. Economic Injury (EIDL) Loan Application Deadline Date: 11/06/2017. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President’s major disaster declaration on 02/06/2017, Private Non-Profit organizations that provide essential services of governmental nature may file disaster loan applications at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Forrest, Lamar, Perry. The Interest Rates are: SMALL BUSINESS ADMINISTRATION AGENCY: sradovich on DSK3GMQ082PROD with NOTICES Percent For Physical Damage: Non-Profit Organizations With Credit Available Elsewhere ... Non-Profit Organizations Without Credit Available Elsewhere ..................................... For Economic Injury: 27 17 2.500 2.500 CFR 200.30–3(a)(12). VerDate Sep<11>2014 16:48 Feb 13, 2017 Jkt 241001 Percent For Physical Damage: Non-Profit Organizations with Credit Available Elsewhere ... Non-Profit Organizations without Credit Available Elsewhere ..................................... For Economic Injury: Non-Profit Organizations without Credit Available Elsewhere ..................................... 2.500 2.500 2.500 The number assigned to this disaster for physical damage is 15043C and for economic injury is 15044C. (Catalog of Federal Domestic Assistance Number 59008) BILLING CODE 8025–01–P SUMMARY: 10623 [Disaster Declaration #15043 and #15044] James E. Rivera, Associate Administrator for Disaster Assistance. [FR Doc. 2017–02907 Filed 2–13–17; 8:45 am] Georgia Disaster #GA–00092 BILLING CODE 8025–01–P U.S. Small Business Administration. ACTION: Notice. AGENCY: SOCIAL SECURITY ADMINISTRATION This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Georgia (FEMA–4297–DR), dated 02/07/2017. Incident: Severe Storms, Tornadoes, Straight-line Winds, and Flooding. Incident Period: 01/21/2017 through 01/22/2017. Effective Date: 02/07/2017. Physical Loan Application Deadline Date: 04/10/2017. Economic Injury (EIDL) Loan Application Deadline Date: 11/07/2017. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the President’s major disaster declaration on 02/07/2017, Private Non-Profit organizations that provide essential services of governmental nature may file disaster loan applications at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: Primary Counties: Baker, Brooks, Calhoun, Clay, Cook, Crisp, Dougherty, Thomas, Turner, Wilcox, Worth. The Interest Rates are: SUMMARY: PO 00000 Frm 00062 Fmt 4703 Sfmt 4703 [Docket No: SSA–2017–0003] Agency Information Collection Activities: Proposed Request and Comment Request The Social Security Administration (SSA) publishes a list of information collection packages requiring clearance by the Office of Management and Budget (OMB) in compliance with Public Law 104–13, the Paperwork Reduction Act of 1995, effective October 1, 1995. This notice includes a new information collection and revisions of OMB-approved information collections. SSA is soliciting comments on the accuracy of the agency’s burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Mail, email, or fax your comments and recommendations on the information collection(s) to the OMB Desk Officer and SSA Reports Clearance Officer at the following addresses or fax numbers. (OMB) Office of Management and Budget, Attn: Desk Officer for SSA, Fax: 202–395–6974, Email address: OIRA_Submission@omb.eop.gov (SSA) Social Security Administration, OLCA, Attn: Reports Clearance Director, 3100 West High Rise, 6401 Security Blvd., Baltimore, MD 21235, Fax: 410–966–2830, Email address: OR.Reports.Clearance@ssa.gov Or you may submit your comments online through www.regulations.gov, E:\FR\FM\14FEN1.SGM 14FEN1

Agencies

[Federal Register Volume 82, Number 29 (Tuesday, February 14, 2017)]
[Notices]
[Pages 10615-10623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02910]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79989; File No. SR-BatsBZX-2017-07]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To List and Trade Under BZX Rule 
14.11(c)(4) the Shares of the VanEck Vectors AMT-Free National 
Municipal Index ETF of VanEck Vectors ETF Trust

February 8, 2017.
    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 January 27, 2017, Bats BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 under BZX Rule 
14.11(c)(4) the shares of the VanEck Vectors AMT-Free National 
Municipal Index ETF (the ``Fund'') of VanEck Vectors ETF Trust (the 
``Trust'').
    The text of the proposed rule change is available at the Exchange's 
Web site at www.bats.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.

[[Page 10616]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
Fund under BZX Rule 14.11(c)(4),\3\ which governs the listing and 
trading of index fund shares based on fixed income securities 
indexes.\4\ The Shares will be offered by the Trust, which was 
established as a Delaware statutory trust on March 15, 2001. 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.\5\ All statements and 
representations made in this filing regarding (a) the description of 
the portfolio, (b) limitations on portfolio holdings or reference 
assets, or (c) the applicability of Exchange rules and surveillance 
procedures shall constitute continued listing requirements for listing 
the Shares on the Exchange.
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    \3\ The Commission approved BZX Rule 14.11(c) in Securities 
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 
(September 6, 2011) (SR-BATS-2011-018).
    \4\ The Commission previously has approved a proposed rule 
change [sic] relating to listing and trading of funds based on 
municipal bond indexes. See Securities Exchange Act Release Nos. 
78329 (July 14, 2016), 81 FR 47217 (July 20, 2016) (SR-BatsBZX-2016-
01) (order approving the listing and trading of the following series 
of VanEck Vectors ETF Trust: VanEck Vectors AMT-Free 6-8 Year 
Municipal Index ETF; VanEck Vectors AMT-Free 8-12 Year Municipal 
Index ETF; and VanEck Vectors AMT-Free 12-17 Year Municipal Index 
ETF); 67985 (October 4, 2012), 77 FR 61804 (October 11, 2012) (SR-
NYSEArca-2012-92) (order approving proposed rule change relating to 
the listing and trading of iShares 2018 S&P AMT-Free Municipal 
Series and iShares 2019 S&P AMT-Free Municipal Series under NYSE 
Arca, Inc. (``NYSE Arca'') Rule 5.2(j)(3), Commentary .02); 72523 
(July 2, 2014), 79 FR 39016 (July 9, 2014) (SR-NYSEArca-2014-37) 
(order approving proposed rule change relating to the listing and 
trading of iShares 2020 S&P AMT-Free Municipal Series under NYSE 
Arca Rule 5.2(j)(3), Commentary .02); and 75468 (July 16, 2015), 80 
FR 43500 (July 22, 2015) (SR-NYSEArca-2015-25) (order approving 
proposed rule change relating to the listing and trading of the 
iShares iBonds Dec 2021 AMT-Free Muni Bond ETF and iShares iBonds 
Dec 2022 AMT-Free Muni Bond ETF under NYSE Arca Rule 5.2(j)(3), 
Commentary .02). The Commission also has issued a notice of filing 
and immediate effectiveness of a proposed rule change relating to 
listing and trading on the Exchange [sic] of the iShares Taxable 
Municipal Bond Fund. See Securities Exchange Act Release No. 63176 
(October 25, 2010), 75 FR 66815 (October 29, 2010) (SR-NYSEArca-
2010-94). The Commission has approved two actively managed funds of 
the PIMCO ETF Trust that hold municipal bonds. See Securities 
Exchange Act Release No. 60981 (November 10, 2009), 74 FR 59594 
(November 18, 2009) (SR-NYSEArca-2009-79) (order approving listing 
and trading of PIMCO ShortTerm Municipal Bond Strategy Fund and 
PIMCO Intermediate Municipal Bond Strategy Fund, among others). The 
Commission also has approved listing and trading of the SPDR Nuveen 
S&P High Yield Municipal Bond Fund. See Securities Exchange Act 
Release No. 63881 (February 9, 2011), 76 FR 9065 (February 16, 2011) 
(SR-NYSEArca-2010-120).
    \5\ See Registration Statement on Form N-1A for the Trust, dated 
October 31, 2016 (File Nos. 333-123257 and 811-10325). The 
descriptions of the Fund and the Shares contained herein are based, 
in part, on information in the Registration Statement. The 
Commission has issued an order granting certain exemptive relief to 
the Trust under the Investment Company Act of 1940 (15 U.S.C. 80a-1) 
(``1940 Act'') (the ``Exemptive Order''). See Investment Company Act 
Release No. 28021 (October 24, 2007) (File No. 812-13426).
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Description of the Shares and the Fund
    Van Eck Associates Corporation will be the investment adviser 
(``Adviser'') to the Fund.\6\ The Adviser will serve as the 
administrator for the Fund (the ``Administrator''). The Bank of New 
York Mellon will serve as the custodian (``Custodian'') and transfer 
agent (``Transfer Agent'') for the Fund. Van Eck Securities Corporation 
(the ``Distributor'') will be the distributor of the Shares. Bloomberg 
Finance L.P. and its affiliates will be the index provider (``Index 
Provider'').
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    \6\ 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 all 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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VanEck Vectors AMT-Free National Municipal Index ETF
    According to the Registration Statement, the Fund will seek to 
replicate as closely as possible, before fees and expenses, the price 
and yield performance of the Bloomberg Barclays AMT-Free National 
Municipal Index (the ``Index''). As of November 30, 2016, there were 
50,615 issues in the Index. Unless otherwise noted, all statistics 
related to the Index presented hereafter were accurate as of November 
30, 2016.
    The Index tracks the municipal bond market with a 75% weight in 
investment grade municipal bonds (i.e., rated Baa3/BBB- or higher) 
through the Muni Investment-Grade Rated/$75 Million Deal Size Index and 
the high yield municipal bond market with a 25% weight in non-
investment grade municipal bonds (i.e., unrated or rated Ba1/BB+ or 
lower) through the Muni High Yield/$20 Million Deal Size Index. To be 
included in the Muni Investment-Grade Rated/$75 Million Deal Size 
Index, a bond must be rated Baa3/BBB- or higher by at least two of the 
following rating agencies if all three agencies rate the bond: Moody's 
Investors Service (``Moody's''), Standard & Poor's Ratings Services 
(``S&P'') and Fitch Ratings, Inc. (``Fitch''). If only two of the three 
agencies rate the bond, the lower rating is used to determine index 
eligibility. If only one of the three agencies rates the bond, the 
rating must be Baa3/BBB- or higher. Bonds in the Muni Investment-Grade 
Rated/$75 Million Deal Size Index must have an outstanding par value of 
at least $7 million and be issued as part of a transaction of at least 
$75 million. To be included in the Muni High Yield/$20 Million Deal 
Size Index, a bond must be unrated or rated Ba1/BB+ or lower by at 
least two of the following rating agencies if all three agencies rate 
the bond: Moody's, S&P and Fitch. If only two of the three agencies 
rate the bond, the lower rating is used to determine index eligibility. 
If only one of the three agencies rates the bond, the rating must be 
Ba1/BB+ or lower. Bonds in the Muni High Yield/$20 Million Deal Size 
Index must have an outstanding par value of at least $3 million and be 
issued as part of a transaction of at least $20 million.
    All bonds included in the Index must have a fixed rate, a dated 
date (i.e., the date when interest begins to accrue) after December 31, 
1990, and a nominal maturity of 1 to 30 years. Bonds subject to the 
alternative minimum tax, taxable municipal bonds, bonds with floating 
rates, derivatives and municipal bonds of issuers from the territories 
of the United States (e.g., Puerto Rico) are excluded from the Index. 
The composition of the Index is rebalanced monthly. Interest and 
principal payments earned by the component securities are held in the 
Index without a reinvestment return until month end when they are 
removed from the Index. Qualifying securities issued, but not 
necessarily settled, on or before the month end rebalancing date 
qualify for inclusion in the Index in the following month.
    The Fund normally invests at least 80% of its total assets in 
securities that

[[Page 10617]]

comprise the Fund's benchmark index. The Index is comprised of publicly 
traded municipal bonds that cover the U.S. dollar-denominated 
investment grade and high yield tax-exempt bond market. The Fund's 80% 
investment policy is non-fundamental and may be changed without 
shareholder approval upon 60 days' prior written notice to 
shareholders.\7\ The Fund also has adopted a fundamental investment 
policy to invest at least 80% of its assets in municipal securities.\8\ 
Currently, when issued transactions (``WIs'') \9\ representing 
securities eligible for inclusion in the Index may be used by the Fund 
in seeking performance that corresponds to the Index and in such cases 
would count towards the Fund's 80% Investment Policy.
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    \7\ As noted herein, the Fund's policy to invest 80% of its 
total assets in securities that comprise the Fund's benchmark index 
(the ``80% Investment Policy'') is non-fundamental and may be 
changed without shareholder approval upon 60 days' prior written 
notice to shareholders. The Exchange notes that, notwithstanding the 
foregoing, all statements and representations made in this filing 
regarding (a) the description of the portfolios [sic], (b) 
limitations on portfolio holdings or reference assets (including, 
for example, the Fund's 80% Investment Policy), or (c) the 
applicability of Exchange rules and surveillance procedures shall 
constitute continued listing requirements for listing the Shares on 
the Exchange. As noted below, the issuer has represented to the 
Exchange that it will advise the Exchange of any failure by the Fund 
to comply with the continued listing requirements (or any changes 
made with respect to the Fund's 80% Investment Policy), and, 
pursuant to its obligations under Section 19(g)(1) of the Exchange 
Act, the Exchange will surveil for compliance with the continued 
listing requirements. If the Fund is not in compliance with the 
applicable listing requirements, the Exchange will commence 
delisting procedures under Exchange Rule 14.12.
    \8\ The Fund's policy to invest 80% of its assets in municipal 
securities (the ``Secondary 80% Policy'') is a fundamental 
investment policy. Fundamental investment policies, including the 
Secondary 80% Policy, cannot be changed without the approval of the 
holders of a majority of the Fund's outstanding voting securities. 
For purposes of the 1940 Act, a majority of the outstanding voting 
securities of the Fund means the vote, at an annual or a special 
meeting of the security holders of the Trust, of the lesser of (1) 
67% or more of the voting securities of the Fund present at such 
meeting, if the holders of more than 50% of the outstanding voting 
securities of the Fund are present or represented by proxy, or (2) 
more than 50% of the outstanding voting securities of the Fund.
    \9\ When issued is a transaction that is made conditionally 
because a security has been authorized but not yet issued. Treasury 
securities, stock splits, and new issues of stocks and bonds are all 
traded on a when-issued basis.
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Other Portfolio Holdings
    While the Fund normally will invest at least 80% of its total 
assets in securities that compose the Index, as described above, the 
Fund may invest its remaining assets in other financial instruments, as 
described below.
    The Fund may invest its remaining assets in securities not included 
in the Index including only the following instruments: Municipal bonds 
not described above; money market instruments, including repurchase 
agreements or other funds which invest exclusively in money market 
instruments; convertible securities; structured notes (notes on which 
the amount of principal repayment and interest payments are based on 
the movement of one or more specified factors, such as the movement of 
a particular stock or stock index); \10\ certain derivative instruments 
described below; and, to the extent permitted by the 1940 Act, 
affiliated and unaffiliated funds, such as open-end or closed-end 
management investment companies, including other exchange-traded funds 
(``ETFs'').\11\ In addition to the use described above, WIs not 
included in the Index may also be used by the Fund in managing cash 
flows.
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    \10\ Structured notes are derivative securities for which the 
amount of principal repayment and/or interest payments is based on 
the movement of one or more factors, including, but not limited to, 
currency exchange rates, interest rates (such as the prime lending 
rate or LIBOR), referenced bonds and stock indices.
    \11\ For purposes of this filing, ETFs include Index Fund Shares 
(as described in Rule 14.11(c)); Portfolio Depositary Receipts (as 
described in Rule 14.11(b)); and Managed Fund Shares (as described 
in Rule 14.11(i)). The ETFs all will be listed and traded in the 
U.S. on registered exchanges. The Fund may invest in the securities 
of ETFs registered under the 1940 Act consistent with the 
requirements of Section 12(d)(1) of the 1940 Act, or any rule, 
regulation or order of the Commission or interpretation thereof. 
While the Fund may invest in inverse ETFs, the Fund will not invest 
in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
---------------------------------------------------------------------------

    The Fund may invest in repurchase agreements with commercial banks, 
brokers or dealers to generate income from its excess cash balances and 
to invest securities lending cash collateral.
    The Fund may use exchange-traded futures contracts and exchange-
traded options thereon, together with positions in cash and money 
market instruments, to simulate full investment in the Index.
    The Fund may use cleared or non-cleared index, interest rate or 
credit default swap agreements. Swap agreements are contracts between 
parties in which one party agrees to make payments to the other party 
based on the change in market value or level of a specified index or 
asset. Currently, interest rate swaps and credit default swaps on 
indexes may be cleared, however, credit default swaps on a specific 
security are currently uncleared.
    The Fund may invest in exchange-traded warrants, which are equity 
securities in the form of options issued by a corporation which give 
the holder the right to purchase stock, usually at a price that is 
higher than the market price at the time the warrant is issued.
    The Fund may invest in participation notes, which are issued by 
banks or broker-dealers and are designed to offer a return linked to 
the performance of a particular underlying equity security or market.
    The Fund will only enter into transactions in derivative 
instruments with counterparties that the Adviser reasonably believes 
are capable of performing under the contract and will post collateral 
as required by the counterparty.\12\
---------------------------------------------------------------------------

    \12\ The Fund will seek, where possible, to use counterparties, 
as applicable, whose financial status is such that the risk of 
default is reduced; however, the risk of losses resulting from 
default is still possible. The Adviser will evaluate the 
creditworthiness of counterparties on a regular basis. In addition 
to information provided by credit agencies, the Adviser will review 
approved counterparties using various factors, which may include the 
counterparty's reputation, the Adviser's past experience with the 
counterparty and the price/market actions of debt of the 
counterparty.
---------------------------------------------------------------------------

Index Overview
    The Exchange is submitting this proposed rule change because the 
Index for the Fund does not meet all of the ``generic'' listing 
requirements of Rule 14.11(c)(4) applicable to the listing of index 
fund shares based on fixed income securities indexes. The Index meets 
all such requirements except for those set forth in Rule 
14.11(c)(4)(B)(i)(b).\13\ Specifically, as of November 30, 2016, 25.04% 
of the weight of the Index components have a minimum original principal 
amount outstanding of $100 million or more.
---------------------------------------------------------------------------

    \13\ Rule 14.11(c)(4)(B)(i)(b) provides that components that in 
the aggregate account for at least 75% of the weight of the index or 
portfolio each shall have a minimum original principal amount 
outstanding of $100 million or more.
---------------------------------------------------------------------------

    As of November 30, 2016, 86.49% of the weight of the Index 
components was comprised of individual maturities that were part of an 
entire municipal bond offering with a minimum original principal amount 
outstanding $100 million or more for all maturities of the offering. In 
addition, the total dollar amount outstanding of issues in the Index 
was approximately $1.5 trillion and the average dollar amount 
outstanding of issues in the Index was approximately $30.4 million. 
Further, the most heavily weighted component represented 1.57% of the 
weight of the Index and the five most heavily weighted components 
represented 3.93% of the weight of the Index.\14\

[[Page 10618]]

Therefore, the Exchange believes that, notwithstanding that the Index 
does not satisfy the criterion in Rule 14.11(c)(4)(B)(i)(b), the Index 
is sufficiently broad-based to deter potential manipulation, given that 
it is comprised of approximately 50,615 issues. In addition, the Index 
securities are sufficiently liquid to deter potential manipulation in 
that a substantial portion (86.49%) of the Index weight is comprised of 
maturities that are part of a minimum original principal amount 
outstanding of $100 million or more, and in view of the substantial 
total dollar amount outstanding and the average dollar amount 
outstanding of the Index issues, as referenced above.\15\ 63.8% of the 
Index weight consisted of issues with a rating of AA/Aa2 or higher.
---------------------------------------------------------------------------

    \14\ Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed-
income security (excluding Treasury Securities, as defined therein) 
shall represent more than 30% of the weight of the index or 
portfolio, and the five most heavily weighted component fixed-income 
securities in the index or portfolio shall not in the aggregate 
account for more than 65% of the weight of the index or portfolio.
    \15\ The Adviser represents that when bonds are close 
substitutes for one another, pricing vendors can use executed trade 
information from all similar bonds as pricing inputs for an 
individual security. This can make individual securities more 
liquid.
---------------------------------------------------------------------------

    The Index value, calculated and disseminated at least once daily, 
as well as the components of the Index and their percentage weighting, 
will be available from major market data vendors. In addition, the 
portfolio of securities held by the Fund will be disclosed on the 
Fund's Web site at www.vaneck.com/etfs.
Correlation Among Municipal Bond Instruments With Common 
Characteristics
    With respect to the Fund, the Adviser represents that the nature of 
the municipal bond market and municipal bond instruments makes it 
feasible to categorize individual issues represented by CUSIPs (i.e., 
the specific identifying number for a security) into categories 
according to common characteristics, specifically, rating, geographical 
region, purpose, and maturity. Bonds that share similar characteristics 
tend to trade similarly to one another; therefore, within these 
categories, the issues may be considered fungible from a portfolio 
management perspective, allowing one CUSIP to be represented by another 
that shares similar characteristics for purposes of developing an 
investment strategy. Therefore, while 25.04% of the weight of the Index 
components have a minimum original principal amount outstanding of $100 
million or more, the nature of the municipal bond market makes the 
issues relatively fungible for investment purposes when aggregated into 
categories such as ratings, geographical region, purpose and maturity. 
In addition, within a single municipal bond issuer, there are often 
multiple contemporaneous or sequential issuances that have the same 
rating, structure and maturity, but have different CUSIPs; these 
separate issues by the same issuer are also likely to trade similarly 
to one another.
    The Adviser represents that the Fund are [sic] managed utilizing 
the principle that municipal bond issues are generally fungible in 
nature when sharing common characteristics, and specifically make use 
of the four categories referred to above. In addition, this principle 
is used in, and consistent with, the portfolio construction process in 
order to facilitate the creation and redemption process, and to enhance 
liquidity (among other benefits, such as reducing transaction costs), 
while still allowing the Fund to closely track the Index.
Net Asset Value
    According to the Registration Statement, the net asset value 
(``NAV'') of the Fund will be determined each business day as of the 
close of trading (ordinarily 4:00 p.m. Eastern time) on the Exchange.
    The values of the Fund's portfolio securities are based on the 
securities' closing prices, when available. In the absence of a last 
reported sales price, or if no sales were reported, and for other 
assets for which market quotes are not readily available, values may be 
based on quotes obtained from a quotation reporting system, established 
market makers or by an outside independent pricing service. Fixed 
income securities, repurchase agreements and money market instruments 
with maturities of more than 60 days are normally valued on the basis 
of quotes from brokers or dealers, established market makers or an 
outside independent pricing service. Prices obtained by an outside 
independent pricing service may use information provided by market 
makers or estimates of market values obtained from yield data related 
to investments or securities with similar characteristics and may use a 
computerized grid matrix of securities and its evaluations in 
determining what it believes is the fair value of the portfolio 
securities. Any assets or liabilities denominated in currencies other 
than the U.S. dollar are converted into U.S. dollars at the current 
market rates on the date of valuation as quoted by one or more sources. 
Short-term investments and money market instruments having a maturity 
of 60 days or less are valued at amortized cost. Futures contracts will 
be valued at the settlement price established each day by the board or 
exchange on which they are traded. Exchange-traded options will be 
valued at the closing price in the market where such contracts are 
principally traded. Swaps, structured notes, participation notes, 
convertible securities, and WIs will be valued based on valuations 
provided by independent, third-party pricing agents. Securities of non-
exchange-traded investment companies will be valued at NAV. Exchange-
traded instruments, including investment companies and warrants, will 
be valued at the last reported sale price on the primary exchange or 
market on which they are traded.
    If a market quotation for a security or other asset is not readily 
available or the Adviser believes it does not otherwise accurately 
reflect the market value of the security or asset at the time the Fund 
calculates its NAV, the security or asset will be fair valued by the 
Adviser in accordance with the Trust's valuation policies and 
procedures approved by the Board of Trustees and in accordance with the 
1940 Act. The Fund may also use fair value pricing in a variety of 
circumstances, including but not limited to, situations when the value 
of a security in the Fund's portfolio has been materially affected by 
events occurring after the close of the market on which the security is 
principally traded (such as a corporate action or other news that may 
materially affect the price of a security) or trading in a security has 
been suspended or halted.
    The Fund currently expects that futures contracts will be valued at 
the settlement price established each day by the board or exchange on 
which they are traded and exchange. Exchange-traded options will be 
valued at the closing price in the market where such contracts are 
principally traded. Additionally, the Fund currently expects that 
swaps, structured notes, participation notes, convertible securities, 
and WIs will be valued at the closing price, if exchange listed, or 
based on valuations provided by independent, third-party pricing 
agents. Securities of non-exchange-traded investment companies will be 
valued at NAV. Exchange-traded instruments, including investment 
companies and warrants, will be valued at the last reported sale price 
on the primary exchange or market on which they are traded.
Creation and Redemption of Shares
    The NAV of the Fund will be determined each business day as of the 
close of trading, (normally 4:00 p.m. Eastern time) on the exchange. 
The Fund currently anticipates that a ``Creation Unit'' will consist of 
50,000

[[Page 10619]]

Shares, though this number may change from time to time, including 
prior to the listing of the Fund. The exact number of Shares that will 
comprise a Creation Unit will be disclosed in the Registration 
Statement of the Fund. The Trust will issue and sell Shares of the Fund 
only in Creation Units on a continuous basis through the Distributor, 
without an initial sales load (but subject to transaction fees), at 
their NAV per Share next determined after receipt, on any business day, 
of an order in proper form.
    The consideration for purchase of a Creation Unit of the Fund 
generally will consist of either (i) the in-kind deposit of a 
designated portfolio of fixed income securities (the ``Deposit 
Securities'') per each Creation Unit and the Cash Component (defined 
below), computed as described below, or (ii) as permitted or required 
by the Fund, of cash. The Cash Component together with the Deposit 
Securities, as applicable, are referred to as the ``Fund Deposit,'' 
which represents the minimum initial and subsequent investment amount 
for Shares. The Cash Component represents the difference between the 
NAV of a Creation Unit and the market value of Deposit Securities and 
may include a Dividend Equivalent Payment. The ``Dividend Equivalent 
Payment'' enables the Fund to make a complete distribution of dividends 
on the next dividend payment date, and is an amount equal, on a per 
Creation Unit basis, to the dividends on all the securities held by 
each [sic] of the Fund (``Fund Securities'') with ex-dividend dates 
within the accumulation period for such distribution (the 
``Accumulation Period''), net of expenses and liabilities for such 
period, as if all of the Fund Securities had been held by the Trust for 
the entire Accumulation Period. The Accumulation Period begins on the 
ex-dividend date for the Fund and ends on the next ex-dividend date.
    The Administrator, through the National Securities Clearing 
Corporation (``NSCC''), makes available on each business day, 
immediately prior to the opening of business on the Exchange (currently 
9:30 a.m. Eastern time), the list of the names and the required number 
of shares of each Deposit Security to be included in the current Fund 
Deposit (based on information at the end of the previous business day) 
as well as the Cash Component for the Fund. Such Fund Deposit is 
applicable, subject to any adjustments as described below, in order to 
effect creations of Creation Units of the Fund until such time as the 
next-announced Fund Deposit composition is made available.
    Shares may be redeemed only in Creation Units at their NAV next 
determined after receipt of a redemption request in proper form by the 
Distributor,\16\ only on a business day and only through a 
Participating Party or DTC Participant who has executed a Participation 
Agreement.
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    \16\ To be eligible to place orders with the Distributor to 
create Creation Units of the Funds [sic], an entity or person either 
must be: (1) A ``Participating Party,'' i.e., a broker-dealer or 
other participant in the Clearing Process through the Continuous Net 
Settlement System of the NSCC; or (2) a DTC Participant (as defined 
below); and, in either case, must have executed an agreement with 
the Distributor and the Transfer Agent (as it may be amended from 
time to time in accordance with its terms) (``Participant 
Agreement''). DTC Participants are participants of the Depository 
Trust Company (``DTC'') that acts as securities depositary for Index 
Fund Shares. A Participating Party and DTC Participant are 
collectively referred to as an ``Authorized Participant.''
---------------------------------------------------------------------------

    The Administrator, through NSCC, makes available immediately prior 
to the opening of business on the Exchange (currently 9:30 a.m. Eastern 
time) on each day that the Exchange is open for business, the Fund 
Securities that will be applicable (subject to possible amendment or 
correction) to redemption requests received in proper form (as defined 
below) on that day.
    Unless cash redemptions are permitted or required for the Fund, the 
redemption proceeds for a Creation Unit generally consist of Fund 
Securities as announced by the Administrator on the business day of the 
request for redemption, plus cash in an amount equal to the difference 
between the NAV of the Shares being redeemed, as next determined after 
a receipt of a request in proper form, and the value of the Fund 
Securities, less the redemption transaction fee and variable fees 
described below. Should the Fund Securities have a value greater than 
the NAV of the Shares being redeemed, a compensating cash payment to 
the Trust equal to the differential plus the applicable redemption 
transaction fee will be required to be arranged for by or on behalf of 
the redeeming shareholder. The Fund reserves the right to honor a 
redemption request by delivering a basket of securities or cash that 
differs from the Fund Securities.\17\
---------------------------------------------------------------------------

    \17\ The Adviser represents that, to the extent that the Trust 
permits or requires a ``cash in lieu'' amount, such transactions 
will be effected in the same or equitable manner for all Authorized 
Participants.
---------------------------------------------------------------------------

    Orders to redeem Creation Units of the Fund must be delivered 
through a DTC Participant that has executed the Participant Agreement 
with the Distributor and with the Trust. A DTC Participant who wishes 
to place an order for redemption of Creation Units of the Fund to be 
effected need not be a Participating Party, but such orders must state 
that redemption of Creation Units of the Fund will instead be effected 
through transfer of Creation Units of the Fund directly through DTC. An 
order to redeem Creation Units of the Fund is deemed received by the 
Administrator on the transmittal date if (i) such order is received by 
the Administrator not later than 4:00 p.m. Eastern time on such 
transmittal date; (ii) such order is preceded or accompanied by the 
requisite number of Shares of Creation Units specified in such order, 
which delivery must be made through DTC to the Administrator no later 
than 11:00 a.m. Eastern time, on such transmittal date (the ``DTC Cut-
Off-Time''); and (iii) all other procedures set forth in the 
Participant Agreement are properly followed.
    After the Administrator has deemed an order for redemption 
received, the Administrator will initiate procedures to transfer the 
requisite Fund Securities (or contracts to purchase such Fund 
Securities) which are expected to be delivered within three business 
days and the cash redemption payment to the redeeming beneficial owner 
by the third business day following the transmittal date on which such 
redemption order is deemed received by the Administrator.
Availability of Information
    The Fund's Web site, which will be publicly available prior to the 
public offering of Shares, will include a form of the prospectus for 
the Fund that may be downloaded. The Web site will include additional 
quantitative information updated on a daily basis, including, for the 
Fund: (1) The prior business day's reported NAV, daily trading volume, 
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. Daily trading volume information for the 
Fund will also be available in the financial section of newspapers, 
through subscription services such as Bloomberg, Thomson Reuters, and 
International Data Corporation, which can be accessed by authorized 
participants and other investors, as well as through other electronic 
services, including major public Web sites. On each business day, 
before commencement of trading in Shares during Regular Trading Hours 
\18\

[[Page 10620]]

on the Exchange, the Fund will disclose on its Web site the identities 
and quantities of the portfolio of securities and other assets in the 
daily disclosed portfolio held by the Fund that formed the basis for 
the Fund's calculation of NAV at the end of the previous business day. 
The daily disclosed portfolio will include, as applicable: The ticker 
symbol; CUSIP number or other identifier, if any; a description of the 
holding (including the type of holding, such as the type of swap); the 
identity of the security, index or other asset or instrument underlying 
the holding, if any; for options, the option strike price; quantity 
held (as measured by, for example, par value, notional value or number 
of shares, contracts, or units); maturity date, if any; coupon rate, if 
any; effective date, if any; market value of the holding; and the 
percentage weighting of the holding in the Fund's portfolio. The Web 
site and information will be publicly available at no charge. The 
value, components, and percentage weightings of each of the Indices 
will be calculated and disseminated at least once daily and will be 
available from major market data vendors. Rules governing the Indices 
are available on Barclays' Web site and in each respective Fund's 
prospectus.
---------------------------------------------------------------------------

    \18\ Regular Trading Hours are 9:30 a.m. to 4:00 p.m. Eastern 
Time.
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    In addition, an estimated value, defined in BZX Rule 14.11(c)(6)(A) 
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 daily 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.\19\ In 
addition, the quotations of certain of the Fund's holdings may not be 
updated during U.S. trading hours if updated prices cannot be 
ascertained.
---------------------------------------------------------------------------

    \19\ 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 daily disclosed portfolio, will allow investors to determine the 
value of the underlying portfolio of the Fund on a daily basis and 
provide a close estimate of that value throughout the trading day.
    Quotation and last sale information for the Shares of the Fund will 
be available via the CTA high speed line. Quotation information for 
investment company securities (excluding ETFs) may be obtained through 
nationally recognized pricing services through subscription agreements 
or from brokers and dealers who make markets in such securities. Price 
information regarding municipal bonds, convertible securities, and non-
exchange traded assets, including investment companies, derivatives, 
money market instruments, repurchase agreements, structured notes, 
participation notes, and WIs is available from third party pricing 
services and major market data vendors. For exchange-traded assets, 
including investment companies, futures, warrants, and options, such 
intraday information is available directly from the applicable listing 
exchange.
Initial and Continued Listing
    The Shares of the Fund will conform to the initial and continued 
listing criteria under BZX Rule 14.11(c)(4), except for those set forth 
in 14.11(c)(4)(B)(i)(b). The Exchange represents that, for initial and/
or continued listing, the Fund and the Trust must be in compliance with 
Rule 10A-3 under the Act. \20\ A minimum of 50,000 Shares of the 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 for the Fund will be calculated daily and will 
be made available to all market participants at the same time.
---------------------------------------------------------------------------

    \20\ 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 the Fund. The Exchange will halt trading in 
the Shares under the conditions specified in BZX Rule 11.18. Trading 
may be halted because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the Shares inadvisable. These may 
include: (1) The extent to which trading is not occurring in the 
securities and/or the financial instruments composing the daily 
disclosed portfolio of the 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(c)(1)(B)(iv), which sets forth circumstances 
under which Shares of the 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 
and has the appropriate rules to facilitate transactions in the Shares 
during all trading sessions. As provided in BZX Rule 11.11(a), the 
minimum price variation for quoting and entry of orders in securities 
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 Index Fund Shares. The 
issuer has represented to the Exchange that it will advise the Exchange 
of any failure by the Fund to comply with the continued listing 
requirements, and, pursuant to its obligations under Section 19(g)(1) 
of the Exchange Act, the Exchange will surveil for compliance with the 
continued listing requirements. If the Fund is not in compliance with 
the applicable listing requirements, the Exchange will commence 
delisting procedures under Exchange Rule 14.12. 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.\21\ In 
addition, 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''). FINRA also can access data 
obtained from the Municipal Securities Rulemaking Board (``MSRB'') 
relating to municipal bond trading activity for surveillance purposes 
in connection with trading in the Shares. In addition, the Exchange may 
obtain information regarding trading in the Shares and the underlying 
shares in exchange-traded investment companies, futures, options, and 
warrants from markets or other entities that are members of ISG or with 
which

[[Page 10621]]

the Exchange has in place a comprehensive surveillance sharing 
agreement. The Exchange prohibits the distribution of material non-
public information by its employees.
---------------------------------------------------------------------------

    \21\ 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.
---------------------------------------------------------------------------

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) BZX 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 \22\ and After Hours 
Trading Sessions \23\ 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.
---------------------------------------------------------------------------

    \22\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m. 
Eastern Time.
    \23\ 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 Fund. Members purchasing Shares from the Fund 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 the 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 Fund and the applicable NAV calculation time 
for the Shares. The Information Circular will disclose that information 
about the Shares of the Fund will be publicly available on the Fund's 
Web site. In addition, the Information Circular will reference that the 
Trust is subject to various fees and expenses described in the Fund's 
Registration Statement.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \24\ in general and Section 6(b)(5) of the Act \25\ 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.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f.
    \25\ 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 
listing criteria in BZX Rule 14.11(c). The Exchange believes that its 
surveillances, which generally focus on detecting securities trading 
outside of their normal patterns which could be indicative of 
manipulative or other violative activity, and associated surveillance 
procedures are adequate to properly monitor the trading of the Shares 
on the Exchange during all trading sessions and to deter and detect 
violations of Exchange rules and the applicable federal securities 
laws. The Exchange will communicate as needed regarding trading in the 
Shares with other markets or other entities that are members of the 
Intermarket Surveillance group (``ISG''), and may obtain trading 
information regarding trading in the Shares from such markets or 
entities. The Exchange can also access data obtained from the Municipal 
Securities Rulemaking Board relating to municipal bond trading activity 
for surveillance purposes in connection with trading in the Shares. The 
Exchange is able to access, as needed, trade information for certain 
fixed income securities held by the Fund reported to FINRA's TRACE. 
FINRA also can access data obtained from the Municipal Securities 
Rulemaking Board (``MSRB'') relating to municipal bond trading activity 
for surveillance purposes in connection with trading in the Shares. In 
addition, the Exchange may obtain information regarding trading in the 
Shares and the underlying shares in exchange-traded investment 
companies, futures, options, and warrants from markets or other 
entities that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
    The Index Provider is not a broker-dealer, but is affiliated with a 
broker-dealer and has implemented a ``fire wall'' with respect to such 
broker-dealer regarding access to information concerning the 
composition and/or changes to the Indices. The Index Provider has also 
implemented procedures designed to prevent the use and dissemination of 
material, non-public information regarding the Indices.
    As of November 30, 2016, 86.49% of the weight of the Index 
components was comprised of individual maturities that were part of an 
entire municipal bond offering with a minimum original principal amount 
outstanding $100 million or more for all maturities of the offering. In 
addition, the total dollar amount outstanding of issues in the Index 
was approximately $1.5 trillion and the average dollar amount 
outstanding of issues in the Index was approximately $30.4 million. 
Further, the most heavily weighted component represented 1.57% of the 
weight of the Index and the five most heavily weighted components 
represented 3.93% of the weight of the Index.\26\ Therefore, the 
Exchange believes that, notwithstanding that the Index does not satisfy 
the criterion in Rule 14.11(c)(4)(B)(i)(b), the Index is sufficiently 
broad-based to deter potential manipulation, given that it is comprised 
of approximately 50,615 issues.
---------------------------------------------------------------------------

    \26\ Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed-
income security (excluding Treasury Securities, as defined therein) 
shall represent more than 30% of the weight of the index or 
portfolio, and the five most heavily weighted component fixed-income 
securities in the index or portfolio shall not in the aggregate 
account for more than 65% of the weight of the index or portfolio.
---------------------------------------------------------------------------

    The value, components, and percentage weightings of each of the 
Indices will be calculated and disseminated at least once daily and 
will be available from major market data vendors. In addition, the 
portfolio of securities held by the Fund will be disclosed on the 
Fund's Web site at www.vaneck.com/etfs. The intraday indicative value 
for Shares of the Fund will be disseminated by one or more major market 
data vendors, updated at least every 15 seconds during Regular Trading 
Hours. The Adviser represents that bonds that share similar 
characteristics, as described above, tend to trade similarly to one 
another; therefore, within these categories, the issues may be 
considered fungible from a portfolio management perspective. Within a 
single municipal bond issuer,

[[Page 10622]]

Adviser represents that separate issues by the same issuer are also 
likely to trade similarly to one another.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that a large amount of information will be publicly available regarding 
the Fund and the Shares, thereby promoting market transparency. The 
Fund's portfolio holdings will be disclosed on the Fund's Web site 
daily after the close of trading on the Exchange and prior to the 
opening of trading on the Exchange the following day. Moreover, the IIV 
will be widely disseminated by one or more major market data vendors at 
least every 15 seconds during Regular Trading Hours. The current value 
of each of the Indices will be disseminated by one or more major market 
data vendors at least once per day. Information regarding market price 
and trading volume of the Shares will be continually available on a 
real-time basis throughout the day on brokers' computer screens and 
other electronic services, and quotation and last sale information will 
be available via the CTA high-speed line. The Web site for the Fund 
will include the prospectus for the Fund and additional data relating 
to NAV and other applicable quantitative information. Moreover, 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. If the Exchange becomes aware that 
the NAV is not being disseminated to all market participants at the 
same time, it will halt trading in the Shares until such time as the 
NAV is available to all market participants. With respect to trading 
halts, the Exchange may consider all relevant factors in exercising its 
discretion to halt or suspend trading in the Shares of the Fund. 
Trading also may be halted because of market conditions or for reasons 
that, in the view of the Exchange, make trading in the Shares 
inadvisable. These may include: (1) The extent to which trading is not 
occurring in the securities and/or the financial instruments composing 
the daily disclosed portfolio of the 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(c)(1)(B)(iv), which sets forth circumstances 
under which Shares of the Fund may be halted. If the IIV of any [sic] 
of the Fund or value of the Indices are not being disseminated as 
required, the Exchange may halt trading during the day in which the 
interruption to the dissemination of the IIV or index value occurs.
    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 
additional types of exchange-traded funds that holds [sic] municipal 
bonds and 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 in the Shares and the underlying 
shares in exchange-traded investment companies, futures, options, and 
warrants 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, investors will have ready access to 
information regarding the IIV 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 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

    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 the 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 proposal 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 No. SR-BatsBZX-2017-07 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 No. SR-BatsBZX-2017-07. 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 Web site (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 Web site 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 such filing will also be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BatsBZX-2017-07 and should be 
submitted on or before March 7, 2017.


[[Page 10623]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02910 Filed 2-13-17; 8:45 am]
 BILLING CODE 8011-01-P