Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Certain Representations Relating to the Listing and Trading of Shares of the Innovator S&P 500 Buffer ETFs, 43932-43934 [2018-18573]
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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices
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D. Other Comments
Comment letters also addressed the
following topics:
• The desire of investors to gain
access to bitcoin through an ETP; 107
• investor understanding about
bitcoin; 108
• the valuation of bitcoin and price
differentials across bitcoin trading
venues; 109
• the intrinsic value of bitcoin; 110
• the reliability of bitcoin as a store
of value; 111
• the volatility of bitcoin prices; 112
• the regulation of bitcoin spot
markets; 113
• the operation and valuation of the
proposed ETPs; 114
• arbitrage between the price of the
Shares and the underlying portfolio
instruments; 115
• the ability of the Funds to meet
redemption orders; 116
• the custody of the assets of the
Funds; 117
• the effect on the Funds of a fork in
the bitcoin blockchain; 118
• the potential impact of Commission
approval of the proposed ETP on the
price of bitcoin and on the U.S.
economy; 119
• the leadership role that the United
States might play in the cryptocurrency
space if the Commission were to
approve the proposed ETP; 120
• the utility of a bitcoin ETP as a
global tool for wealth distribution; 121
and
• the legitimacy that Commission
approval of the proposed ETP might
confer upon bitcoin as a digital asset.122
Ultimately, however, additional
discussion of these tangential topics is
107 See Kaleda Letter, supra note 12; Santos
Letter, supra note 12; Netto Letter, supra note 12.
108 See Desai Letter, supra note 12, at 1; Kumar
Letter, supra note 12.
109 See Kumar Letter, supra note 12; Malkin
Letter, supra note 12; Bhat Letter, supra note 12;
GraniteShares Letter, supra note 12, at 6–7, 10–11.
110 See Ahn Letter, supra note 12.
111 See Otenyi Letter, supra note 12; Desai Letter,
supra note 12, at 1.
112 See Desai Letter, supra note 12, at 1; Malkin
Letter, supra note 12, at 1; Bhat Letter, supra note
12.
113 See Barnwell Letter, supra note 12, at 2; Desai
Letter, supra note 12, at 1; Fitzgerald Letter, supra
note 12, at 1; Kumar Letter, supra note 12; Malkin
Letter, supra note 12, at 1.
114 See NERA Letter, supra note 12, at 1–3, 5;
GraniteShares Letter, supra note 12, at 3, 5–6.
115 See GraniteShares Letter, supra note 12, at 8.
116 See id. at 7.
117 See id. at 3.
118 See id. at 6.
119 See Krohn Letter, supra note 12; Hales Letter,
supra note 12; Santos Letter, supra note 12.
120 See Hales Letter, supra note 12.
121 See Otenyi Letter, supra note 12.
122 See Desai Letter, supra note 12, at 1, 2; Kumar
Letter, supra note 12; Santos Letter, supra note 12.
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unnecessary, as they do not bear on the
basis for the Commission’s decision to
disapprove the proposal.
E. The Exchange’s Untimely
Amendments to the Proposal
As noted above, the deadline for
rebuttal comments in response to the
Order Instituting Proceedings was May
15, 2018.123 On August 21, 2018,
however, the Exchange filed
Amendment No. 1 with the
Commission, stating that the
amendment ‘‘amends and replaces in its
entirety the proposal as originally
submitted on January 5, 2018.’’ Then, on
August 22, 2018, the Exchange filed
Amendment No. 2 with the
Commission, stating that the
amendment ‘‘amends and replaces in its
entirety Amendment No. 1 as submitted
on August 21, 2018, which amended
and replaced in its entirety the proposal
as originally submitted on January 5,
2018.’’ Because these amendments were
filed months after the deadline for
comments on the proposed rule change,
the Commission deems Amendment No.
1 and Amendment No. 2 to have been
untimely filed.
Even if these amendments had been
timely filed, however, the Commission
would still conclude that the Exchange
had not met its burden to demonstrate
that its proposal is consistent with
Exchange Act Section 6(b)(5). The
change that the amendments made to
the proposal was to limit the
investments of the Funds to Bitcoin
Futures Contracts, which trade on CFE
and CME, eliminating the Funds’ ability
to invest in listed or unlisted swaps on
bitcoin or on the Benchmark Futures
Contracts.124 Although CFE and CME
are ‘‘regulated markets,’’ the record, as
discussed above, does not provide a
basis for the Commission to conclude
that CFE and CME are regulated markets
‘‘of significant size’’ in Bitcoin Futures
Contracts.125 Therefore, even if the
Exchange’s amendments were timely
filed, the Commission would be unable
to find, based on the record, that the
Exchange had entered into a
surveillance-sharing agreement with a
regulated market of significant size
related to bitcoin.126
supra note 10 and accompanying text.
Sponsor also represents in its August 20,
2018, comment letter that the Funds would invest
only in Bitcoin Futures Contracts. See
GraniteShares Letter, supra note 12, at 5.
125 See supra notes 78–91 and accompanying text.
126 Additionally, even though the Exchange’s
amendments would have removed the
representation in the Notice that the Exchange
expects significant liquidity to exist in the market
for Bitcoin Futures Contracts, based on numerous
conversations with market participants, issuers, and
discussions with personnel of CFE, see supra notes
F. Basis for Disapproval
The record before the Commission
does not provide a basis for the
Commission to conclude that the
Exchange has met its burden under the
Exchange Act and the Commission’s
Rules of Practice to demonstrate that its
proposed rule change is consistent with
Exchange Act Section 6(b)(5).127
IV. Conclusion
For the reasons set forth above, the
Commission does not find, pursuant to
Section 19(b)(2) of the Exchange Act,
that the proposed rule change is
consistent with the requirements of the
Exchange Act and the rules and
regulations thereunder applicable to a
national securities exchange, and in
particular, with Section 6(b)(5) of the
Exchange Act.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Exchange Act,
that proposed rule change SR–
CboeBZX–2018–001 is disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.128
Brent J. Fields,
Secretary.
[FR Doc. 2018–18578 Filed 8–27–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83908; File No. SR–
CboeBZX–2018–064]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend
Certain Representations Relating to
the Listing and Trading of Shares of
the Innovator S&P 500 Buffer ETFs
August 22, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on August
16, 2018, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
123 See
124 The
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23 & 82 and accompanying text, the elimination of
this representation would not alter the
Commission’s conclusion that the Exchange has not
met its burden to demonstrate that CFE and CME
are markets ‘‘of significant size.’’
127 In disapproving the proposed rule change, the
Commission has considered its impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
128 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend certain representations made in
a proposed rule change previously filed
with the Commission pursuant to Rule
19b–4 relating to the Innovator S&P 500
Buffer ETFs (the ‘‘Buffer Funds’’).
The text of the proposed rule change
is available at the Exchange’s website at
www.markets.cboe.com, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
daltland on DSKBBV9HB2PROD with NOTICES
1. Purpose
The shares of the Buffer Funds (the
‘‘Shares’’) were approved to be listed
and traded on the Exchange under Rule
14.11(i),3 which governs the listing and
trading of Managed Fund Shares, but
have not yet begun trading. The Buffer
Funds are each a series of the Innovator
ETFs Trust (the ‘‘Trust’’), which is
organized as a Delaware statutory trust
and is registered with the Commission
as an open-end management investment
company.4
In this proposed rule change, the
Exchange proposes to amend several
representations made in the Prior
3 See Securities Exchange Act Release No. 83679
(July 20, 2018), 83 FR 35505 (July 26, 2018) (SR–
BatsBZX–2017–72) (the ‘‘Prior Approval’’).
4 See Registration Statement on Form N–1A for
the Trust, dated August 8, 2018 (File Nos. 333–
146827 and 811–22135) (the ‘‘Registration
Statement’’). The Commission has issued an order
granting certain exemptive relief to the Trust under
the Investment Company Act of 1940 (15 U.S.C
80a–1) (‘‘1940 Act’’) (the ‘‘Exemptive Order’’). See
Investment Company Act Release No. 32854
(October 6, 2017) (File No. 812–14781).
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Approval related to the investment
strategy, as described below.5
Throughout the description of the Buffer
Funds’ investment strategy in the Prior
Approval, there are representations such
as ‘‘(each Buffer Fund will) seek to
provide investment returns during the
outcome period that match the gains of
the S&P 500 Index up to the Buffer Cap
Level, while shielding investors from
S&P 500 Index losses of up to 10%.’’
The Exchange is proposing to amend all
such representations related to the
Buffer Funds such that the Buffer Funds
will provide investment returns during
the outcome period that match the gains
of the S&P 500 Index up to the Buffer
Cap Level, while shielding investors
from S&P 500 Index losses of up to 9%
instead of the previously stated 10%.
The Exchange does not believe that
this proposed change raises any
substantive issues for the Commission
because it represents only a small
change to the investment strategy and
all other statements and representations
made in the Prior Approval regarding
the description of the portfolio or
reference assets, limitations on portfolio
holdings or reference assets,
dissemination and availability of
reference assets and intraday indicative
values, and the applicability of
Exchange listing rules specified in the
Prior Approval remain true and shall
continue to constitute continued listing
requirements for the Buffer Funds.
Additionally, the change proposed
above will constitute a continued listing
requirement for the Buffer Funds.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with Section 6(b)
of the Act 6 in general and Section
6(b)(5) of the Act 7 in particular in that
it is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to remove impediments to, and
perfect the mechanism of a free and
open market and, in general, to protect
investors and the public interest.
Specifically, the Exchange believes that
the proposal is designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to remove
impediments to, and perfect the
mechanism of a free and open market
and, in general, to protect investors and
the public interest.
As described above, all of the
representations from the Prior Approval
which formed the basis for the Prior
Approval remain true and will continue
to constitute continued listing
requirements for the Buffer Funds with
the exception of the one point (changing
the downside protection from 10% to
9%) that the Exchange is proposing to
amend. This proposed change will not
make any changes to the types of
instruments that the Buffer Funds can
hold, but will only make a small change
to the investment strategy. As such, the
Exchange believes that the proposal
does not raise any substantive issues
that were not previously addressed in
the Prior Approval.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purpose of the Act. The Exchange
believes that the proposal to allow the
Buffer Funds to amend their investment
strategy will enhance competition
among both market participants and
listing venues by allowing additional
series of Managed Fund Shares to come
to list on the Exchange, to the benefit of
investors and the marketplace.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change
does not (i) significantly affect the
protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative 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 8 and subparagraph
(f)(6) of Rule 19b–4 thereunder.9
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
8 15
5 The
Exchange notes that while a change was
made to the principal investment strategy, there
were no changes to the Buffer Funds’ investment
objective, the method or methods used to select the
Buffer Funds’ portfolio investments, or the Buffer
Funds’ fees and expenses.
6 15 U.S.C. 78f.
7 15 U.S.C. 78f(b)(5).
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43933
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). As required under
Rule19b–4(f)(6)(iii), the Exchange provided the
Commission with written notice of its intent to file
the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission.
9 17
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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices
Act 10 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 11
permits the Commission to 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 proposed
rule change may become operative upon
filing. The Exchange states that waiver
of the 30-day operative delay would
allow the Buffer Funds to immediately
begin listing and trading on the
Exchange and employ its amended
investment strategy. The Commission
does not believe that any new or novel
issues are raised by the proposal.
Moreover, as noted above, apart from
modifying the downside protection from
10% to 9%, all other statements and
representations made in the Prior
Approval would remain true and will
apply on a continuous basis. For these
reasons, the Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest.
Accordingly, the Commission hereby
waives the operative delay and
designates the proposed rule change
operative upon filing.12
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. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
daltland on DSKBBV9HB2PROD with NOTICES
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–
CboeBZX–2018–064 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–CboeBZX–2018–064. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (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 website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2018–064, and
should be submitted on or before
September 18, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–18573 Filed 8–27–18; 8:45 am]
BILLING CODE 8011–01–P
10 17
CFR 240.19b–4(f)(6).
CFR 240.19b–4(f)(6)(iii).
12 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
11 17
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13 17
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83904; File No. SR–
NYSEArca–2017–139]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Order Disapproving a
Proposed Rule Change To List and
Trade the Shares of the ProShares
Bitcoin ETF and the ProShares Short
Bitcoin ETF
August 22, 2018.
I. Introduction
On December 4, 2017, NYSE Arca,
Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to list and trade
the shares (‘‘Shares’’) of the ProShares
Bitcoin ETF and the ProShares Short
Bitcoin ETF (each a ‘‘Fund’’ and,
collectively, the ‘‘Funds’’) issued by the
ProShares Trust II (‘‘Trust’’) under
NYSE Arca Rule 8.200–E, Commentary
.02. The proposed rule change was
published for comment in the Federal
Register on December 26, 2017.3 The
comment period for the Notice of
Proposed Rule Change closed on
January 16, 2018.
On January 30, 2018, pursuant to
Section 19(b)(2) of the Exchange Act,4
the Commission designated a longer
period within which to approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether to
approve or disapprove the proposed
rule change.5 On March 23, 2018, the
Commission instituted proceedings
under Section 19(b)(2)(B) of the
Exchange Act 6 to determine whether to
approve or disapprove the proposed
rule change.7 The comment period and
rebuttal comment period for the Order
Instituting Proceedings closed on April
19, 2018, and May 3, 2018, respectively.
Finally, on June 15, 2018, the
Commission extended the period for
consideration of the proposed rule
change to August 23, 2018.8 As of
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 82350
(Dec. 19, 2017), 82 FR 61100 (Dec. 26, 2017)
(‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 82602
(Jan. 30, 2018), 83 FR 4941 (Feb. 2, 2018).
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 82939
(Mar. 23, 2018), 83 FR 13537 (Mar. 29, 2018)
(‘‘Order Instituting Proceedings’’).
8 See Securities Exchange Act Release No. 83452
(June 15, 2018), 83 FR 28894 (June 21, 2018).
2 17
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]]>Agencies
[Federal Register Volume 83, Number 167 (Tuesday, August 28, 2018)]
[Notices]
[Pages 43932-43934]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18573]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-83908; File No. SR-CboeBZX-2018-064]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
Certain Representations Relating to the Listing and Trading of Shares
of the Innovator S&P 500 Buffer ETFs
August 22, 2018.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on August 16, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II
[[Page 43933]]
below, which Items have been prepared by the Exchange. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange filed a proposal to amend certain representations made
in a proposed rule change previously filed with the Commission pursuant
to Rule 19b-4 relating to the Innovator S&P 500 Buffer ETFs (the
``Buffer Funds'').
The text of the proposed rule change is available at the Exchange's
website at www.markets.cboe.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
Sections A, B, and C below, of the most significant parts of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The shares of the Buffer Funds (the ``Shares'') were approved to be
listed and traded on the Exchange under Rule 14.11(i),\3\ which governs
the listing and trading of Managed Fund Shares, but have not yet begun
trading. The Buffer Funds are each a series of the Innovator ETFs Trust
(the ``Trust''), which is organized as a Delaware statutory trust and
is registered with the Commission as an open-end management investment
company.\4\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 83679 (July 20,
2018), 83 FR 35505 (July 26, 2018) (SR-BatsBZX-2017-72) (the ``Prior
Approval'').
\4\ See Registration Statement on Form N-1A for the Trust, dated
August 8, 2018 (File Nos. 333-146827 and 811-22135) (the
``Registration Statement''). The Commission has issued an order
granting certain exemptive relief to the Trust under the Investment
Company Act of 1940 (15 U.S.C 80a-1) (``1940 Act'') (the ``Exemptive
Order''). See Investment Company Act Release No. 32854 (October 6,
2017) (File No. 812-14781).
---------------------------------------------------------------------------
In this proposed rule change, the Exchange proposes to amend
several representations made in the Prior Approval related to the
investment strategy, as described below.\5\ Throughout the description
of the Buffer Funds' investment strategy in the Prior Approval, there
are representations such as ``(each Buffer Fund will) seek to provide
investment returns during the outcome period that match the gains of
the S&P 500 Index up to the Buffer Cap Level, while shielding investors
from S&P 500 Index losses of up to 10%.'' The Exchange is proposing to
amend all such representations related to the Buffer Funds such that
the Buffer Funds will provide investment returns during the outcome
period that match the gains of the S&P 500 Index up to the Buffer Cap
Level, while shielding investors from S&P 500 Index losses of up to 9%
instead of the previously stated 10%.
---------------------------------------------------------------------------
\5\ The Exchange notes that while a change was made to the
principal investment strategy, there were no changes to the Buffer
Funds' investment objective, the method or methods used to select
the Buffer Funds' portfolio investments, or the Buffer Funds' fees
and expenses.
---------------------------------------------------------------------------
The Exchange does not believe that this proposed change raises any
substantive issues for the Commission because it represents only a
small change to the investment strategy and all other statements and
representations made in the Prior Approval regarding the description of
the portfolio or reference assets, limitations on portfolio holdings or
reference assets, dissemination and availability of reference assets
and intraday indicative values, and the applicability of Exchange
listing rules specified in the Prior Approval remain true and shall
continue to constitute continued listing requirements for the Buffer
Funds. Additionally, the change proposed above will constitute a
continued listing requirement for the Buffer Funds.
2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act \6\ in general and Section 6(b)(5) of the Act \7\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to, and perfect the
mechanism of a free and open market and, in general, to protect
investors and the public interest. Specifically, the Exchange believes
that the proposal is designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to remove impediments to, and perfect the mechanism of a free and open
market and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f.
\7\ 15 U.S.C. 78f(b)(5).
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As described above, all of the representations from the Prior
Approval which formed the basis for the Prior Approval remain true and
will continue to constitute continued listing requirements for the
Buffer Funds with the exception of the one point (changing the downside
protection from 10% to 9%) that the Exchange is proposing to amend.
This proposed change will not make any changes to the types of
instruments that the Buffer Funds can hold, but will only make a small
change to the investment strategy. As such, the Exchange believes that
the proposal does not raise any substantive issues that were not
previously addressed in the Prior Approval.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange believes that
the proposal to allow the Buffer Funds to amend their investment
strategy will enhance competition among both market participants and
listing venues by allowing additional series of Managed Fund Shares to
come to list on the Exchange, to the benefit of investors and the
marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the proposed rule change does not (i) significantly affect
the protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative 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 \8\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\9\
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(6). As required under Rule19b-
4(f)(6)(iii), the Exchange provided the Commission with written
notice of its intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
[[Page 43934]]
Act \10\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ permits the
Commission to 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 proposed rule change may become operative upon filing. The Exchange
states that waiver of the 30-day operative delay would allow the Buffer
Funds to immediately begin listing and trading on the Exchange and
employ its amended investment strategy. The Commission does not believe
that any new or novel issues are raised by the proposal. Moreover, as
noted above, apart from modifying the downside protection from 10% to
9%, all other statements and representations made in the Prior Approval
would remain true and will apply on a continuous basis. For these
reasons, the Commission believes that waiver of the 30-day operative
delay is consistent with the protection of investors and the public
interest. Accordingly, the Commission hereby waives the operative delay
and designates the proposed rule change operative upon filing.\12\
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\10\ 17 CFR 240.19b-4(f)(6).
\11\ 17 CFR 240.19b-4(f)(6)(iii).
\12\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2018-064 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-CboeBZX-2018-064. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeBZX-2018-064, and should be
submitted on or before September 18, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18573 Filed 8-27-18; 8:45 am]
BILLING CODE 8011-01-P
