Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Pursuant to NYSE Arca Rule 5.2-E(j)(3) Twelve Series of Investment Company Units, 46870-46877 [2017-21537]

Download as PDF 46870 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices the needs of the market and regulators (including the IOSCO Principles 19). 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 purposes of the Act. The proposed rule change will facilitate the continued administration of the LBMA Silver Price utilizing a fully auditable auction process and will promote market competition by permitting the continued listing and trading of shares of the Silver Trusts and the Silver Funds utilizing the LBMA Silver Price. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act 20 and Rule 19b–4(f)(6) thereunder.21 Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest, (ii) impose any significant burden on competition, and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act 22 and Rule 19b– 4(f)(6) thereunder.23 A proposed rule change filed under Rule 19b–4(f)(6) normally does not become operative prior to 30 days after the date of the filing. However, pursuant to Rule 19b–4(f)(6)(iii), the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. As noted above, the administrator for the LBMA asabaliauskas on DSKBBXCHB2PROD with NOTICES 19 See note 18, supra. U.S.C. 78s(b)(3)(A)(iii). 21 17 CFR 240.19b–4(f)(6). 22 15 U.S.C. 78s(b)(3)(A). 23 17 CFR 240.19b–4(f)(6). As required under Rule 19b–4(f)(6)(iii), the Exchange provided the Commission with written notice of its intent to file the proposed rule change, along with a brief description and the text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. 20 15 VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 Silver Price will change from CME and Thomson Reuters to IBA, effective October 2, 2017. The Commission believes that waiver of the operative delay is consistent with the protection of investors and the public interest as it will prevent the disruption in the trading of the Silver Trust and the Silver Fund shares. Therefore, the Commission designates the proposed rule change to be operative upon filing.24 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 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 the filing also will 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 Number SR– NYSEArca–2017–113 and should be submitted on or before October 27, 2017. IV. Solicitation of Comments For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Eduardo A. Aleman, Assistant Secretary. Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2017–113 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2017–113. 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 (https://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 [FR Doc. 2017–21536 Filed 10–5–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81794; File No. SR– NYSEArca–2017–56] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Pursuant to NYSE Arca Rule 5.2–E(j)(3) Twelve Series of Investment Company Units DATE: October 2, 2017. I. Introduction On June 19, 2017, NYSE Arca, Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade certain series of Investment Company Units listed pursuant to NYSE Arca Rule 5.2–E(j)(3). The proposed rule change was published for comment in the Federal Register on July 7, 2017.3 On August 7, 2017, the Exchange filed Amendment No. 1 to the proposed rule change, which amended and superseded the 25 17 24 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00118 Fmt 4703 Sfmt 4703 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 81062 (June 30, 2017), 82 FR 31651. 1 15 E:\FR\FM\06OCN1.SGM 06OCN1 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices proposed rule change as originally filed.4 On August 15, 2017, pursuant to Section 19(b)(2) of the Act,5 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.6 The Commission has received no comment letters on the proposed rule change. This order institutes proceedings under Section 19(b)(2)(B) of the Act 7 to determine whether to approve or disapprove the proposed rule change, as modified by Amendment No. 1. asabaliauskas on DSKBBXCHB2PROD with NOTICES II. Exchange’s Description of the Proposed Rule Change, as Modified by Amendment No. 1 The Exchange proposes to list and trade pursuant to NYSE Arca Rule 5.2– E(j)(3) shares (‘‘Shares’’) of the following series of Investment Company Units: (1) iShares National Muni Bond ETF; (2) iShares Short-Term National Muni Bond ETF; (3) VanEck Vectors AMT-Free Intermediate Municipal Index ETF; (4) VanEck Vectors AMT-Free Long Municipal Index ETF; (5) VanEck Vectors AMT-Free Short Municipal Index ETF; (6) VanEck Vectors HighYield Municipal Index ETF; (7) VanEck Vectors Pre-Refunded Municipal Index ETF; (8) PowerShares VRDO Tax-Free Weekly Portfolio; (9) SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF; (10) SPDR Nuveen Bloomberg Barclays Municipal Bond ETF (collectively, the ‘‘Multistate Municipal Bond Funds’’); (11) iShares California Muni Bond ETF; and (12) iShares New York Muni Bond ETF (collectively, the ‘‘Single-State Municipal Bond Funds’’ and, together with the Multistate Municipal Bond Funds, the ‘‘Municipal Bond Funds’’).8 4 In Amendment No. 1, the Exchange: (1) Described the investment objective of each fund; (2) described investment eligibility criteria and restrictions for each fund; (3) clarified that the Web site for each fund will contain its prospectus and additional data; (4) clarified that the Exchange has obtained a representation from each fund issuer that the applicable net asset value for each fund will be calculated daily and made available to all market participants at the same time; (5) clarified that none of the indexes underlying the funds are maintained by a broker-dealer; and (6) made technical changes. Amendment No. 1 to the proposed rule change is available at: https://www.sec.gov/comments/srnysearca-2017-56/nysearca201756.htm. 5 15 U.S.C. 78s(b)(2). 6 See Securities Exchange Act Release No. 81400, 82 FR 39643 (August 21, 2017). The Commission designated October 5, 2017, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change. 7 15 U.S.C. 78s(b)(2)(B). 8 The Commission notes that, although the Shares do not meet the standards set forth in Commentary VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 The Single-State Municipal Bond Funds overlie an index comprised of the fixed income municipal bond securities of one State; the Multistate Municipal Bond Funds overlie an index comprised of the fixed income municipal bond securities of more than one State. Commentary .02 to Rule 5.2(j)(3) sets forth the generic listing requirements for an index of fixed income securities underlying a series of Investment Company Units. One of the enumerated listing requirements is that component fixed income securities that, in the aggregate, account for at least 75% of the weight of the index each shall have a minimum principal amount outstanding of $100 million or more.9 The Exchange states that none of the indexes underlying the Municipal Bond Funds satisfy this criterion but represents that each of the underlying indexes meet all of the other requirements of such rule. A. The Exchange’s Description of the Municipal Bond Funds and Their Underlying Indexes 10 1. iShares National Muni Bond ETF The iShares National Muni Bond ETF seeks to track the investment results of the S&P National AMT-Free Municipal Bond Index, which measures the performance of the investment grade segment of the U.S. municipal bond market. The S&P National AMT-Free Municipal Bond Index primarily includes municipal bonds from issuers that are state or local governments or agencies such that the interest on each such bond is exempt from U.S. federal income taxes and the federal alternative minimum tax. Each bond in the S&P National AMT-Free Municipal Bond Index must have a rating of at least BBB¥ by S&P Global Ratings (‘‘S&P’’), Baa3 by Moody’s Investors Service, Inc. (‘‘Moody’s’’), or BBB¥ by Fitch Ratings, Inc. (‘‘Fitch’’). Each bond in the S&P National AMT-Free Municipal Bond Index must be denominated in U.S. dollars, must be a constituent of an offering where the original offering amount was at least $100 million, and must have a minimum par amount of $25 million. To remain in the S&P National AMT-Free Municipal Bond Index, bonds must maintain a minimum par amount greater than or equal to $25 million as of the next rebalancing date. .02 to Rule 5.2–E(j)(3), the Exchange nevertheless listed the Shares prior to 2010. 9 See Commentary .02(a)(2) to NYSE Arca Rule 5.2–E(j)(3). 10 Additional information regarding the Funds and their underlying indexes can be found in Amendment No. 1. See supra note 4. PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 46871 As of April 1, 2017, the S&P National AMT-Free Municipal Bond Index included 11,333 component fixed income municipal bond securities from issuers in 47 different states or U.S. territories. The most heavily weighted security in the index represented approximately 0.25% of the total weight of the index and the aggregate weight of the top five most heavily weighted securities in the index represented less than 1% of the total weight of the index. Approximately 99.29% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 31.79% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $628,460,731,594, and the average dollar amount outstanding of issues in the index was approximately $55,454,048. Generally, the iShares National Muni Bond ETF invests at least 90% of its assets in the component securities of the S&P National AMT-Free Municipal Bond Index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, including shares of money market funds, as well as in securities not included in the S&P National AMTFree Municipal Bond Index, but which the fund’s investment advisor believes will help the fund track the S&P National AMT-Free Municipal Bond Index. 2. iShares Short Term National Muni Bond ETF The iShares Short Term National Muni Bond ETF seeks to track the investment results of the S&P Short Term National AMT-Free Municipal Bond Index, which measures the performance of the short-term investment grade segment of the U.S. municipal bond market. The S&P Short Term National AMT-Free Municipal Bond Index primarily includes municipal bonds from issuers that are state or local governments or agencies such that the interest on each such bond is exempt from U.S. federal income taxes and the federal alternative minimum tax (‘‘AMT’’). Each bond in the S&P Short Term National AMT-Free Municipal Bond Index must have a rating of at least BBB¥ by S&P, Baa3 by Moody’s, or BBB¥ by Fitch. Each bond in the S&P Short Term National AMTFree Municipal Bond Index must be E:\FR\FM\06OCN1.SGM 06OCN1 46872 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices asabaliauskas on DSKBBXCHB2PROD with NOTICES denominated in U.S. dollars, must be a constituent of an offering where the original offering amount was at least $100 million, and must have a minimum par amount of $25 million. To remain in the S&P Short Term National AMT-Free Municipal Bond Index, bonds must maintain a minimum par amount greater than or equal to $25 million as of the next rebalancing date. As of April 1, 2017, the S&P Short Term National AMT-Free Municipal Bond Index included 3,309 component fixed income municipal bond securities from issuers in 44 different states or U.S. territories. The most heavily weighted security in the index represented approximately 1% of the total weight of the index and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 2% of the total weight of the index. Approximately 98.22% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 27.63% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $166,147,941,156, and the average dollar amount outstanding of issues in the index was approximately $50,210,922. Generally, the iShares National Muni Bond ETF invests at least 90% of its assets in the component securities of the S&P Short Term National AMT-Free Municipal Bond Index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, including shares of money market funds, as well as in securities not included in the S&P Short Term National AMT-Free Municipal Bond Index, but which the fund’s investment advisor believes will help the fund track the S&P Short Term National AMT-Free Municipal Bond Index. publicly traded municipal bonds that cover the U.S. dollar-denominated intermediate term tax-exempt bond market. To be included in the Bloomberg Barclays AMT-Free Intermediate Continuous Municipal Index, a bond must be rated Baa3/BBB¥ or higher by at least two of the following ratings agencies if all three agencies rate the security: Moody’s, S&P, and Fitch. If only one of the three agencies rates a security, the rating must be at least Baa3/BBB¥. Constituent securities of the Bloomberg Barclays AMT-Free Intermediate Continuous Municipal 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. As of April 1, 2017, the Bloomberg Barclays AMT-Free Intermediate Continuous Municipal Index included 17,272 component fixed income municipal bond securities from issuers in 50 different states or U.S. territories. The most heavily weighted security in the index represented less than 0.25% of the total weight of the index and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 0.50% of the total weight of the index. Approximately 96.13% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 7.75% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $340,102,539,050, and the average dollar amount outstanding of issues in the index was approximately $19,690,976. Normally, the VanEck Vectors AMTFree Intermediate Municipal Index ETF invests at least 80% of its total assets in fixed income securities that comprise the Bloomberg Barclays AMT-Free Intermediate Continuous Municipal Index. 3. VanEck Vectors AMT-Free Intermediate Municipal Index ETF The VanEck Vectors AMT-Free Intermediate Municipal Index ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bloomberg Barclays AMT-Free Intermediate Continuous Municipal Index. The Bloomberg Barclays AMT-Free Intermediate Continuous Municipal Index is a market size weighted index comprised of 4. VanEck Vectors AMT-Free Long Municipal Index ETF The VanEck Vectors AMT-Free Long Municipal Index ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bloomberg Barclays AMT-Free Long Continuous Municipal Index. The Bloomberg Barclays AMTFree Long Continuous Municipal Index is a market size weighted index comprised of publicly traded municipal VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 PO 00000 Frm 00120 Fmt 4703 Sfmt 4703 bonds that cover the U.S. dollar denominated long-term tax-exempt bond market. To be included in the Bloomberg Barclays AMT-Free Long Continuous Municipal Index, bonds must be rated Baa3/BBB¥ or higher by at least two of the following ratings agencies if all three agencies rate the security: Moody’s, S&P, and Fitch. If only one of the three agencies rates a security, the rating must be at least Baa3/BBB¥. Constituent securities of the Bloomberg Barclays AMT-Free Long Continuous Municipal 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. As of April 1, 2017, the Bloomberg Barclays AMT-Free Long Continuous Municipal Index included 7,657 component fixed income municipal bond securities from issuers in 50 different states or U.S. territories. The most heavily weighted security in the index represented less than 0.50% of the total weight of the index and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 1.25% of the total weight of the index. Approximately 93.84% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 32.34% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $279,575,285,082, and the average dollar amount outstanding of issues in the index was approximately $36,512,379. Normally, the VanEck Vectors AMTFree Long Municipal Index ETF invests at least 80% of its total assets in fixed income securities that comprise the Bloomberg Barclays AMT-Free Long Continuous Municipal Index. 5. VanEck Vectors AMT-Free Short Municipal Index ETF The VanEck Vectors AMT-Free Short Municipal Index ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bloomberg Barclays AMT-Free Short Continuous Municipal Index. The Bloomberg Barclays AMTFree Short Continuous Municipal Index is a market size weighted index comprised of publicly traded municipal bonds that cover the U.S. dollar denominated short-term tax-exempt bond market. To be included in the E:\FR\FM\06OCN1.SGM 06OCN1 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices asabaliauskas on DSKBBXCHB2PROD with NOTICES Bloomberg Barclays AMT-Free Short Continuous Municipal Index, bonds must be rated Baa3/BBB¥ or higher by at least two of the following ratings agencies if all three agencies rate the security: Moody’s, S&P, and Fitch. If only one of the three agencies rates a security, the rating must be at least Baa3/BBB¥. Constituent securities of the Bloomberg Barclays AMT-Free Short Continuous Municipal 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. As of April 1, 2017, the Bloomberg Barclays AMT-Free Short Continuous Municipal Index included 7,229 component fixed income municipal bond securities from issuers in 48 different states or U.S. territories. The most heavily weighted security in the index represented approximately 1% of the total weight of the index and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 2.25% of the total weight of the index. Approximately 94.4% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 13.60% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $152,020,140,995, and the average dollar amount outstanding of issues in the index was approximately $21,026,299. Normally, the VanEck Vectors AMTFree Short Municipal Index ETF invests at least 80% of its total assets in fixed income securities that comprise the Bloomberg Barclays AMT-Free Short Continuous Municipal Index. weighting methodology, provided that the total allocation to issuers from each individual territory of the United States (including Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands) does not exceed 4%. The Bloomberg Barclays Municipal Custom High Yield Composite Index tracks the high yield municipal bond market with a 75% weight in non-investment grade municipal bonds and a targeted 25% weight in Baa/BBB rated investment grade municipal bonds. As of April 1, 2017, the Bloomberg Barclays Municipal Custom High Yield Composite Index included 4,702 component fixed income municipal bond securities from issuers in 50 different states or U.S. territories. The most heavily weighted security in the index represented approximately 1.25% of the total weight of the index, and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 6% of the total weight of the index. Approximately 75.16% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 43.26% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $224,318,153,150, and the average dollar amount outstanding of issues in the index was approximately $47,706,966. Normally, the VanEck Vectors HighYield Municipal Index ETF invests at least 80% of its total assets in securities that comprise the Bloomberg Barclays Municipal Custom High Yield Composite Index. 6. VanEck Vectors High-Yield Municipal Index ETF The VanEck Vectors High-Yield Municipal Index ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bloomberg Barclays Municipal Custom High Yield Composite Index. The Bloomberg Barclays Municipal Custom High Yield Composite Index is a market size weighted index composed of publicly traded municipal bonds that cover the U.S. dollar denominated high yield long-term tax-exempt bond market. The Bloomberg Barclays Municipal Custom High Yield Composite Index is calculated using a market value 7. VanEck Vectors Pre-Refunded Municipal Index ETF The VanEck Vectors Pre-Refunded Municipal Index ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Bloomberg Barclays Municipal Pre-Refunded—TreasuryEscrowed Index. The Bloomberg Barclays Municipal Pre-Refunded— Treasury-Escrowed Index is a market size weighted index comprised of publicly traded municipal bonds that cover the U.S. dollar denominated taxexempt bond market. The Bloomberg Barclays Municipal Pre-Refunded— Treasury-Escrowed Index is comprised of pre-refunded and/or escrowed-to- VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 46873 maturity municipal bonds. To be included in the Bloomberg Barclays Municipal Pre-Refunded—TreasuryEscrowed Index, bonds must have an explicit or implicit credit rating of AAA. Constituent securities of the Bloomberg Barclays Municipal Pre-Refunded— Treasury-Escrowed 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 in market value. As of April 1, 2017, the Bloomberg Barclays Municipal Pre-RefundedTreasury-Escrowed Index included 3,691 component fixed income municipal bond securities from issuers in 50 different states or U.S. territories. The most heavily weighted security in the index represented approximately 0.50% of the total weight of the index and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 2.25% of the total weight of the index. Approximately 93.70% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 19.23% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $94,289,476,486, and the average dollar amount outstanding of issues in the index was approximately $25,545,780. Normally, the VanEck Vectors PreRefunded Municipal Index ETF invests at least 80% of its total assets in securities that comprise the Bloomberg Barclays Municipal Pre-Refunded— Treasury-Escrowed Index. 8. PowerShares VRDO Tax-Free Weekly Portfolio The PowerShares VRDO Tax-Free Weekly Portfolio seeks investment results that generally correspond (before fees and expenses) to the price and yield of the Bloomberg U.S. Municipal AMTFree Weekly VRDO Index. The Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index is comprised of municipal securities issued in the primary market as variable rate demand obligation (‘‘VRDO’’) bonds. Only VRDOs whose interest rates are reset weekly are included in the Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index, and the Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index excludes secondary or derivative VRDOs (tender option bonds). To be E:\FR\FM\06OCN1.SGM 06OCN1 46874 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices asabaliauskas on DSKBBXCHB2PROD with NOTICES included in the Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index, constituents must be rated by at least one of the following statistical rating agencies at the following minimum ratings: Moody’s as A¥3 for long-term bonds or Prime-2 for shortterm bonds; by S&P as A¥ for long-term bonds or A¥2 for short-term bonds; and by Fitch as A¥ for long-term bonds or F¥2 for short-term bonds. As of April 1, 2017, the Bloomberg US Municipal AMT-Free Weekly VRDO Index included 1,494 component fixed income municipal bond securities from issuers in 49 different states or U.S. territories. The most heavily weighted security in the index represented approximately 0.75% of the total weight of the index and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 2.75% of the total weight of the index. Approximately 44.76% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 34.88% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $68,489,564,000, and the average dollar amount outstanding of issues in the index was approximately $45,843,082. Generally, the PowerShares VRDO Tax-Free Weekly Portfolio invests at least 80% of its total assets in VRDO bonds that are exempt from federal income tax with interest rates that reset weekly that comprise the Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index. 9. SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF The SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Bloomberg Barclays Managed Money Municipal Short Term Index which tracks the short term tax exempt municipal bond market. The Bloomberg Barclays Managed Money Municipal Short Term Index is designed to track the publicly traded municipal bonds that cover the U.S. dollar denominated short term tax exempt bond market, including state and local general obligation bonds, revenue bonds, pre-refunded bonds, and insured bonds. All bonds in the VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 Bloomberg Barclays Managed Money Municipal Short Term Index must be rated Aa3/AA¥ or higher by at least two of the following statistical ratings agencies: Moody’s, S&P, or Fitch. If only one of the agencies rates the security, the rating must be at least Aa3/AA¥. Each security in the Bloomberg Barclays Managed Money Municipal Short Term 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. As of April 1, 2017, the Bloomberg Barclays Managed Money Municipal Short Term Index included 4,263 component fixed income municipal bond securities from issuers in 44 different states or U.S. territories. The most heavily weighted security in the index represented approximately 0.75% of the total weight of the index, and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 2% of the total weight of the index. Approximately 94.54% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 10.82% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $85,187,709,681, and the average dollar amount outstanding of issues in the index was approximately $19,983,042. Under normal market conditions, the SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF generally invests substantially all, but at least 80%, of its total assets in the securities comprising the Bloomberg Barclays Managed Money Municipal Short Term Index or in securities that the fund’s sub-adviser determines have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the Bloomberg Barclays Managed Money Municipal Short Term Index. In addition, the SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF may invest in debt securities that are not included in the Bloomberg Barclays Managed Money Municipal Short Term Index, cash and cash equivalents or money market instruments, such as repurchase agreements and money market funds. PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 10. SPDR Nuveen Bloomberg Barclays Municipal Bond ETF The Exchange states that, according to its prospectus, the SPDR Nuveen Bloomberg Barclays Municipal Bond ETF seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of the Bloomberg Barclays Municipal Managed Money Index which tracks the U.S. municipal bond market. The Bloomberg Barclays Municipal Managed Money Index is designed to track the U.S. long term taxexempt bond market, including state and local general obligation bonds, revenue bonds, pre-refunded bonds, and insured bonds. The Bloomberg Barclays Municipal Managed Money Index is comprised of tax-exempt municipal securities issued by states, cities, counties, districts and their respective agencies. The Bloomberg Barclays Municipal Managed Money Index also includes municipal lease obligations, which are securities issued by state and local governments and authorities to finance the acquisition of equipment and facilities. All bonds in the Bloomberg Barclays Municipal Managed Money Index must be rated Aa3/AA¥ or higher by at least two of the following statistical ratings agencies: Moody’s, S&P, and Fitch. If only one of the agencies rates the security, the rating must be at least Aa3/AA¥. Each security in the Bloomberg Barclays Municipal Managed Money 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. As of April 1, 2017, the Bloomberg Barclays Municipal Managed Money Index included 22,247 component fixed income municipal bond securities from issuers in 48 different states or U.S. territories. The most heavily weighted security in the index represented less than 0.25% of the total weight of the index, and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 0.50% of the total weight of the index. Approximately 95.05% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 13.35% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $496,240,108,998, and the average E:\FR\FM\06OCN1.SGM 06OCN1 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices asabaliauskas on DSKBBXCHB2PROD with NOTICES dollar amount outstanding of issues in the index was approximately $22,305,934. Under normal market conditions, the SPDR Nuveen Bloomberg Barclays Municipal Bond ETF generally invests substantially all, but at least 80%, of its total assets in the securities comprising the Bloomberg Barclays Municipal Managed Money Index or in securities that the fund’s sub-adviser determines have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the Bloomberg Barclays Municipal Managed Money Index. In addition, the SPDR Nuveen Bloomberg Barclays Municipal Bond ETF may invest in debt securities that are not included in the Bloomberg Barclays Municipal Managed Money Index, cash and cash equivalents or money market instruments, such as repurchase agreements and money market funds. 11. iShares California Muni Bond ETF The iShares California Muni Bond ETF seeks to track the investment results of the S&P California AMT-Free Municipal Bond Index, which measures the performance of the investment grade segment of the California municipal bond market. The S&P California AMTFree Municipal Bond Index is a subset of the S&P National AMT-Free Municipal Bond Index and is comprised of municipal bonds issued in the State of California. The S&P California AMTFree Municipal Bond Index primarily includes municipal bonds from issuers in California that are California state or local governments or agencies whose interest payments are exempt from U.S. federal and California state income taxes and the federal alternative minimum tax. Each bond in the S&P California AMT-Free Municipal Bond Index must have a rating of at least BBB¥ by S&P, Baa3 by Moody’s, or BBB¥ by Fitch. Each bond in the S&P California AMTFree Municipal Bond Index must be denominated in U.S. dollars, must be a constituent of an offering where the original offering amount was at least $100 million, and must have a minimum par amount of $25 million. To remain in the S&P California AMT-Free Municipal Bond Index, bonds must maintain a minimum par amount greater than or equal to $25 million as of the next rebalancing date. As of April 1, 2017, the S&P California AMT-Free Municipal Bond Index included 2,115 component fixed income municipal bond securities from more than 150 distinct municipal bond issuers in the State of California. The most heavily weighted security in the index represented approximately 0.50% VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 of the total weight of the index, and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 2.75% of the total weight of the index. Approximately 96.31% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 38.89% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $137,796,471,640, and the average dollar amount outstanding of issues in the index was approximately $65,151,996. Generally, the iShares California Muni Bond ETF invests at least 90% of its assets in the component securities of the S&P California AMT-Free Municipal Bond Index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, including shares of money market funds, as well as in securities not included in the S&P California AMT-Free Municipal Bond Index, but which the fund’s investment advisor believes will help the fund track the S&P California AMT-Free Municipal Bond Index. 12. iShares New York Muni Bond ETF The iShares New York Muni Bond ETF seeks to track the investment results of the S&P New York AMT-Free Municipal Bond Index, which measures the performance of the investment grade segment of the New York municipal bond market. The S&P New York AMTFree Municipal Bond Index is a subset of the S&P National AMT-Free Municipal Bond Index and is comprised of municipal bonds issued in the State of New York. The S&P New York AMTFree Municipal Bond Index primarily includes municipal bonds from issuers in New York that are New York state or local governments or agencies whose interest payments are exempt from U.S. federal and New York State personal income taxes and the federal alternative minimum tax. Each bond in the S&P New York AMT-Free Municipal Bond Index must have a rating of at least BBB¥ by S&P, Baa3 by Moody’s, or BBB¥ by Fitch. Each bond in the S&P New York AMT-Free Municipal Bond Index must be denominated in U.S. dollars, must be a constituent of an offering where the original offering amount was at least $100 million, and must have a minimum par amount of PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 46875 $25 million. To remain in the S&P New York AMT-Free Municipal Bond Index, bonds must maintain a minimum par amount greater than or equal to $25 million as of the next rebalancing date. As of April 1, 2017, the S&P New York AMT-Free Municipal Bond Index included 2,191 component fixed income municipal bond securities from more than 20 distinct municipal bond issuers in the State of New York. The most heavily weighted security in the index represented approximately 1.50% of the total weight of the index, and the aggregate weight of the top five most heavily weighted securities in the index represented approximately 4.25% of the total weight of the index. Approximately 98.63% of the weight of the index components was composed of individual maturities that were part of an entire municipal bond offering with a minimum original principal amount outstanding of $100 million or more for all maturities in the offering. Approximately 34.50% of the weight of the components in the index had a minimum original principal amount outstanding of $100 million or more. In addition, the total dollar amount outstanding of issues in the index was approximately $124,381,556,872, and the average dollar amount outstanding of issues in the index was approximately $56,769,309. Generally, the iShares New York Muni Bond ETF invests at least 90% of its assets in the component securities of the S&P New York AMT-Free Municipal Bond Index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents, including shares of money market funds, as well as in securities not included in the S&P New York AMT-Free Municipal Bond Index x, but which the fund’s investment advisor believes will help the fund track the S&P New York AMT-Free Municipal Bond Index. B. The Continued Listing and Trading of the Shares The Exchange states that it is appropriate to continue to list and trade the Shares based on the characteristics of the indexes underlying the Municipal Bond Funds. According to the Exchange, each index underlying the Municipal Bond Funds satisfies all of the generic listing requirements for Investment Company Units based on a fixed income index, except for the minimum principal amount outstanding requirement of Commentary .02(a)(2) to Rule 5.2(j)(3). The Exchange asserts that a fundamental purpose behind the minimum principal amount outstanding requirement is to ensure that component E:\FR\FM\06OCN1.SGM 06OCN1 asabaliauskas on DSKBBXCHB2PROD with NOTICES 46876 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices securities of an index are sufficiently liquid such that the potential for index manipulation is reduced.11 The Exchange asserts that each index underlying the Municipal Bond Funds is a broad-based index of fixed income municipal bond securities that is not readily susceptible to manipulation. With respect to the Multistate Municipal Bond Funds, the Exchange states: (1) Each underlying index is broad-based and currently includes, on average, more than 8,000 component securities; (2) currently each underlying index includes securities issued by municipal entities in more than 40 states or U.S. territories, and notes that the applicable generic listing criterion requires that an index contain securities issued by at least 13 non-affiliated issuers; 12 and (3) no single security currently represents more than approximately 1.5% of the weight of any underlying index, the aggregate weight of the five most heavily weighted securities in each index does not exceed approximately 6% of the weight of the index, and notes the applicable generic listing criterion permits a single component security to represent up to 30% of the weight of an index and the top five component securities to, in aggregate, represent up to 65% of the weight of an index.13 The Exchange asserts that this index diversification is significant, and that the absence of constituent concentration in the underlying indexes provides a strong degree of protection against manipulation of the indexes.14 With respect to the Single-State Municipal Bond Funds, the Exchange states that each underlying index is well-diversified to protect against index manipulation. To support this, the Exchange states: (1) On average, the underlying indexes include more than 1,500 securities; (2) each underlying index includes securities from at least 20 distinct municipal bond issuers; and (3) the most heavily weighted security in any of the underlying indexes represents approximately 2% of the weight of the index, and the aggregate weight of the five most heavily weighted securities in any of the indexes represents approximately 6.25% of the total index weight. The Exchange represents that: (1) On a continuous basis, each index underlying a Municipal Bond Fund will contain at least 500 component 11 See Amendment No. 1, supra note 4, at 16. Commentary .02(a)(5) to NYSE Arca Rule 5.2–E(j)(3). 13 See Commentary .02(a)(4) to NYSE Arca Rule 5.2–E(j)(3). 14 See Amendment No. 1, supra note 4, at 17. 12 See VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 securities; (2) currently, each index satisfies all of the generic listing requirements under NYSE Arca Rule 5.2–E(j)(3) except for Commentary .02(a)(2); (3) the continued listing criteria under Rules 5.2(j)(3) (except for Commentary .02(a)(2)) and 5.5(g)(2) applicable to Investment Company Units will apply to the Shares; and (4) the issuer of each Municipal Bond Fund is required to comply with Rule 10A–3 15 under the Act for the initial and continued listing of the Shares of each Municipal Bond Fund. In addition, the Exchange represents that the Shares will comply with all other requirements applicable to Investment Company Units including, but not limited to, requirements relating to the dissemination of key information such as the value of the underlying index and the applicable Intraday Indicative Value (‘‘IIV’’),16 rules governing the trading of equity securities, trading hours, trading halts, surveillance, information barriers and the Information Bulletin to Equity Trading Permit Holders, as set forth in Exchange rules applicable to Investment Company Units and prior Commission orders approving the generic listing rules applicable to the listing and trading of Investment Company Units. III. Proceedings To Determine Whether To Approve or Disapprove SR– NYSEArca–2017–56, as Modified by Amendment No. 1, and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act 17 to determine whether the proposed rule change, as modified by Amendment No. 1, should be approved or disapproved. Institution of such proceedings is appropriate at this time in view of the legal and policy issues raised by the proposed rule change. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described below, the Commission seeks and encourages interested persons to provide comments on the proposed rule change, as modified by Amendment No. 1. 15 17 CFR 240.10A–3. IIV for each Municipal Bond Fund will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange’s Core Trading Session of 9:30 a.m. to 4:00 p.m., Eastern time. See Amendment No. 1, supra note 4, at 18, n.10. The Exchange states that currently it understands that several major market data vendors display and/or make widely available IIVs taken from the Consolidated Tape Association or other data feeds. 17 15 U.S.C. 78s(b)(2)(B). 16 An PO 00000 Frm 00124 Fmt 4703 Sfmt 4703 Pursuant to Section 19(b)(2)(B) of the Act,18 the Commission is providing notice of the grounds for disapproval under consideration. The Commission is instituting proceedings to allow for additional analysis of the proposal’s consistency with Section 6(b)(5) of the Act, which requires, among other things, that the rules of a national securities exchange be ‘‘designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade,’’ and ‘‘to protect investors and the public interest.’’ 19 As noted above, the Exchange has submitted this proposed rule change because the Shares of the Municipal Bond Funds do not meet all of the generic listing requirements set forth in Commentary.02 to NYSE Arca Rule 5.2– E(j)(3). In the proposal, the Exchange describes certain characteristics of the underlying indexes as of April 1, 2017,20 and asserts that those characteristics demonstrate that ‘‘each . . . fund is based on a broad-based index that is not readily susceptible to manipulation.’’ 21 Further, the Exchange contends that the ‘‘significant diversification and the lack of concentration among constituent securities provides a strong degree of protection against index manipulation.’’ 22 For purposes of continued listing of the Shares, however, apart from the representation that each index will have at least 500 component securities on an ongoing basis, the Exchange has not provided any criteria governing the extent to which the indexes may deviate from the initial set of characteristics that the Exchange relies on to determine the susceptibility of the indexes to manipulation. Accordingly, the Commission seeks commenters’ views on whether the Exchange’s statements and representations support a determination that the continued listing and trading of the Shares of the Municipal Bond Funds would be consistent with Section 6(b)(5) of the Act, which, among other things, requires that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and to protect investors and the public interest. 18 Id. 19 15 U.S.C. 78f(b)(5). supra Section II.A. 21 See supra note 3, 82 FR at 31652. 22 See supra note 3, 82 FR at 31653. 20 See E:\FR\FM\06OCN1.SGM 06OCN1 Federal Register / Vol. 82, No. 193 / Friday, October 6, 2017 / Notices IV. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposal is consistent with Section 6(b)(5) or any other provision of the Act, or the rules and regulations thereunder. Although there do not appear to be any issues relevant to approval or disapproval that would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.23 Interested persons are invited to submit written data, views, and arguments regarding whether the proposal should be approved or disapproved by October 27, 2017. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by November 13, 2017. The Commission asks that commenters address the sufficiency of the Exchange’s statements in support of the proposal, which are set forth in Amendment No. 1,24 in addition to any other comments they may wish to submit about the proposed rule change. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSEArca–2017–56 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSEArca–2017–56. 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 (https://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 the filing also will 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 Number SR– NYSEArca–2017–56 and should be submitted on or before October 27, 2017. Rebuttal comments should be submitted by November 13, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–21537 Filed 10–5–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81798; File No. SR– NASDAQ–2017–097] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange’s Connectivity Fees at Rule 7051 asabaliauskas on DSKBBXCHB2PROD with NOTICES October 2, 2017. 23 Section 19(b)(2) of the Act, as amended by the Securities Acts Amendments of 1975, Public Law 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Acts Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). 24 See supra note 3. VerDate Sep<11>2014 18:40 Oct 05, 2017 Jkt 244001 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 September 18, 2017, The NASDAQ Stock Market LLC (‘‘Nasdaq’’ or 25 17 CFR 200.30–3(a)(57). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 46877 ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III 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 proposes to amend Rule 7051, which sets forth the schedule of fees that the Exchange charges to its clients for connecting directly to the Exchange’s data centers and/or receiving third party market data feeds and other non-Exchange services from the Exchange via circuits provided by third party telecommunications providers. While these amendments are effective upon filing, the Exchange has designated the proposed amendments to be operative on October 1, 2017. The text of the proposed rule change is available on the Exchange’s Web site at https://nasdaq.cchwallstreet.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 aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend Rule 7051, which sets forth the schedule of fees that the Exchange charges to its clients for connecting directly to the Exchange’s data centers and/or receiving third party market data feeds and other non-Exchange services from the Exchange via circuits provided by third party telecommunications providers. Subscribers may use the connectivity provided under Rule 7051 to link them E:\FR\FM\06OCN1.SGM 06OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 82, Number 193 (Friday, October 6, 2017)]
[Notices]
[Pages 46870-46877]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21537]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81794; File No. SR-NYSEArca-2017-56]

Self-Regulatory Organizations; NYSE Arca, Inc.; Order Instituting
Proceedings To Determine Whether To Approve or Disapprove a Proposed
Rule Change, as Modified by Amendment No. 1, To List and Trade Pursuant
to NYSE Arca Rule 5.2-E(j)(3) Twelve Series of Investment Company Units

DATE: October 2, 2017.

I. Introduction

On June 19, 2017, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
list and trade certain series of Investment Company Units listed
pursuant to NYSE Arca Rule 5.2-E(j)(3). The proposed rule change was
published for comment in the Federal Register on July 7, 2017.\3\ On
August 7, 2017, the Exchange filed Amendment No. 1 to the proposed rule
change, which amended and superseded the

[[Page 46871]]

proposed rule change as originally filed.\4\ On August 15, 2017,
pursuant to Section 19(b)(2) of the Act,\5\ the Commission designated a
longer period within which to approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether to disapprove the proposed rule change.\6\ The
Commission has received no comment letters on the proposed rule change.
This order institutes proceedings under Section 19(b)(2)(B) of the Act
\7\ to determine whether to approve or disapprove the proposed rule
change, as modified by Amendment No. 1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 81062 (June 30,
2017), 82 FR 31651.
\4\ In Amendment No. 1, the Exchange: (1) Described the
investment objective of each fund; (2) described investment
eligibility criteria and restrictions for each fund; (3) clarified
that the Web site for each fund will contain its prospectus and
additional data; (4) clarified that the Exchange has obtained a
representation from each fund issuer that the applicable net asset
value for each fund will be calculated daily and made available to
all market participants at the same time; (5) clarified that none of
the indexes underlying the funds are maintained by a broker-dealer;
and (6) made technical changes. Amendment No. 1 to the proposed rule
change is available at: https://www.sec.gov/comments/sr-nysearca-2017-56/nysearca201756.htm.
\5\ 15 U.S.C. 78s(b)(2).
\6\ See Securities Exchange Act Release No. 81400, 82 FR 39643
(August 21, 2017). The Commission designated October 5, 2017, as the
date by which the Commission shall either approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\7\ 15 U.S.C. 78s(b)(2)(B).
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II. Exchange's Description of the Proposed Rule Change, as Modified by
Amendment No. 1

The Exchange proposes to list and trade pursuant to NYSE Arca Rule
5.2-E(j)(3) shares (``Shares'') of the following series of Investment
Company Units: (1) iShares National Muni Bond ETF; (2) iShares Short-
Term National Muni Bond ETF; (3) VanEck Vectors AMT-Free Intermediate
Municipal Index ETF; (4) VanEck Vectors AMT-Free Long Municipal Index
ETF; (5) VanEck Vectors AMT-Free Short Municipal Index ETF; (6) VanEck
Vectors High-Yield Municipal Index ETF; (7) VanEck Vectors Pre-Refunded
Municipal Index ETF; (8) PowerShares VRDO Tax-Free Weekly Portfolio;
(9) SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF; (10)
SPDR Nuveen Bloomberg Barclays Municipal Bond ETF (collectively, the
``Multistate Municipal Bond Funds''); (11) iShares California Muni Bond
ETF; and (12) iShares New York Muni Bond ETF (collectively, the
``Single-State Municipal Bond Funds'' and, together with the Multistate
Municipal Bond Funds, the ``Municipal Bond Funds'').\8\ The Single-
State Municipal Bond Funds overlie an index comprised of the fixed
income municipal bond securities of one State; the Multistate Municipal
Bond Funds overlie an index comprised of the fixed income municipal
bond securities of more than one State.
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\8\ The Commission notes that, although the Shares do not meet
the standards set forth in Commentary .02 to Rule 5.2-E(j)(3), the
Exchange nevertheless listed the Shares prior to 2010.
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Commentary .02 to Rule 5.2(j)(3) sets forth the generic listing
requirements for an index of fixed income securities underlying a
series of Investment Company Units. One of the enumerated listing
requirements is that component fixed income securities that, in the
aggregate, account for at least 75% of the weight of the index each
shall have a minimum principal amount outstanding of $100 million or
more.\9\ The Exchange states that none of the indexes underlying the
Municipal Bond Funds satisfy this criterion but represents that each of
the underlying indexes meet all of the other requirements of such rule.
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\9\ See Commentary .02(a)(2) to NYSE Arca Rule 5.2-E(j)(3).
---------------------------------------------------------------------------

A. The Exchange's Description of the Municipal Bond Funds and Their
Underlying Indexes \10\
---------------------------------------------------------------------------

\10\ Additional information regarding the Funds and their
underlying indexes can be found in Amendment No. 1. See supra note
4.
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1. iShares National Muni Bond ETF
The iShares National Muni Bond ETF seeks to track the investment
results of the S&P National AMT-Free Municipal Bond Index, which
measures the performance of the investment grade segment of the U.S.
municipal bond market. The S&P National AMT-Free Municipal Bond Index
primarily includes municipal bonds from issuers that are state or local
governments or agencies such that the interest on each such bond is
exempt from U.S. federal income taxes and the federal alternative
minimum tax. Each bond in the S&P National AMT-Free Municipal Bond
Index must have a rating of at least BBB- by S&P Global Ratings
(``S&P''), Baa3 by Moody's Investors Service, Inc. (``Moody's''), or
BBB- by Fitch Ratings, Inc. (``Fitch''). Each bond in the S&P National
AMT-Free Municipal Bond Index must be denominated in U.S. dollars, must
be a constituent of an offering where the original offering amount was
at least $100 million, and must have a minimum par amount of $25
million. To remain in the S&P National AMT-Free Municipal Bond Index,
bonds must maintain a minimum par amount greater than or equal to $25
million as of the next rebalancing date.
As of April 1, 2017, the S&P National AMT-Free Municipal Bond Index
included 11,333 component fixed income municipal bond securities from
issuers in 47 different states or U.S. territories. The most heavily
weighted security in the index represented approximately 0.25% of the
total weight of the index and the aggregate weight of the top five most
heavily weighted securities in the index represented less than 1% of
the total weight of the index. Approximately 99.29% of the weight of
the index components was composed of individual maturities that were
part of an entire municipal bond offering with a minimum original
principal amount outstanding of $100 million or more for all maturities
in the offering. Approximately 31.79% of the weight of the components
in the index had a minimum original principal amount outstanding of
$100 million or more. In addition, the total dollar amount outstanding
of issues in the index was approximately $628,460,731,594, and the
average dollar amount outstanding of issues in the index was
approximately $55,454,048.
Generally, the iShares National Muni Bond ETF invests at least 90%
of its assets in the component securities of the S&P National AMT-Free
Municipal Bond Index and may invest up to 10% of its assets in certain
futures, options and swap contracts, cash and cash equivalents,
including shares of money market funds, as well as in securities not
included in the S&P National AMT-Free Municipal Bond Index, but which
the fund's investment advisor believes will help the fund track the S&P
National AMT-Free Municipal Bond Index.
2. iShares Short Term National Muni Bond ETF
The iShares Short Term National Muni Bond ETF seeks to track the
investment results of the S&P Short Term National AMT-Free Municipal
Bond Index, which measures the performance of the short-term investment
grade segment of the U.S. municipal bond market. The S&P Short Term
National AMT-Free Municipal Bond Index primarily includes municipal
bonds from issuers that are state or local governments or agencies such
that the interest on each such bond is exempt from U.S. federal income
taxes and the federal alternative minimum tax (``AMT''). Each bond in
the S&P Short Term National AMT-Free Municipal Bond Index must have a
rating of at least BBB- by S&P, Baa3 by Moody's, or BBB- by Fitch. Each
bond in the S&P Short Term National AMT-Free Municipal Bond Index must
be

[[Page 46872]]

denominated in U.S. dollars, must be a constituent of an offering where
the original offering amount was at least $100 million, and must have a
minimum par amount of $25 million. To remain in the S&P Short Term
National AMT-Free Municipal Bond Index, bonds must maintain a minimum
par amount greater than or equal to $25 million as of the next
rebalancing date.
As of April 1, 2017, the S&P Short Term National AMT-Free Municipal
Bond Index included 3,309 component fixed income municipal bond
securities from issuers in 44 different states or U.S. territories. The
most heavily weighted security in the index represented approximately
1% of the total weight of the index and the aggregate weight of the top
five most heavily weighted securities in the index represented
approximately 2% of the total weight of the index. Approximately 98.22%
of the weight of the index components was composed of individual
maturities that were part of an entire municipal bond offering with a
minimum original principal amount outstanding of $100 million or more
for all maturities in the offering. Approximately 27.63% of the weight
of the components in the index had a minimum original principal amount
outstanding of $100 million or more. In addition, the total dollar
amount outstanding of issues in the index was approximately
$166,147,941,156, and the average dollar amount outstanding of issues
in the index was approximately $50,210,922.
Generally, the iShares National Muni Bond ETF invests at least 90%
of its assets in the component securities of the S&P Short Term
National AMT-Free Municipal Bond Index and may invest up to 10% of its
assets in certain futures, options and swap contracts, cash and cash
equivalents, including shares of money market funds, as well as in
securities not included in the S&P Short Term National AMT-Free
Municipal Bond Index, but which the fund's investment advisor believes
will help the fund track the S&P Short Term National AMT-Free Municipal
Bond Index.
3. VanEck Vectors AMT-Free Intermediate Municipal Index ETF
The VanEck Vectors AMT-Free Intermediate Municipal Index ETF seeks
to replicate as closely as possible, before fees and expenses, the
price and yield performance of the Bloomberg Barclays AMT-Free
Intermediate Continuous Municipal Index. The Bloomberg Barclays AMT-
Free Intermediate Continuous Municipal Index is a market size weighted
index comprised of publicly traded municipal bonds that cover the U.S.
dollar-denominated intermediate term tax-exempt bond market. To be
included in the Bloomberg Barclays AMT-Free Intermediate Continuous
Municipal Index, a bond must be rated Baa3/BBB- or higher by at least
two of the following ratings agencies if all three agencies rate the
security: Moody's, S&P, and Fitch. If only one of the three agencies
rates a security, the rating must be at least Baa3/BBB-. Constituent
securities of the Bloomberg Barclays AMT-Free Intermediate Continuous
Municipal 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.
As of April 1, 2017, the Bloomberg Barclays AMT-Free Intermediate
Continuous Municipal Index included 17,272 component fixed income
municipal bond securities from issuers in 50 different states or U.S.
territories. The most heavily weighted security in the index
represented less than 0.25% of the total weight of the index and the
aggregate weight of the top five most heavily weighted securities in
the index represented approximately 0.50% of the total weight of the
index. Approximately 96.13% of the weight of the index components was
composed of individual maturities that were part of an entire municipal
bond offering with a minimum original principal amount outstanding of
$100 million or more for all maturities in the offering. Approximately
7.75% of the weight of the components in the index had a minimum
original principal amount outstanding of $100 million or more. In
addition, the total dollar amount outstanding of issues in the index
was approximately $340,102,539,050, and the average dollar amount
outstanding of issues in the index was approximately $19,690,976.
Normally, the VanEck Vectors AMT-Free Intermediate Municipal Index
ETF invests at least 80% of its total assets in fixed income securities
that comprise the Bloomberg Barclays AMT-Free Intermediate Continuous
Municipal Index.
4. VanEck Vectors AMT-Free Long Municipal Index ETF
The VanEck Vectors AMT-Free Long Municipal Index ETF seeks to
replicate as closely as possible, before fees and expenses, the price
and yield performance of the Bloomberg Barclays AMT-Free Long
Continuous Municipal Index. The Bloomberg Barclays AMT-Free Long
Continuous Municipal Index is a market size weighted index comprised of
publicly traded municipal bonds that cover the U.S. dollar denominated
long-term tax-exempt bond market. To be included in the Bloomberg
Barclays AMT-Free Long Continuous Municipal Index, bonds must be rated
Baa3/BBB- or higher by at least two of the following ratings agencies
if all three agencies rate the security: Moody's, S&P, and Fitch. If
only one of the three agencies rates a security, the rating must be at
least Baa3/BBB-. Constituent securities of the Bloomberg Barclays AMT-
Free Long Continuous Municipal 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.
As of April 1, 2017, the Bloomberg Barclays AMT-Free Long
Continuous Municipal Index included 7,657 component fixed income
municipal bond securities from issuers in 50 different states or U.S.
territories. The most heavily weighted security in the index
represented less than 0.50% of the total weight of the index and the
aggregate weight of the top five most heavily weighted securities in
the index represented approximately 1.25% of the total weight of the
index. Approximately 93.84% of the weight of the index components was
composed of individual maturities that were part of an entire municipal
bond offering with a minimum original principal amount outstanding of
$100 million or more for all maturities in the offering. Approximately
32.34% of the weight of the components in the index had a minimum
original principal amount outstanding of $100 million or more. In
addition, the total dollar amount outstanding of issues in the index
was approximately $279,575,285,082, and the average dollar amount
outstanding of issues in the index was approximately $36,512,379.
Normally, the VanEck Vectors AMT-Free Long Municipal Index ETF
invests at least 80% of its total assets in fixed income securities
that comprise the Bloomberg Barclays AMT-Free Long Continuous Municipal
Index.
5. VanEck Vectors AMT-Free Short Municipal Index ETF
The VanEck Vectors AMT-Free Short Municipal Index ETF seeks to
replicate as closely as possible, before fees and expenses, the price
and yield performance of the Bloomberg Barclays AMT-Free Short
Continuous Municipal Index. The Bloomberg Barclays AMT-Free Short
Continuous Municipal Index is a market size weighted index comprised of
publicly traded municipal bonds that cover the U.S. dollar denominated
short-term tax-exempt bond market. To be included in the

[[Page 46873]]

Bloomberg Barclays AMT-Free Short Continuous Municipal Index, bonds
must be rated Baa3/BBB- or higher by at least two of the following
ratings agencies if all three agencies rate the security: Moody's, S&P,
and Fitch. If only one of the three agencies rates a security, the
rating must be at least Baa3/BBB-. Constituent securities of the
Bloomberg Barclays AMT-Free Short Continuous Municipal 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.
As of April 1, 2017, the Bloomberg Barclays AMT-Free Short
Continuous Municipal Index included 7,229 component fixed income
municipal bond securities from issuers in 48 different states or U.S.
territories. The most heavily weighted security in the index
represented approximately 1% of the total weight of the index and the
aggregate weight of the top five most heavily weighted securities in
the index represented approximately 2.25% of the total weight of the
index. Approximately 94.4% of the weight of the index components was
composed of individual maturities that were part of an entire municipal
bond offering with a minimum original principal amount outstanding of
$100 million or more for all maturities in the offering. Approximately
13.60% of the weight of the components in the index had a minimum
original principal amount outstanding of $100 million or more. In
addition, the total dollar amount outstanding of issues in the index
was approximately $152,020,140,995, and the average dollar amount
outstanding of issues in the index was approximately $21,026,299.
Normally, the VanEck Vectors AMT-Free Short Municipal Index ETF
invests at least 80% of its total assets in fixed income securities
that comprise the Bloomberg Barclays AMT-Free Short Continuous
Municipal Index.
6. VanEck Vectors High-Yield Municipal Index ETF
The VanEck Vectors High-Yield Municipal Index ETF seeks to
replicate as closely as possible, before fees and expenses, the price
and yield performance of the Bloomberg Barclays Municipal Custom High
Yield Composite Index. The Bloomberg Barclays Municipal Custom High
Yield Composite Index is a market size weighted index composed of
publicly traded municipal bonds that cover the U.S. dollar denominated
high yield long-term tax-exempt bond market. The Bloomberg Barclays
Municipal Custom High Yield Composite Index is calculated using a
market value weighting methodology, provided that the total allocation
to issuers from each individual territory of the United States
(including Puerto Rico, Guam, the U.S. Virgin Islands, American Samoa,
and the Northern Mariana Islands) does not exceed 4%. The Bloomberg
Barclays Municipal Custom High Yield Composite Index tracks the high
yield municipal bond market with a 75% weight in non-investment grade
municipal bonds and a targeted 25% weight in Baa/BBB rated investment
grade municipal bonds.
As of April 1, 2017, the Bloomberg Barclays Municipal Custom High
Yield Composite Index included 4,702 component fixed income municipal
bond securities from issuers in 50 different states or U.S.
territories. The most heavily weighted security in the index
represented approximately 1.25% of the total weight of the index, and
the aggregate weight of the top five most heavily weighted securities
in the index represented approximately 6% of the total weight of the
index. Approximately 75.16% of the weight of the index components was
composed of individual maturities that were part of an entire municipal
bond offering with a minimum original principal amount outstanding of
$100 million or more for all maturities in the offering. Approximately
43.26% of the weight of the components in the index had a minimum
original principal amount outstanding of $100 million or more. In
addition, the total dollar amount outstanding of issues in the index
was approximately $224,318,153,150, and the average dollar amount
outstanding of issues in the index was approximately $47,706,966.
Normally, the VanEck Vectors High-Yield Municipal Index ETF invests
at least 80% of its total assets in securities that comprise the
Bloomberg Barclays Municipal Custom High Yield Composite Index.
7. VanEck Vectors Pre-Refunded Municipal Index ETF
The VanEck Vectors Pre-Refunded Municipal Index ETF seeks to
replicate as closely as possible, before fees and expenses, the price
and yield performance of the Bloomberg Barclays Municipal Pre-
Refunded--Treasury-Escrowed Index. The Bloomberg Barclays Municipal
Pre-Refunded--Treasury-Escrowed Index is a market size weighted index
comprised of publicly traded municipal bonds that cover the U.S. dollar
denominated tax-exempt bond market. The Bloomberg Barclays Municipal
Pre-Refunded--Treasury-Escrowed Index is comprised of pre-refunded and/
or escrowed-to-maturity municipal bonds. To be included in the
Bloomberg Barclays Municipal Pre-Refunded--Treasury-Escrowed Index,
bonds must have an explicit or implicit credit rating of AAA.
Constituent securities of the Bloomberg Barclays Municipal Pre-
Refunded--Treasury-Escrowed 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 in market value.
As of April 1, 2017, the Bloomberg Barclays Municipal Pre-Refunded-
Treasury-Escrowed Index included 3,691 component fixed income municipal
bond securities from issuers in 50 different states or U.S.
territories. The most heavily weighted security in the index
represented approximately 0.50% of the total weight of the index and
the aggregate weight of the top five most heavily weighted securities
in the index represented approximately 2.25% of the total weight of the
index. Approximately 93.70% of the weight of the index components was
composed of individual maturities that were part of an entire municipal
bond offering with a minimum original principal amount outstanding of
$100 million or more for all maturities in the offering. Approximately
19.23% of the weight of the components in the index had a minimum
original principal amount outstanding of $100 million or more. In
addition, the total dollar amount outstanding of issues in the index
was approximately $94,289,476,486, and the average dollar amount
outstanding of issues in the index was approximately $25,545,780.
Normally, the VanEck Vectors Pre-Refunded Municipal Index ETF
invests at least 80% of its total assets in securities that comprise
the Bloomberg Barclays Municipal Pre-Refunded--Treasury-Escrowed Index.
8. PowerShares VRDO Tax-Free Weekly Portfolio
The PowerShares VRDO Tax-Free Weekly Portfolio seeks investment
results that generally correspond (before fees and expenses) to the
price and yield of the Bloomberg U.S. Municipal AMT-Free Weekly VRDO
Index. The Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index is
comprised of municipal securities issued in the primary market as
variable rate demand obligation (``VRDO'') bonds. Only VRDOs whose
interest rates are reset weekly are included in the Bloomberg U.S.
Municipal AMT-Free Weekly VRDO Index, and the Bloomberg U.S. Municipal
AMT-Free Weekly VRDO Index excludes secondary or derivative VRDOs
(tender option bonds). To be

[[Page 46874]]

included in the Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index,
constituents must be rated by at least one of the following statistical
rating agencies at the following minimum ratings: Moody's as A-3 for
long-term bonds or Prime-2 for short-term bonds; by S&P as A- for long-
term bonds or A-2 for short-term bonds; and by Fitch as A- for long-
term bonds or F-2 for short-term bonds.
As of April 1, 2017, the Bloomberg US Municipal AMT-Free Weekly
VRDO Index included 1,494 component fixed income municipal bond
securities from issuers in 49 different states or U.S. territories. The
most heavily weighted security in the index represented approximately
0.75% of the total weight of the index and the aggregate weight of the
top five most heavily weighted securities in the index represented
approximately 2.75% of the total weight of the index. Approximately
44.76% of the weight of the index components was composed of individual
maturities that were part of an entire municipal bond offering with a
minimum original principal amount outstanding of $100 million or more
for all maturities in the offering. Approximately 34.88% of the weight
of the components in the index had a minimum original principal amount
outstanding of $100 million or more. In addition, the total dollar
amount outstanding of issues in the index was approximately
$68,489,564,000, and the average dollar amount outstanding of issues in
the index was approximately $45,843,082.
Generally, the PowerShares VRDO Tax-Free Weekly Portfolio invests
at least 80% of its total assets in VRDO bonds that are exempt from
federal income tax with interest rates that reset weekly that comprise
the Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index.
9. SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF
The SPDR Nuveen Bloomberg Barclays Short Term Municipal Bond ETF
seeks to provide investment results that, before fees and expenses,
correspond generally to the price and yield performance of the
Bloomberg Barclays Managed Money Municipal Short Term Index which
tracks the short term tax exempt municipal bond market. The Bloomberg
Barclays Managed Money Municipal Short Term Index is designed to track
the publicly traded municipal bonds that cover the U.S. dollar
denominated short term tax exempt bond market, including state and
local general obligation bonds, revenue bonds, pre-refunded bonds, and
insured bonds. All bonds in the Bloomberg Barclays Managed Money
Municipal Short Term Index must be rated Aa3/AA- or higher by at least
two of the following statistical ratings agencies: Moody's, S&P, or
Fitch. If only one of the agencies rates the security, the rating must
be at least Aa3/AA-. Each security in the Bloomberg Barclays Managed
Money Municipal Short Term 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.
As of April 1, 2017, the Bloomberg Barclays Managed Money Municipal
Short Term Index included 4,263 component fixed income municipal bond
securities from issuers in 44 different states or U.S. territories. The
most heavily weighted security in the index represented approximately
0.75% of the total weight of the index, and the aggregate weight of the
top five most heavily weighted securities in the index represented
approximately 2% of the total weight of the index. Approximately 94.54%
of the weight of the index components was composed of individual
maturities that were part of an entire municipal bond offering with a
minimum original principal amount outstanding of $100 million or more
for all maturities in the offering. Approximately 10.82% of the weight
of the components in the index had a minimum original principal amount
outstanding of $100 million or more. In addition, the total dollar
amount outstanding of issues in the index was approximately
$85,187,709,681, and the average dollar amount outstanding of issues in
the index was approximately $19,983,042.
Under normal market conditions, the SPDR Nuveen Bloomberg Barclays
Short Term Municipal Bond ETF generally invests substantially all, but
at least 80%, of its total assets in the securities comprising the
Bloomberg Barclays Managed Money Municipal Short Term Index or in
securities that the fund's sub-adviser determines have economic
characteristics that are substantially identical to the economic
characteristics of the securities that comprise the Bloomberg Barclays
Managed Money Municipal Short Term Index. In addition, the SPDR Nuveen
Bloomberg Barclays Short Term Municipal Bond ETF may invest in debt
securities that are not included in the Bloomberg Barclays Managed
Money Municipal Short Term Index, cash and cash equivalents or money
market instruments, such as repurchase agreements and money market
funds.
10. SPDR Nuveen Bloomberg Barclays Municipal Bond ETF
The Exchange states that, according to its prospectus, the SPDR
Nuveen Bloomberg Barclays Municipal Bond ETF seeks to provide
investment results that, before fees and expenses, correspond generally
to the price and yield performance of the Bloomberg Barclays Municipal
Managed Money Index which tracks the U.S. municipal bond market. The
Bloomberg Barclays Municipal Managed Money Index is designed to track
the U.S. long term tax-exempt bond market, including state and local
general obligation bonds, revenue bonds, pre-refunded bonds, and
insured bonds. The Bloomberg Barclays Municipal Managed Money Index is
comprised of tax-exempt municipal securities issued by states, cities,
counties, districts and their respective agencies. The Bloomberg
Barclays Municipal Managed Money Index also includes municipal lease
obligations, which are securities issued by state and local governments
and authorities to finance the acquisition of equipment and facilities.
All bonds in the Bloomberg Barclays Municipal Managed Money Index must
be rated Aa3/AA- or higher by at least two of the following statistical
ratings agencies: Moody's, S&P, and Fitch. If only one of the agencies
rates the security, the rating must be at least Aa3/AA-. Each security
in the Bloomberg Barclays Municipal Managed Money 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.
As of April 1, 2017, the Bloomberg Barclays Municipal Managed Money
Index included 22,247 component fixed income municipal bond securities
from issuers in 48 different states or U.S. territories. The most
heavily weighted security in the index represented less than 0.25% of
the total weight of the index, and the aggregate weight of the top five
most heavily weighted securities in the index represented approximately
0.50% of the total weight of the index. Approximately 95.05% of the
weight of the index components was composed of individual maturities
that were part of an entire municipal bond offering with a minimum
original principal amount outstanding of $100 million or more for all
maturities in the offering. Approximately 13.35% of the weight of the
components in the index had a minimum original principal amount
outstanding of $100 million or more. In addition, the total dollar
amount outstanding of issues in the index was approximately
$496,240,108,998, and the average

[[Page 46875]]

dollar amount outstanding of issues in the index was approximately
$22,305,934.
Under normal market conditions, the SPDR Nuveen Bloomberg Barclays
Municipal Bond ETF generally invests substantially all, but at least
80%, of its total assets in the securities comprising the Bloomberg
Barclays Municipal Managed Money Index or in securities that the fund's
sub-adviser determines have economic characteristics that are
substantially identical to the economic characteristics of the
securities that comprise the Bloomberg Barclays Municipal Managed Money
Index. In addition, the SPDR Nuveen Bloomberg Barclays Municipal Bond
ETF may invest in debt securities that are not included in the
Bloomberg Barclays Municipal Managed Money Index, cash and cash
equivalents or money market instruments, such as repurchase agreements
and money market funds.
11. iShares California Muni Bond ETF
The iShares California Muni Bond ETF seeks to track the investment
results of the S&P California AMT-Free Municipal Bond Index, which
measures the performance of the investment grade segment of the
California municipal bond market. The S&P California AMT-Free Municipal
Bond Index is a subset of the S&P National AMT-Free Municipal Bond
Index and is comprised of municipal bonds issued in the State of
California. The S&P California AMT-Free Municipal Bond Index primarily
includes municipal bonds from issuers in California that are California
state or local governments or agencies whose interest payments are
exempt from U.S. federal and California state income taxes and the
federal alternative minimum tax. Each bond in the S&P California AMT-
Free Municipal Bond Index must have a rating of at least BBB- by S&P,
Baa3 by Moody's, or BBB- by Fitch. Each bond in the S&P California AMT-
Free Municipal Bond Index must be denominated in U.S. dollars, must be
a constituent of an offering where the original offering amount was at
least $100 million, and must have a minimum par amount of $25 million.
To remain in the S&P California AMT-Free Municipal Bond Index, bonds
must maintain a minimum par amount greater than or equal to $25 million
as of the next rebalancing date.
As of April 1, 2017, the S&P California AMT-Free Municipal Bond
Index included 2,115 component fixed income municipal bond securities
from more than 150 distinct municipal bond issuers in the State of
California. The most heavily weighted security in the index represented
approximately 0.50% of the total weight of the index, and the aggregate
weight of the top five most heavily weighted securities in the index
represented approximately 2.75% of the total weight of the index.
Approximately 96.31% of the weight of the index components was composed
of individual maturities that were part of an entire municipal bond
offering with a minimum original principal amount outstanding of $100
million or more for all maturities in the offering. Approximately
38.89% of the weight of the components in the index had a minimum
original principal amount outstanding of $100 million or more. In
addition, the total dollar amount outstanding of issues in the index
was approximately $137,796,471,640, and the average dollar amount
outstanding of issues in the index was approximately $65,151,996.
Generally, the iShares California Muni Bond ETF invests at least
90% of its assets in the component securities of the S&P California
AMT-Free Municipal Bond Index and may invest up to 10% of its assets in
certain futures, options and swap contracts, cash and cash equivalents,
including shares of money market funds, as well as in securities not
included in the S&P California AMT-Free Municipal Bond Index, but which
the fund's investment advisor believes will help the fund track the S&P
California AMT-Free Municipal Bond Index.
12. iShares New York Muni Bond ETF
The iShares New York Muni Bond ETF seeks to track the investment
results of the S&P New York AMT-Free Municipal Bond Index, which
measures the performance of the investment grade segment of the New
York municipal bond market. The S&P New York AMT-Free Municipal Bond
Index is a subset of the S&P National AMT-Free Municipal Bond Index and
is comprised of municipal bonds issued in the State of New York. The
S&P New York AMT-Free Municipal Bond Index primarily includes municipal
bonds from issuers in New York that are New York state or local
governments or agencies whose interest payments are exempt from U.S.
federal and New York State personal income taxes and the federal
alternative minimum tax. Each bond in the S&P New York AMT-Free
Municipal Bond Index must have a rating of at least BBB- by S&P, Baa3
by Moody's, or BBB- by Fitch. Each bond in the S&P New York AMT-Free
Municipal Bond Index must be denominated in U.S. dollars, must be a
constituent of an offering where the original offering amount was at
least $100 million, and must have a minimum par amount of $25 million.
To remain in the S&P New York AMT-Free Municipal Bond Index, bonds must
maintain a minimum par amount greater than or equal to $25 million as
of the next rebalancing date.
As of April 1, 2017, the S&P New York AMT-Free Municipal Bond Index
included 2,191 component fixed income municipal bond securities from
more than 20 distinct municipal bond issuers in the State of New York.
The most heavily weighted security in the index represented
approximately 1.50% of the total weight of the index, and the aggregate
weight of the top five most heavily weighted securities in the index
represented approximately 4.25% of the total weight of the index.
Approximately 98.63% of the weight of the index components was composed
of individual maturities that were part of an entire municipal bond
offering with a minimum original principal amount outstanding of $100
million or more for all maturities in the offering. Approximately
34.50% of the weight of the components in the index had a minimum
original principal amount outstanding of $100 million or more. In
addition, the total dollar amount outstanding of issues in the index
was approximately $124,381,556,872, and the average dollar amount
outstanding of issues in the index was approximately $56,769,309.
Generally, the iShares New York Muni Bond ETF invests at least 90%
of its assets in the component securities of the S&P New York AMT-Free
Municipal Bond Index and may invest up to 10% of its assets in certain
futures, options and swap contracts, cash and cash equivalents,
including shares of money market funds, as well as in securities not
included in the S&P New York AMT-Free Municipal Bond Index x, but which
the fund's investment advisor believes will help the fund track the S&P
New York AMT-Free Municipal Bond Index.

B. The Continued Listing and Trading of the Shares

The Exchange states that it is appropriate to continue to list and
trade the Shares based on the characteristics of the indexes underlying
the Municipal Bond Funds. According to the Exchange, each index
underlying the Municipal Bond Funds satisfies all of the generic
listing requirements for Investment Company Units based on a fixed
income index, except for the minimum principal amount outstanding
requirement of Commentary .02(a)(2) to Rule 5.2(j)(3). The Exchange
asserts that a fundamental purpose behind the minimum principal amount
outstanding requirement is to ensure that component

[[Page 46876]]

securities of an index are sufficiently liquid such that the potential
for index manipulation is reduced.\11\ The Exchange asserts that each
index underlying the Municipal Bond Funds is a broad-based index of
fixed income municipal bond securities that is not readily susceptible
to manipulation.
---------------------------------------------------------------------------

\11\ See Amendment No. 1, supra note 4, at 16.
---------------------------------------------------------------------------

With respect to the Multistate Municipal Bond Funds, the Exchange
states: (1) Each underlying index is broad-based and currently
includes, on average, more than 8,000 component securities; (2)
currently each underlying index includes securities issued by municipal
entities in more than 40 states or U.S. territories, and notes that the
applicable generic listing criterion requires that an index contain
securities issued by at least 13 non-affiliated issuers; \12\ and (3)
no single security currently represents more than approximately 1.5% of
the weight of any underlying index, the aggregate weight of the five
most heavily weighted securities in each index does not exceed
approximately 6% of the weight of the index, and notes the applicable
generic listing criterion permits a single component security to
represent up to 30% of the weight of an index and the top five
component securities to, in aggregate, represent up to 65% of the
weight of an index.\13\ The Exchange asserts that this index
diversification is significant, and that the absence of constituent
concentration in the underlying indexes provides a strong degree of
protection against manipulation of the indexes.\14\
---------------------------------------------------------------------------

\12\ See Commentary .02(a)(5) to NYSE Arca Rule 5.2-E(j)(3).
\13\ See Commentary .02(a)(4) to NYSE Arca Rule 5.2-E(j)(3).
\14\ See Amendment No. 1, supra note 4, at 17.
---------------------------------------------------------------------------

With respect to the Single-State Municipal Bond Funds, the Exchange
states that each underlying index is well-diversified to protect
against index manipulation. To support this, the Exchange states: (1)
On average, the underlying indexes include more than 1,500 securities;
(2) each underlying index includes securities from at least 20 distinct
municipal bond issuers; and (3) the most heavily weighted security in
any of the underlying indexes represents approximately 2% of the weight
of the index, and the aggregate weight of the five most heavily
weighted securities in any of the indexes represents approximately
6.25% of the total index weight.
The Exchange represents that: (1) On a continuous basis, each index
underlying a Municipal Bond Fund will contain at least 500 component
securities; (2) currently, each index satisfies all of the generic
listing requirements under NYSE Arca Rule 5.2-E(j)(3) except for
Commentary .02(a)(2); (3) the continued listing criteria under Rules
5.2(j)(3) (except for Commentary .02(a)(2)) and 5.5(g)(2) applicable to
Investment Company Units will apply to the Shares; and (4) the issuer
of each Municipal Bond Fund is required to comply with Rule 10A-3 \15\
under the Act for the initial and continued listing of the Shares of
each Municipal Bond Fund. In addition, the Exchange represents that the
Shares will comply with all other requirements applicable to Investment
Company Units including, but not limited to, requirements relating to
the dissemination of key information such as the value of the
underlying index and the applicable Intraday Indicative Value
(``IIV''),\16\ rules governing the trading of equity securities,
trading hours, trading halts, surveillance, information barriers and
the Information Bulletin to Equity Trading Permit Holders, as set forth
in Exchange rules applicable to Investment Company Units and prior
Commission orders approving the generic listing rules applicable to the
listing and trading of Investment Company Units.
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\15\ 17 CFR 240.10A-3.
\16\ An IIV for each Municipal Bond Fund will be widely
disseminated by one or more major market data vendors at least every
15 seconds during the Exchange's Core Trading Session of 9:30 a.m.
to 4:00 p.m., Eastern time. See Amendment No. 1, supra note 4, at
18, n.10. The Exchange states that currently it understands that
several major market data vendors display and/or make widely
available IIVs taken from the Consolidated Tape Association or other
data feeds.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-
NYSEArca-2017-56, as Modified by Amendment No. 1, and Grounds for
Disapproval Under Consideration

The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \17\ to determine whether the proposed rule
change, as modified by Amendment No. 1, should be approved or
disapproved. Institution of such proceedings is appropriate at this
time in view of the legal and policy issues raised by the proposed rule
change. Institution of proceedings does not indicate that the
Commission has reached any conclusions with respect to any of the
issues involved. Rather, as described below, the Commission seeks and
encourages interested persons to provide comments on the proposed rule
change, as modified by Amendment No. 1.
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\17\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\18\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposal's consistency with Section 6(b)(5) of the Act,
which requires, among other things, that the rules of a national
securities exchange be ``designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade,'' and ``to protect investors and the public
interest.'' \19\
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\18\ Id.
\19\ 15 U.S.C. 78f(b)(5).
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As noted above, the Exchange has submitted this proposed rule
change because the Shares of the Municipal Bond Funds do not meet all
of the generic listing requirements set forth in Commentary.02 to NYSE
Arca Rule 5.2-E(j)(3). In the proposal, the Exchange describes certain
characteristics of the underlying indexes as of April 1, 2017,\20\ and
asserts that those characteristics demonstrate that ``each . . . fund
is based on a broad-based index that is not readily susceptible to
manipulation.'' \21\ Further, the Exchange contends that the
``significant diversification and the lack of concentration among
constituent securities provides a strong degree of protection against
index manipulation.'' \22\ For purposes of continued listing of the
Shares, however, apart from the representation that each index will
have at least 500 component securities on an ongoing basis, the
Exchange has not provided any criteria governing the extent to which
the indexes may deviate from the initial set of characteristics that
the Exchange relies on to determine the susceptibility of the indexes
to manipulation. Accordingly, the Commission seeks commenters' views on
whether the Exchange's statements and representations support a
determination that the continued listing and trading of the Shares of
the Municipal Bond Funds would be consistent with Section 6(b)(5) of
the Act, which, among other things, requires that the rules of an
exchange be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, and to
protect investors and the public interest.
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\20\ See supra Section II.A.
\21\ See supra note 3, 82 FR at 31652.
\22\ See supra note 3, 82 FR at 31653.

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[[Page 46877]]

IV. Procedure: Request for Written Comments

The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, or
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\23\
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\23\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by October 27, 2017. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
November 13, 2017. The Commission asks that commenters address the
sufficiency of the Exchange's statements in support of the proposal,
which are set forth in Amendment No. 1,\24\ in addition to any other
comments they may wish to submit about the proposed rule change.
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\24\ See supra note 3.
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Comments may be submitted by any of the following methods:

Electronic Comments

Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2017-56 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2017-56. 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 (https://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 the filing also will 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 Number SR-NYSEArca-2017-56 and should
be submitted on or before October 27, 2017. Rebuttal comments should be
submitted by November 13, 2017.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(57).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21537 Filed 10-5-17; 8:45 am]
BILLING CODE 8011-01-P

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