Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating To Make Certain Changes to the Listing Rule Governing the Listing and Trading of the Shares of the WisdomTree Japan Multifactor Fund and the WisdomTree Europe Multifactor Fund of the WisdomTree in Order for Such Funds To Be Listed and Traded on the Exchange Under Rule 14.11(i) (“Managed Fund Shares”), 13371-13376 [2019-06528]
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Federal Register / Vol. 84, No. 65 / Thursday, April 4, 2019 / Notices
Five of these rule changes went into
effect without being suspended. These
rule changes, among other things,
instituted or raised port fees. The
Remand Order maintains the status quo
and allows BOX to continue charging
any of these fees still in force as it
conducts proceedings on remand. It was
only in the sixth instance that the
Commission suspended the proposed
rule changes and instituted proceedings.
BOX has not been singled out for
disparate treatment.134
IV. Conclusion
For the reasons set forth above, the
Commission does not find that the
proposed rule changes are consistent
with the Act and the rules and
regulations thereunder applicable to a
national securities exchange, and in
particular, Sections 6(b)(4), 6(b)(5), and
6(b)(8) of the Act.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,135 that the
proposed rule changes (SR–BOX–2018–
24, SR–BOX–2018–37, and SR–BOX–
2019–04) be, and hereby are,
disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.136
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–06519 Filed 4–3–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85474; File No. SR–
CboeBZX–2019–019]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change Relating To
Make Certain Changes to the Listing
Rule Governing the Listing and
Trading of the Shares of the
WisdomTree Japan Multifactor Fund
and the WisdomTree Europe
Multifactor Fund of the WisdomTree in
Order for Such Funds To Be Listed and
Traded on the Exchange Under Rule
14.11(i) (‘‘Managed Fund Shares’’)
March 29, 2019.
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 March 15,
2019, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
2018)); SR–BOX–2018–15 (challenged by File No.
3–18525 (filed May 31, 2018)); SR–BOX–2017–31
(challenged by 3–18286 (filed Nov. 17, 2017)); SR–
BOX–2016–40 (challenged by File No. 3–17663
(filed Nov. 8, 2016)); SR–BOX–2015–39 (challenged
by File No. 3–17040 (filed Jan. 8, 2016)).
134 The Commission notes that BOX 2 and BOX
3 were both filed after the Remand Order and
therefore are not subject to the Remand Order.
135 15 U.S.C. 78s(b)(2).
136 17 CFR 200.30–3(a)(12).
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Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) is filing with the
Securities and Exchange Commission
(‘‘Commission’’) a proposal to make
certain changes to the listing rule
governing the listing and trading of the
shares of the WisdomTree Japan
Multifactor Fund and the WisdomTree
Europe Multifactor Fund of the
WisdomTree in order for [these] Funds
to be listed and traded on the Exchange
under Rule 14.11(i) (‘‘Managed Fund
Shares’’).
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
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13371
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The shares of the Funds (the
‘‘Shares’’) are currently listed and
traded on the Exchange pursuant to the
generic listing standards under Rule
14.11(c), which governs the listing and
trading of Index Fund Shares on the
Exchange. The Exchange is proposing to
continue listing and trading the Shares
on the Exchange with certain changes to
each Fund’s potential holdings, but
under Rule 14.11(i), which governs the
listing and trading of Managed Fund
Shares on the Exchange. The Exchange
submits this proposal in order to allow
the Funds to hold OTC currency swaps
in a manner that does not comply with
Exchange Rule 14.11(i)(4)(C)(v).
The Shares are offered by the
WisdomTree Trust, which was
established as a Delaware statutory trust
on December 15, 2005. WisdomTree
Asset Management, Inc. (the ‘‘Adviser’’)
acts as adviser to the Funds. Mellon
Investments Corporation acts as subadviser (the ‘‘Sub-Adviser’’) to the
Funds. The Trust is registered with the
Commission as an investment company
and has filed two Form 497
Supplements to its registration
statement on Form N–1A (‘‘Registration
Statement’’) with the Commission on
behalf of the Funds outlining the
changes described herein.5
Exchange Rule 14.11(i)(7) provides
that, if the investment adviser to the
investment company issuing Managed
Fund Shares is affiliated with a brokerdealer, such investment adviser shall
erect and maintain a ‘‘fire wall’’
between the investment adviser and the
5 See Registration Statement for the Trust (File
Nos. 333–132380 811–21864) and Form 497
Supplements dated January 18, 2019. The
descriptions of the Funds and the Shares contained
herein are based on information in the Registration
Statement.
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broker-dealer with respect to access to
information concerning the composition
and/or changes to such investment
company portfolio.6 In addition,
Exchange Rule 14.11(i)(7) further
requires that personnel who make
decisions on the investment company’s
portfolio composition must be subject to
procedures designed to prevent the use
and dissemination of material
nonpublic information regarding the
applicable investment company
portfolio. Exchange Rule 14.11(i)(7) is
similar to Exchange Rule
14.11(b)(5)(A)(i) (which applies to
index-based funds); however, Exchange
Rule 14.11(i)(7) in connection with the
establishment of a ‘‘fire wall’’ between
the investment adviser and the brokerdealer reflects the applicable open-end
fund’s portfolio, not an underlying
benchmark index, as is the case with
index-based funds. The Adviser is not a
registered broker-dealer and is not
affiliated with any broker-dealers that
are in the business of buying or selling
securities. The Sub-Adviser is affiliated
with multiple broker-dealers and has
implemented and will maintain a ‘‘fire
wall’’ with respect to such brokerdealers and their personnel regarding
access to information concerning the
composition and/or changes to a Fund’s
portfolio. In addition, Sub-Adviser
personnel who make decisions
regarding a Fund’s portfolio are subject
to procedures designed to prevent the
use and dissemination of material
nonpublic information regarding such
Fund’s portfolio. In the event that (a) the
Adviser or the Sub-Adviser becomes
registered as a broker-dealer or newly
affiliated with a broker-dealer, or (b) any
new adviser or sub-adviser is a
6 An investment adviser to an open-end fund is
required to be registered under the Investment
Advisers Act of 1940 (the ‘‘Advisers Act’’). As a
result, the Adviser and its related personnel are
subject to the provisions of Rule 204A–1 under the
Advisers Act relating to codes of ethics. This Rule
requires investment advisers to adopt a code of
ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with
other applicable securities laws. Accordingly,
procedures designed to prevent the communication
and misuse of non-public information by an
investment adviser must be consistent with Rule
204A–1 under the Advisers Act. In addition, Rule
206(4)–7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment
advice to clients unless such investment adviser has
(i) adopted and implemented written policies and
procedures reasonably designed to prevent
violation, by the investment adviser and its
supervised persons, of the Advisers Act and the
Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review
regarding the adequacy of the policies and
procedures established pursuant to subparagraph (i)
above and the effectiveness of their
implementation; and (iii) designated an individual
(who is a supervised person) responsible for
administering the policies and procedures adopted
under subparagraph (i) above.
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registered broker-dealer or becomes
affiliated with a broker-dealer, it will
implement and maintain a fire wall with
respect to its relevant personnel or such
broker-dealer affiliate, as applicable,
regarding access to information
concerning the composition and/or
changes to the portfolio, and will be
subject to procedures designed to
prevent the use and dissemination of
material non-public information
regarding such portfolio.
Each Fund intends to qualify each
year as a regulated investment company
under Subchapter M of the Internal
Revenue Code of 1986, as amended.
The Exchange submits this proposal
in order to allow the Funds to hold OTC
currency swaps in a manner that does
not comply with Exchange Rule
14.11(i)(4)(C)(v),7 Otherwise, the Funds
will comply with all other listing
requirements on an initial and
continued listing basis under Exchange
Rule 14.11(i) for Managed Fund Shares
(the ‘‘Generic Listing Standards’’).
WisdomTree Japan Multifactor Fund
As amended in the applicable Form
497 Supplement, the Japan Fund will
seek income and capital appreciation.
The Japan Fund will be actively
managed using a model-based approach
and will seek to achieve its investment
objective by investing primarily in
Japanese equity securities that exhibit
certain characteristics that the Adviser
believes to be indicative of positive
future returns based on a model
developed by the Adviser. The Adviser
will seek to identify equity securities
that have the highest potential for
returns based on proprietary measures
of fundamental factors, such as value
and quality, and technical factors, such
as momentum and correlation. The
Adviser will employ a quantitative
model to identify which securities the
Japan Fund might purchase and sell and
opportune times for purchases and
sales. At a minimum, the Japan Fund’s
portfolio will be rebalanced quarterly
according to the Adviser’s quantitative
model, although a more active approach
may be taken depending on such factors
as market conditions and investment
opportunities, and the number of
holdings in the Japan Fund may vary.
The Adviser will seek to manage the
Japan Fund’s currency risk by
dynamically hedging currency
fluctuations in the relative value of the
Japanese yen against the U.S. dollar (the
‘‘Japan Currency Hedge’’), ranging from
7 In particular, the Funds may not meet the
requirement under Exchange Rule 14.11(i)(4)(C)(v)
that the aggregate gross notional value of OTC
derivatives shall not exceed 20% of the weight of
the portfolio (including gross notional exposures).
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a 0% to 100% hedge. The hedge ratios
are adjusted as frequently as weekly
utilizing signals such as interest rate
differentials, momentum, and value.
Under Normal Market Conditions,8
the Japan Fund will hold only the
following instruments: Non-U.S.
Component Stocks,9 American
Depositary Receipts (‘‘ADRs’’), U.S.
exchange-listed ETFs,10 cash and Cash
Equivalents,11 and OTC currency swaps.
As noted above, all of the Japan Fund’s
holdings will meet the Generic Listing
Standards with the exception of its
holdings in OTC currency swaps, which
may not meet the requirement under
Rule 14.11(i)(4)(C)(v) that prevents the
aggregate gross notional value of OTC
derivatives from exceeding 20% of the
weight of the portfolio (including gross
notional exposures).
8 The term ‘‘Normal Market Conditions’’ includes,
but is not limited to, the absence of trading halts
in the applicable financial markets generally;
operational issues causing dissemination of
inaccurate market information or system failures; or
force majeure type events such as natural or manmade disaster, act of God, armed conflict, act of
terrorism, riot or labor disruption, or any similar
intervening circumstance. In response to adverse
market, economic, political, or other conditions, the
Fund reserves the right to invest in U.S. government
securities, other money market instruments (as
defined below), and cash, without limitation, as
determined by the Adviser or Sub-Adviser. In the
event the Fund engages in these temporary
defensive strategies that are inconsistent with its
investment strategies, the Fund’s ability to achieve
its investment objectives may be limited.
9 As defined in Rule 14.11(c)(1)(E), the term
‘‘Non-U.S. Component Stock’’ shall mean an equity
security that (a) is not registered under Sections
12(b) or 12(g) of the Act, (b) is issued by an entity
that is not organized, domiciled or incorporated in
the United States, and (c) is issued by an entity that
is an operating company (including Real Estate
Investment Trusts (REITs) and income trusts, but
excluding investment trusts, unit trusts, mutual
funds, and derivatives).
10 For purposes of this filing the term ETF shall
mean Portfolio Depository Receipts as defined in
Rule 14.11(b), Index Fund Shares as defined in Rule
14.11(c), and Managed Fund Shares as defined in
Rule 14.11(i), or the equivalent product type on
other national securities exchanges. With respect to
Index Fund Shares, the underlying index shall be
referred to herein as an ‘‘Index.’’
11 As defined in Rule 14.11(i)(4)(C)(iii), Cash
Equivalents are short-term instruments with
maturities of less than three months that are: (i) U.S.
Government securities, including bills, notes, and
bonds differing as to maturity and rates of interest,
which are either issued or guaranteed by the U.S.
Treasury or by U.S. Government agencies or
instrumentalities; (ii) certificates of deposit issued
against funds deposited in a bank or savings and
loan association; (iii) bankers acceptances, which
are short-term credit instruments used to finance
commercial transactions; (iv) repurchase
agreements and reverse repurchase agreements; (v)
bank time deposits, which are monies kept on
deposit with banks or savings and loan associations
for a stated period of time at a fixed rate of interest;
(vi) commercial paper, which are short-term
unsecured promissory notes; and (vii) money
market funds.
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WisdomTree Europe Multifactor Fund
As amended in the applicable Form
497 Supplement, the Europe Fund will
seek income and capital appreciation.
The Europe Fund will be actively
managed using a model-based approach
and will seek to achieve its investment
objective by investing primarily in
European equity securities that exhibit
certain characteristics that the Adviser
believes to be indicative of positive
future returns based on a model
developed by the Adviser. The Adviser
will seek to identify equity securities
that have the highest potential for
returns based on proprietary measures
of fundamental factors, such as value
and quality, and technical factors, such
as momentum and correlation. The
Adviser will employ a quantitative
model to identify which securities the
Europe Fund might purchase and sell
and opportune times for purchases and
sales. At a minimum, the Europe Fund’s
portfolio will be rebalanced quarterly
according to the Adviser’s quantitative
model, although a more active approach
may be taken depending on such factors
as market conditions and investment
opportunities, and the number of
holdings in the Europe Fund may vary.
The Adviser will seek to manage the
Europe Fund’s currency risk by
dynamically hedging currency
fluctuations in the relative value of the
euro against the U.S. dollar
(collectively, with the Japan Currency
Hedge, the ‘‘Currency Hedge’’), ranging
from a 0% to 100% hedge. The hedge
ratios are adjusted as frequently as
weekly utilizing signals such as interest
rate differentials, momentum, and
value.
Under Normal Market Conditions, the
Europe Fund will hold only the
following instruments: Non-U.S.
Component Stocks, ADRs, U.S.
exchange-listed ETFs, cash and Cash
Equivalents, and OTC currency swaps.
As noted above, the Europe Fund’s
holdings will meet the Generic Listing
Standards with the exception of its
holdings in OTC currency swaps, which
may not meet the requirement under
Rule 14.11(i)(4)(C)(v) that prevents the
aggregate gross notional value of OTC
derivatives from exceeding 20% of the
weight of the portfolio (including gross
notional exposures).
The Trust is required to comply with
Rule 10A–3 under the Act 12 for the
initial and continued listing of the
Shares of each Fund. In addition, the
Exchange represents that the Shares of
each Fund will meet and be subject to
all other requirements of the Generic
12 17
CFR 240.10A–3.
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Listing Rules and continued listing
requirements for Managed Fund Shares
under Exchange Rule 14.11(i), including
those requirements regarding the
Disclosed Portfolio (as defined in the
Exchange rules) and the requirement
that the Disclosed Portfolio and the net
asset value (‘‘NAV’’) will be made
available to all market participants at
the same time,13 intraday indicative
value,14 suspension of trading or
removal,15 trading halts,16 disclosure,17
firewalls,18 and surveillance.19 All
statements and representations made in
this filing 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 this filing shall constitute
continued listing requirements for the
Funds. The Trust, on behalf of the
Funds, has represented to the Exchange
that it will advise the Exchange of any
failure by a Fund or the Shares to
comply with the continued listing
requirements, and, pursuant to its
obligations under Section 19(g)(1) of the
Act, the Exchange will surveil for
compliance with the continued listing
requirements. If a Fund or the Shares
are not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under Exchange Rule 14.12.
Precedent and Policy Discussion
As described above, the Funds meet
all of the Generic Listing Standards
except as it may relate to their holdings
in OTC currency swaps, which would
be used to achieve their respective
Currency Hedge. The Exchange believes
that this proposal does not raise any
substantive issues for the Commission
to review because there are numerous
instances in which the Commission has
approved the listing and trading of
series of Managed Fund Shares that
employ nearly identical or substantially
similar hedging strategies,20 especially
13 See Exchange Rules 14.11(i)(4)(A)(ii) and
14.11(i)(4)(B)(ii).
14 See Exchange Rule 14.11(i)(4)(B)(i).
15 See Exchange Rule 14.11(i)(4)(B)(iii).
16 See Exchange Rule 14.11(i)(4)(B)(iv).
17 See Exchange Rule 14.11(i)(6).
18 See Exchange Rule 14.11(i)(7).
19 See Exchange Rules 14.11(i)(2)(C).
20 See Securities Exchange Act Release Nos.
84143 (September 14, 2018), 83 FR 47659
(September 20, 2018) (SR–CboeBZX–2018–019)
(order approving the listing and trading of eighteen
series of Managed Fund Shares that allowed each
series to hedge its foreign equity position with up
to 50% gross notional exposure to OTC currency
swaps) (the ‘‘Hedged ADR Approval Order’’); 84818
(December 13, 2018), 83 FR 65189 (December 19,
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13373
when compared to the Hedged ADR
Approval Order. Specifically, the
Hedged ADR Approval Order approved
the listing and trading of eighteen series
of Managed Fund Shares (the ‘‘Hedged
ADR Funds’’), each of which consisted
of only two components: (i) A single
ADR; and (ii) OTC currency swaps used
to hedge against fluctuations in the
exchange rate between the U.S. dollar
and the local currency of the foreign
security underlying the ADR. In
addition to not meeting Rule
14.11(i)(4)(C)(v) related to the OTC
currency swaps used to hedge currency
exposure, each series of the Hedged
ADR Funds also did not meet the
concentration 21 and diversity 22
requirements related to their respective
equity holdings. Stated another way, the
Funds are proposing to implement a
Currency Hedge using the same
instruments as the Hedged ADR Funds
with the same limits on such
instruments, but do not require the
additional relief from the equity
holdings portion of the Generic Listing
Standards that was necessary for the
Hedged ADR Funds to list and trade.
Further, the Exchange believes that,
while the portfolios of the Funds might
not meet Rule 14.11(i)(4)(C)(v), the
policy issues that the rule is intended to
address are otherwise mitigated by the
structure and purpose of the Currency
Hedge within the Funds.23 Specifically,
the Exchange believes that the policy
issues that Rule 14.11(i)(4)(C)(v) is
intended to address are mitigated by the
way that the Funds would use OTC
currency swaps. The rule is intended to
mitigate concerns around the
manipulability of a particular
underlying reference asset or derivatives
contract and to minimize counterparty
risk. While the Currency Hedge
2018) (SR–NYSEArca–2018–75) (order approving
the listing and trading of a series of Managed Fund
Shares that may hold up to 50% of the aggregate
gross notional value of the fund’s portfolio in OTC
derivatives for the purpose of reducing currency,
interest rate, credit, or duration risk, in addition to
allowing the fund to hold an additional 20% of
non-hedging OTC derivatives); 82591 (January 26,
2018) 83 FR 4707 (February 1, 2018) (SR–BatsBZX–
2017–54) (the ‘‘Inflation Hedged Fund’’) (order
approving the listing and trading of a series of
Managed Fund Shares that could gain up to 50%
gross notional exposure to OTC derivatives in order
to hedge against inflation in the fund’s portfolio);
and 83363 (June 1, 2018), 83 FR 26531 (June 7,
2018) (SR–CboeBZX–2018–036) (notice of filing and
immediate effectiveness of a proposal to allow the
Inflation Hedged Fund to move increase its
potential exposure to OTC derivative instruments
from 50% to 60% of the fund’s gross notional
value).
21 See Rule 14.11(i)(4)(C)(i)(a)(3).
22 See Rule 14.11(i)(4)(C)(i)(a)(4).
23 Each Fund expects to invest in excess of 80%
of its net assets in Non-U.S. Component Stocks in
a manner that will comply with the Generic Listing
Standards.
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positions taken by the Funds may not
meet the Generic Listing Standards
related to OTC derivatives holdings, the
policy concerns about limiting exposure
to potentially manipulable underlying
reference assets that the Generic Listing
Standards are intended to address are
otherwise mitigated by the liquidity in
the underlying spot currency market
that prevents manipulation of the
reference prices used by the Currency
Hedge.24 The Funds will attempt to
limit counterparty risk in OTC currency
swaps by: (i) Entering into such
contracts only with counterparties the
Adviser and/or Sub-Adviser believes are
creditworthy; (ii) limiting a Fund’s
exposure to each counterparty; and (iii)
monitoring the creditworthiness of each
counterparty and the Fund’s exposure to
each counterparty on an ongoing basis.
Availability of Information
As noted above, the Funds will each
comply with the requirements for
Managed Fund Shares related to
Disclosed Portfolio, Net Asset Value,
and the Intraday Indicative Value.
Additionally, the intra-day, closing and
settlement prices of Non-U.S.
Component Stocks, ADRs, and ETFs
will be readily available from the
securities exchanges on which such
securities are traded, as well as
published or other public sources, or
online information services such as
Bloomberg or Reuters. Intraday price
quotations on OTC currency swaps are
available from major broker-dealer firms
and from third-parties, which may
provide prices free with a time delay or
in real-time for a paid fee. Price
information for cash equivalents will be
available from major market data
vendors. Each Fund’s Disclosed
Portfolio will be available on the
issuer’s website
(www.WisdomTree.com) free of charge.
Each Fund’s website will include the
prospectus for the applicable Fund and
additional information related to NAV
and other applicable quantitative
information. Information regarding
market price and trading volume of the
Shares will be continuously available
throughout the day on brokers’
computer screens and other electronic
services. Information regarding the
previous day’s closing price and trading
volume for the Shares will be published
daily in the financial section of
newspapers. Trading in the Shares may
be halted for market conditions or for
24 Based on statistics reported by the Bank for
International Settlements, there is significant
liquidity in the spot market for the euro and the
Japanese yen. See ‘‘Turnover of OTC foreign
exchange instruments, by currency’’ available at:
https://stats.bis.org/statx/srs/table/d11.3.
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reasons that, in the view of the
Exchange, make trading inadvisable.
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. The Exchange has
appropriate rules to facilitate trading in
the shares during all trading sessions.
Surveillance
The Exchange believes that its
surveillance procedures are adequate to
properly monitor the trading of the
Funds on the Exchange during all
trading sessions and to deter and detect
violations of Exchange rules and the
applicable federal securities laws.
Trading of the Funds through the
Exchange will continue to be subject to
the Exchange’s surveillance procedures
for derivative products, including
Managed Fund Shares. The issuer has
represented to the Exchange that it will
advise the Exchange of any failure by a
Fund to comply with the continued
listing requirements, and, pursuant to
its obligations under Section 19(g)(1) of
the Act, the Exchange will surveil for
compliance with the continued listing
requirements. If a Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting proceedings under
Rule 14.12. The Exchange may obtain
information regarding trading in the
Funds, ADRs, ETFs, and certain of the
Non-U.S. Component Stocks that are
held by each Fund via the ISG, from
other exchanges that are members or
affiliates of the ISG, or with which the
Exchange has entered into a
comprehensive surveillance sharing
agreement. Additionally, the Exchange
or FINRA, on behalf of the Exchange,
are able to access, as needed, trade
information for certain fixed income
instruments reported to TRACE.
2. Statutory Basis
The Exchange believes that the
proposal is consistent with Section 6(b)
of the Act 25 in general and Section
6(b)(5) of the Act 26 in particular in that
it is designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system and, in
general, to protect investors and the
public interest. Specifically, the
Exchange believes that the proposal is
25 15
26 15
PO 00000
U.S.C. 78f.
U.S.C. 78f(b)(5).
Frm 00132
Fmt 4703
Sfmt 4703
consistent with Rule 6(b)(5) of the Act
in that is designed to prevent fraudulent
and manipulative acts and practices
because the policy concerns about
limiting exposure to potentially
manipulable underlying reference assets
that the Generic Listing Standards are
intended to address, specifically Rule
14.11(i)(4)(C)(v) related to OTC
derivatives holdings, are otherwise
mitigated by the liquidity in the
underlying spot currency market that
prevents manipulation of the reference
prices used by the Currency Hedge.
Specifically, the Exchange believes that
the policy issues that Rule
14.11(i)(4)(C)(v) is intended to address
are mitigated by the way that the Funds
would use OTC currency swaps. The
rule is intended to mitigate concerns
around the manipulability of a
particular underlying reference asset or
derivatives contract and to minimize
counterparty risk. As noted above, while
the Currency Hedge positions that might
be taken by the Funds may not meet the
Generic Listing Standards related to
OTC derivatives holdings, the policy
concerns about limiting exposure to
potentially manipulable underlying
reference assets that the Generic Listing
Standards are intended to address are
otherwise mitigated by the liquidity in
the underlying spot currency market
that prevents manipulation of the
reference prices used by the Currency
Hedge. The Funds will attempt to limit
counterparty risk in OTC currency
swaps by: (i) Entering into such
contracts only with counterparties the
Adviser and/or Sub-Adviser believes are
creditworthy; (ii) limiting a Fund’s
exposure to each counterparty; and (iii)
monitoring the creditworthiness of each
counterparty and the Fund’s exposure to
each counterparty on an ongoing basis.
The Exchange also notes that there are
numerous instances in which the
Commission has approved the listing
and trading of series of Managed Fund
Shares that employ nearly identical or
substantially similar hedging
strategies.27 Specifically, the Hedged
27 See Securities Exchange Act Release Nos.
84143 (September 14, 2018), 83 FR 47659
(September 20, 2018) (SR–CboeBZX–2018–019)
(order approving the listing and trading of eighteen
series of Managed Fund Shares that allowed each
series to hedge its foreign equity position with up
to 50% gross notional exposure to OTC currency
swaps) (the ‘‘Hedged ADR Approval Order’’); 84818
(December 13, 2018), 83 FR 65189 (December 19,
2018) (SR–NYSEArca–2018–75) (order approving
the listing and trading of a series of Managed Fund
Shares that may hold up to 50% of the aggregate
gross notional value of the fund’s portfolio in OTC
derivatives for the purpose of reducing currency,
interest rate, credit, or duration risk, in addition to
allowing the fund to hold an additional 20% of
non-hedging OTC derivatives); 82591 (January 26,
2018) 83 FR 4707 (February 1, 2018) (SR–BatsBZX–
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ADR Approval Order approved the
listing and trading of eighteen series of
Managed Fund Shares (the ‘‘Hedged
ADR Funds’’), each of which consisted
of only two components: (i) A single
ADR; and (ii) OTC currency swaps used
to hedge against fluctuations in the
exchange rate between the U.S. dollar
and the local currency of the foreign
security underlying the ADR. In
addition to not meeting Rule
14.11(i)(4)(C)(v) related to the OTC
currency swaps used to hedge currency
exposure, each series of the Hedged
ADR Funds also did not meet the
concentration 28 and diversity 29
requirements related to their respective
equity holdings. Stated another way, the
Funds are proposing to implement a
Currency Hedge using the same
instruments as the Hedged ADR Funds
with the same limits on such
instruments, but do not require the
additional relief from the equity
holdings portion of the Generic Listing
Standards that was necessary for the
Hedged ADR Funds to list and trade.
The Exchange believes that its
surveillance procedures are adequate to
properly monitor the trading of the
Funds on the Exchange during all
trading sessions and to deter and detect
violations of Exchange rules and the
applicable federal securities laws.
Trading of the Funds through the
Exchange will be subject to the
Exchange’s surveillance procedures for
derivative products, including Managed
Fund Shares. All statements and
representations made in this filing
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 this
filing shall constitute continued listing
requirements for the Funds. The Trust,
on behalf of the Funds, has represented
to the Exchange that it will advise the
Exchange of any failure by a Fund or the
Shares to comply with the continued
listing requirements, and, pursuant to
its obligations under Section 19(g)(1) of
the Act, the Exchange will surveil for
2017–54) (the ‘‘Inflation Hedged Fund’’) (order
approving the listing and trading of a series of
Managed Fund Shares that could gain up to 50%
gross notional exposure to OTC derivatives in order
to hedge against inflation in the fund’s portfolio);
and 83363 (June 1, 2018), 83 FR 26531 (June 7,
2018) (SR–CboeBZX–2018–036) (notice of filing and
immediate effectiveness of a proposal to allow the
Inflation Hedged Fund to move increase its
potential exposure to OTC derivative instruments
from 50% to 60% of the fund’s gross notional
value).
28 See Rule 14.11(i)(4)(C)(i)(a)(3).
29 See Rule 14.11(i)(4)(C)(i)(a)(4).
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17:25 Apr 03, 2019
Jkt 247001
compliance with the continued listing
requirements. If a Fund or the Shares
are not in compliance with the
applicable listing requirements, the
Exchange will commence delisting
procedures under Exchange Rule 14.12.
As described above, all ADRs and
ETFs will be listed on a U.S. national
securities exchange, all of which are
members of ISG or are exchanges with
which the Exchange has in place a
comprehensive surveillance sharing
agreement.30 The Exchange may obtain
information regarding trading in the
Funds, ADRs, ETFs, and certain NonU.S. Component Stocks held by each
Fund via the ISG, from other exchanges
that are members or affiliates of the ISG,
or with which the Exchange has entered
into a comprehensive surveillance
sharing agreement. Additionally, the
Exchange or FINRA, on behalf of the
Exchange, are able to access, as needed,
trade information for certain fixed
income instruments reported to TRACE.
For the above reasons, the Exchange
believes that the proposed rule change
is consistent with the requirements of
Section 6(b)(5) of the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purpose of the Act. The Exchange
notes that the proposed rule change will
facilitate the listing and trading of
additional series of Managed Fund
Shares that will enhance competition
among market participants, to the
benefit of investors and the marketplace.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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
30 For a list of the current members and affiliate
members of ISG, see www.isgportal.com. The
Exchange notes that not all components of the
Disclosed Portfolio for the Fund may trade on
markets that are members of ISG or with which the
Exchange has in place a comprehensive
surveillance sharing agreement.
PO 00000
Frm 00133
Fmt 4703
Sfmt 4703
13375
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 31 and Rule 19b–
4(f)(6) thereunder.32
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 33 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 34
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
requested that the Commission waive
the 30-day operative delay so that the
proposed rule change may become
operative upon filing. The Exchange
asserts that there is no reason for delay
because, as noted above, the Funds are
proposing to implement a Currency
Hedge using the same instruments as
the Hedged ADR Funds with the same
limits on such instruments and
requiring the 30-day delay before the
filing becomes operative will not further
any underlying policy goals related to
the protection of investors and the
public interest. According to the
Exchange, waiver of the 30-day
operative delay would more quickly
facilitate the Adviser’s ability to fully
implement its Currency Hedge, which
would enhance competition among
market participants, to the benefit of
investors and the marketplace. For those
reasons, the Exchange asserts that
waiver of the operative delay would be
consistent with the protection of
investors and the public interest. The
Commission believes that the proposal
raises no new or substantive issues and
that waiver of the 30-day operative
delay is consistent with the protection
of investors and the public interest. The
Commission hereby waives the
operative delay and designates the
proposed rule change operative upon
filing.35
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
31 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission 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. The Exchange
has satisfied this requirement.
33 17 CFR 240.19b–4(f)(6).
34 17 CFR 240.19b–4(f)(6)(iii).
35 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).
32 17
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Federal Register / Vol. 84, No. 65 / Thursday, April 4, 2019 / Notices
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 will 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:
jbell on DSK30RV082PROD 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–2019–019 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–2019–019. 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
VerDate Sep<11>2014
17:25 Apr 03, 2019
Jkt 247001
Number SR–CboeBZX–2019–019 and
should be submitted on or before April
25, 2019.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.36
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–06528 Filed 4–3–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85458; File No. SR–CBOE–
2019–018]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating To Amend Rule
6.42, Interpretation and Policy .04 To
Specify That Replacement Issues May
Be Added to the Penny Pilot Program
(‘‘Pilot’’) on a Quarterly Basis, Without
Altering the Expiration Date of the
Pilot, Which Is June 30, 2019
March 29, 2019.
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 March 22,
2019, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Exchange filed the proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of
the Act 3 and Rule 19b–4(f)(6)
thereunder.4 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
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
Rule 6.42, Interpretation and Policy .04
to specify that replacement issues may
be added to the Penny Pilot Program
(‘‘Pilot’’) on a quarterly basis, without
altering the expiration date of the Pilot,
which is June 30, 2019. The text of the
proposed rule change is provided
below.
36 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
PO 00000
Frm 00134
Fmt 4703
Sfmt 4703
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe Exchange, Inc.
*
*
*
*
*
Rule 6.42. Minimum Increments for Bids and
Offers
(a)–(b) No change.
. . . Interpretations and Policies:
.01–.03 No change.
.04 The Exchange may replace any option
class participating in the Penny Pilot
Program that has been delisted with the next
most actively traded, multiply listed option
class, based on national average daily volume
in the preceding six calendar months, that is
not yet included in the Pilot Program. Any
replacement class would be added on the
second trading day in the first month of each
quarter [following January 1, 2019]. The
Penny Pilot will expire on June 30, 2019.
*
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegalRegulatory
Home.aspx), at the Exchange’s Office of
the Secretary, 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 6.42, Interpretation and Policy .04,
regarding the Pilot, to specify that
replacement issues may be added to the
Pilot on a quarterly basis, without
altering the expiration date of the Pilot,
which is June 30, 2019. The Exchange
recently filed to extend the Pilot until
June 30, 2019 (from December 31, 2018)
and also updated the rule text to
provide that replacement issues may be
added to the Pilot on the second trading
day following January 1, 2019.5 The
5 See Securities Exchange Act Release No. 84940
(December 21, 2018), 83 FR 67759 (December 31,
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]]>Agencies
[Federal Register Volume 84, Number 65 (Thursday, April 4, 2019)]
[Notices]
[Pages 13371-13376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06528]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85474; File No. SR-CboeBZX-2019-019]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change Relating
To Make Certain Changes to the Listing Rule Governing the Listing and
Trading of the Shares of the WisdomTree Japan Multifactor Fund and the
WisdomTree Europe Multifactor Fund of the WisdomTree in Order for Such
Funds To Be Listed and Traded on the Exchange Under Rule 14.11(i)
(``Managed Fund Shares'')
March 29, 2019.
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 March 15, 2019, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') is filing
with the Securities and Exchange Commission (``Commission'') a proposal
to make certain changes to the listing rule governing the listing and
trading of the shares of the WisdomTree Japan Multifactor Fund and the
WisdomTree Europe Multifactor Fund of the WisdomTree in order for
[these] Funds to be listed and traded on the Exchange under Rule
14.11(i) (``Managed Fund Shares'').
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The shares of the Funds (the ``Shares'') are currently listed and
traded on the Exchange pursuant to the generic listing standards under
Rule 14.11(c), which governs the listing and trading of Index Fund
Shares on the Exchange. The Exchange is proposing to continue listing
and trading the Shares on the Exchange with certain changes to each
Fund's potential holdings, but under Rule 14.11(i), which governs the
listing and trading of Managed Fund Shares on the Exchange. The
Exchange submits this proposal in order to allow the Funds to hold OTC
currency swaps in a manner that does not comply with Exchange Rule
14.11(i)(4)(C)(v).
The Shares are offered by the WisdomTree Trust, which was
established as a Delaware statutory trust on December 15, 2005.
WisdomTree Asset Management, Inc. (the ``Adviser'') acts as adviser to
the Funds. Mellon Investments Corporation acts as sub-adviser (the
``Sub-Adviser'') to the Funds. The Trust is registered with the
Commission as an investment company and has filed two Form 497
Supplements to its registration statement on Form N-1A (``Registration
Statement'') with the Commission on behalf of the Funds outlining the
changes described herein.\5\
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\5\ See Registration Statement for the Trust (File Nos. 333-
132380 811-21864) and Form 497 Supplements dated January 18, 2019.
The descriptions of the Funds and the Shares contained herein are
based on information in the Registration Statement.
---------------------------------------------------------------------------
Exchange Rule 14.11(i)(7) provides that, if the investment adviser
to the investment company issuing Managed Fund Shares is affiliated
with a broker-dealer, such investment adviser shall erect and maintain
a ``fire wall'' between the investment adviser and the
[[Page 13372]]
broker-dealer with respect to access to information concerning the
composition and/or changes to such investment company portfolio.\6\ In
addition, Exchange Rule 14.11(i)(7) further requires that personnel who
make decisions on the investment company's portfolio composition must
be subject to procedures designed to prevent the use and dissemination
of material nonpublic information regarding the applicable investment
company portfolio. Exchange Rule 14.11(i)(7) is similar to Exchange
Rule 14.11(b)(5)(A)(i) (which applies to index-based funds); however,
Exchange Rule 14.11(i)(7) in connection with the establishment of a
``fire wall'' between the investment adviser and the broker-dealer
reflects the applicable open-end fund's portfolio, not an underlying
benchmark index, as is the case with index-based funds. The Adviser is
not a registered broker-dealer and is not affiliated with any broker-
dealers that are in the business of buying or selling securities. The
Sub-Adviser is affiliated with multiple broker-dealers and has
implemented and will maintain a ``fire wall'' with respect to such
broker-dealers and their personnel regarding access to information
concerning the composition and/or changes to a Fund's portfolio. In
addition, Sub-Adviser personnel who make decisions regarding a Fund's
portfolio are subject to procedures designed to prevent the use and
dissemination of material nonpublic information regarding such Fund's
portfolio. In the event that (a) the Adviser or the Sub-Adviser becomes
registered as a broker-dealer or newly affiliated with a broker-dealer,
or (b) any new adviser or sub-adviser is a registered broker-dealer or
becomes affiliated with a broker-dealer, it will implement and maintain
a fire wall with respect to its relevant personnel or such broker-
dealer affiliate, as applicable, regarding access to information
concerning the composition and/or changes to the portfolio, and will be
subject to procedures designed to prevent the use and dissemination of
material non-public information regarding such portfolio.
---------------------------------------------------------------------------
\6\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and its related personnel are
subject to the provisions of Rule 204A-1 under the Advisers Act
relating to codes of ethics. This Rule requires investment advisers
to adopt a code of ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with other applicable
securities laws. Accordingly, procedures designed to prevent the
communication and misuse of non-public information by an investment
adviser must be consistent with Rule 204A-1 under the Advisers Act.
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful
for an investment adviser to provide investment advice to clients
unless such investment adviser has (i) adopted and implemented
written policies and procedures reasonably designed to prevent
violation, by the investment adviser and its supervised persons, of
the Advisers Act and the Commission rules adopted thereunder; (ii)
implemented, at a minimum, an annual review regarding the adequacy
of the policies and procedures established pursuant to subparagraph
(i) above and the effectiveness of their implementation; and (iii)
designated an individual (who is a supervised person) responsible
for administering the policies and procedures adopted under
subparagraph (i) above.
---------------------------------------------------------------------------
Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as
amended.
The Exchange submits this proposal in order to allow the Funds to
hold OTC currency swaps in a manner that does not comply with Exchange
Rule 14.11(i)(4)(C)(v),\7\ Otherwise, the Funds will comply with all
other listing requirements on an initial and continued listing basis
under Exchange Rule 14.11(i) for Managed Fund Shares (the ``Generic
Listing Standards'').
---------------------------------------------------------------------------
\7\ In particular, the Funds may not meet the requirement under
Exchange Rule 14.11(i)(4)(C)(v) that the aggregate gross notional
value of OTC derivatives shall not exceed 20% of the weight of the
portfolio (including gross notional exposures).
---------------------------------------------------------------------------
WisdomTree Japan Multifactor Fund
As amended in the applicable Form 497 Supplement, the Japan Fund
will seek income and capital appreciation. The Japan Fund will be
actively managed using a model-based approach and will seek to achieve
its investment objective by investing primarily in Japanese equity
securities that exhibit certain characteristics that the Adviser
believes to be indicative of positive future returns based on a model
developed by the Adviser. The Adviser will seek to identify equity
securities that have the highest potential for returns based on
proprietary measures of fundamental factors, such as value and quality,
and technical factors, such as momentum and correlation. The Adviser
will employ a quantitative model to identify which securities the Japan
Fund might purchase and sell and opportune times for purchases and
sales. At a minimum, the Japan Fund's portfolio will be rebalanced
quarterly according to the Adviser's quantitative model, although a
more active approach may be taken depending on such factors as market
conditions and investment opportunities, and the number of holdings in
the Japan Fund may vary.
The Adviser will seek to manage the Japan Fund's currency risk by
dynamically hedging currency fluctuations in the relative value of the
Japanese yen against the U.S. dollar (the ``Japan Currency Hedge''),
ranging from a 0% to 100% hedge. The hedge ratios are adjusted as
frequently as weekly utilizing signals such as interest rate
differentials, momentum, and value.
Under Normal Market Conditions,\8\ the Japan Fund will hold only
the following instruments: Non-U.S. Component Stocks,\9\ American
Depositary Receipts (``ADRs''), U.S. exchange-listed ETFs,\10\ cash and
Cash Equivalents,\11\ and OTC currency swaps. As noted above, all of
the Japan Fund's holdings will meet the Generic Listing Standards with
the exception of its holdings in OTC currency swaps, which may not meet
the requirement under Rule 14.11(i)(4)(C)(v) that prevents the
aggregate gross notional value of OTC derivatives from exceeding 20% of
the weight of the portfolio (including gross notional exposures).
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\8\ The term ``Normal Market Conditions'' includes, but is not
limited to, the absence of trading halts in the applicable financial
markets generally; operational issues causing dissemination of
inaccurate market information or system failures; or force majeure
type events such as natural or man-made disaster, act of God, armed
conflict, act of terrorism, riot or labor disruption, or any similar
intervening circumstance. In response to adverse market, economic,
political, or other conditions, the Fund reserves the right to
invest in U.S. government securities, other money market instruments
(as defined below), and cash, without limitation, as determined by
the Adviser or Sub-Adviser. In the event the Fund engages in these
temporary defensive strategies that are inconsistent with its
investment strategies, the Fund's ability to achieve its investment
objectives may be limited.
\9\ As defined in Rule 14.11(c)(1)(E), the term ``Non-U.S.
Component Stock'' shall mean an equity security that (a) is not
registered under Sections 12(b) or 12(g) of the Act, (b) is issued
by an entity that is not organized, domiciled or incorporated in the
United States, and (c) is issued by an entity that is an operating
company (including Real Estate Investment Trusts (REITs) and income
trusts, but excluding investment trusts, unit trusts, mutual funds,
and derivatives).
\10\ For purposes of this filing the term ETF shall mean
Portfolio Depository Receipts as defined in Rule 14.11(b), Index
Fund Shares as defined in Rule 14.11(c), and Managed Fund Shares as
defined in Rule 14.11(i), or the equivalent product type on other
national securities exchanges. With respect to Index Fund Shares,
the underlying index shall be referred to herein as an ``Index.''
\11\ As defined in Rule 14.11(i)(4)(C)(iii), Cash Equivalents
are short-term instruments with maturities of less than three months
that are: (i) U.S. Government securities, including bills, notes,
and bonds differing as to maturity and rates of interest, which are
either issued or guaranteed by the U.S. Treasury or by U.S.
Government agencies or instrumentalities; (ii) certificates of
deposit issued against funds deposited in a bank or savings and loan
association; (iii) bankers acceptances, which are short-term credit
instruments used to finance commercial transactions; (iv) repurchase
agreements and reverse repurchase agreements; (v) bank time
deposits, which are monies kept on deposit with banks or savings and
loan associations for a stated period of time at a fixed rate of
interest; (vi) commercial paper, which are short-term unsecured
promissory notes; and (vii) money market funds.
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[[Page 13373]]
WisdomTree Europe Multifactor Fund
As amended in the applicable Form 497 Supplement, the Europe Fund
will seek income and capital appreciation. The Europe Fund will be
actively managed using a model-based approach and will seek to achieve
its investment objective by investing primarily in European equity
securities that exhibit certain characteristics that the Adviser
believes to be indicative of positive future returns based on a model
developed by the Adviser. The Adviser will seek to identify equity
securities that have the highest potential for returns based on
proprietary measures of fundamental factors, such as value and quality,
and technical factors, such as momentum and correlation. The Adviser
will employ a quantitative model to identify which securities the
Europe Fund might purchase and sell and opportune times for purchases
and sales. At a minimum, the Europe Fund's portfolio will be rebalanced
quarterly according to the Adviser's quantitative model, although a
more active approach may be taken depending on such factors as market
conditions and investment opportunities, and the number of holdings in
the Europe Fund may vary.
The Adviser will seek to manage the Europe Fund's currency risk by
dynamically hedging currency fluctuations in the relative value of the
euro against the U.S. dollar (collectively, with the Japan Currency
Hedge, the ``Currency Hedge''), ranging from a 0% to 100% hedge. The
hedge ratios are adjusted as frequently as weekly utilizing signals
such as interest rate differentials, momentum, and value.
Under Normal Market Conditions, the Europe Fund will hold only the
following instruments: Non-U.S. Component Stocks, ADRs, U.S. exchange-
listed ETFs, cash and Cash Equivalents, and OTC currency swaps. As
noted above, the Europe Fund's holdings will meet the Generic Listing
Standards with the exception of its holdings in OTC currency swaps,
which may not meet the requirement under Rule 14.11(i)(4)(C)(v) that
prevents the aggregate gross notional value of OTC derivatives from
exceeding 20% of the weight of the portfolio (including gross notional
exposures).
The Trust is required to comply with Rule 10A-3 under the Act \12\
for the initial and continued listing of the Shares of each Fund. In
addition, the Exchange represents that the Shares of each Fund will
meet and be subject to all other requirements of the Generic Listing
Rules and continued listing requirements for Managed Fund Shares under
Exchange Rule 14.11(i), including those requirements regarding the
Disclosed Portfolio (as defined in the Exchange rules) and the
requirement that the Disclosed Portfolio and the net asset value
(``NAV'') will be made available to all market participants at the same
time,\13\ intraday indicative value,\14\ suspension of trading or
removal,\15\ trading halts,\16\ disclosure,\17\ firewalls,\18\ and
surveillance.\19\ All statements and representations made in this
filing 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 this
filing shall constitute continued listing requirements for the Funds.
The Trust, on behalf of the Funds, has represented to the Exchange that
it will advise the Exchange of any failure by a Fund or the Shares to
comply with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Act, the Exchange will
surveil for compliance with the continued listing requirements. If a
Fund or the Shares are not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under
Exchange Rule 14.12.
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\12\ 17 CFR 240.10A-3.
\13\ See Exchange Rules 14.11(i)(4)(A)(ii) and
14.11(i)(4)(B)(ii).
\14\ See Exchange Rule 14.11(i)(4)(B)(i).
\15\ See Exchange Rule 14.11(i)(4)(B)(iii).
\16\ See Exchange Rule 14.11(i)(4)(B)(iv).
\17\ See Exchange Rule 14.11(i)(6).
\18\ See Exchange Rule 14.11(i)(7).
\19\ See Exchange Rules 14.11(i)(2)(C).
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Precedent and Policy Discussion
As described above, the Funds meet all of the Generic Listing
Standards except as it may relate to their holdings in OTC currency
swaps, which would be used to achieve their respective Currency Hedge.
The Exchange believes that this proposal does not raise any substantive
issues for the Commission to review because there are numerous
instances in which the Commission has approved the listing and trading
of series of Managed Fund Shares that employ nearly identical or
substantially similar hedging strategies,\20\ especially when compared
to the Hedged ADR Approval Order. Specifically, the Hedged ADR Approval
Order approved the listing and trading of eighteen series of Managed
Fund Shares (the ``Hedged ADR Funds''), each of which consisted of only
two components: (i) A single ADR; and (ii) OTC currency swaps used to
hedge against fluctuations in the exchange rate between the U.S. dollar
and the local currency of the foreign security underlying the ADR. In
addition to not meeting Rule 14.11(i)(4)(C)(v) related to the OTC
currency swaps used to hedge currency exposure, each series of the
Hedged ADR Funds also did not meet the concentration \21\ and diversity
\22\ requirements related to their respective equity holdings. Stated
another way, the Funds are proposing to implement a Currency Hedge
using the same instruments as the Hedged ADR Funds with the same limits
on such instruments, but do not require the additional relief from the
equity holdings portion of the Generic Listing Standards that was
necessary for the Hedged ADR Funds to list and trade.
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\20\ See Securities Exchange Act Release Nos. 84143 (September
14, 2018), 83 FR 47659 (September 20, 2018) (SR-CboeBZX-2018-019)
(order approving the listing and trading of eighteen series of
Managed Fund Shares that allowed each series to hedge its foreign
equity position with up to 50% gross notional exposure to OTC
currency swaps) (the ``Hedged ADR Approval Order''); 84818 (December
13, 2018), 83 FR 65189 (December 19, 2018) (SR-NYSEArca-2018-75)
(order approving the listing and trading of a series of Managed Fund
Shares that may hold up to 50% of the aggregate gross notional value
of the fund's portfolio in OTC derivatives for the purpose of
reducing currency, interest rate, credit, or duration risk, in
addition to allowing the fund to hold an additional 20% of non-
hedging OTC derivatives); 82591 (January 26, 2018) 83 FR 4707
(February 1, 2018) (SR-BatsBZX-2017-54) (the ``Inflation Hedged
Fund'') (order approving the listing and trading of a series of
Managed Fund Shares that could gain up to 50% gross notional
exposure to OTC derivatives in order to hedge against inflation in
the fund's portfolio); and 83363 (June 1, 2018), 83 FR 26531 (June
7, 2018) (SR-CboeBZX-2018-036) (notice of filing and immediate
effectiveness of a proposal to allow the Inflation Hedged Fund to
move increase its potential exposure to OTC derivative instruments
from 50% to 60% of the fund's gross notional value).
\21\ See Rule 14.11(i)(4)(C)(i)(a)(3).
\22\ See Rule 14.11(i)(4)(C)(i)(a)(4).
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Further, the Exchange believes that, while the portfolios of the
Funds might not meet Rule 14.11(i)(4)(C)(v), the policy issues that the
rule is intended to address are otherwise mitigated by the structure
and purpose of the Currency Hedge within the Funds.\23\ Specifically,
the Exchange believes that the policy issues that Rule
14.11(i)(4)(C)(v) is intended to address are mitigated by the way that
the Funds would use OTC currency swaps. The rule is intended to
mitigate concerns around the manipulability of a particular underlying
reference asset or derivatives contract and to minimize counterparty
risk. While the Currency Hedge
[[Page 13374]]
positions taken by the Funds may not meet the Generic Listing Standards
related to OTC derivatives holdings, the policy concerns about limiting
exposure to potentially manipulable underlying reference assets that
the Generic Listing Standards are intended to address are otherwise
mitigated by the liquidity in the underlying spot currency market that
prevents manipulation of the reference prices used by the Currency
Hedge.\24\ The Funds will attempt to limit counterparty risk in OTC
currency swaps by: (i) Entering into such contracts only with
counterparties the Adviser and/or Sub-Adviser believes are
creditworthy; (ii) limiting a Fund's exposure to each counterparty; and
(iii) monitoring the creditworthiness of each counterparty and the
Fund's exposure to each counterparty on an ongoing basis.
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\23\ Each Fund expects to invest in excess of 80% of its net
assets in Non-U.S. Component Stocks in a manner that will comply
with the Generic Listing Standards.
\24\ Based on statistics reported by the Bank for International
Settlements, there is significant liquidity in the spot market for
the euro and the Japanese yen. See ``Turnover of OTC foreign
exchange instruments, by currency'' available at: https://stats.bis.org/statx/srs/table/d11.3.
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Availability of Information
As noted above, the Funds will each comply with the requirements
for Managed Fund Shares related to Disclosed Portfolio, Net Asset
Value, and the Intraday Indicative Value. Additionally, the intra-day,
closing and settlement prices of Non-U.S. Component Stocks, ADRs, and
ETFs will be readily available from the securities exchanges on which
such securities are traded, as well as published or other public
sources, or online information services such as Bloomberg or Reuters.
Intraday price quotations on OTC currency swaps are available from
major broker-dealer firms and from third-parties, which may provide
prices free with a time delay or in real-time for a paid fee. Price
information for cash equivalents will be available from major market
data vendors. Each Fund's Disclosed Portfolio will be available on the
issuer's website (www.WisdomTree.com) free of charge. Each Fund's
website will include the prospectus for the applicable Fund and
additional information related to NAV and other applicable quantitative
information. Information regarding market price and trading volume of
the Shares will be continuously available throughout the day on
brokers' computer screens and other electronic services. Information
regarding the previous day's closing price and trading volume for the
Shares will be published daily in the financial section of newspapers.
Trading in the Shares may be halted for market conditions or for
reasons that, in the view of the Exchange, make trading inadvisable.
The Exchange deems the Shares to be equity securities, thus rendering
trading in the Shares subject to the Exchange's existing rules
governing the trading of equity securities. The Exchange has
appropriate rules to facilitate trading in the shares during all
trading sessions.
Surveillance
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Funds on the Exchange during all
trading sessions and to deter and detect violations of Exchange rules
and the applicable federal securities laws. Trading of the Funds
through the Exchange will continue to be subject to the Exchange's
surveillance procedures for derivative products, including Managed Fund
Shares. The issuer has represented to the Exchange that it will advise
the Exchange of any failure by a Fund to comply with the continued
listing requirements, and, pursuant to its obligations under Section
19(g)(1) of the Act, the Exchange will surveil for compliance with the
continued listing requirements. If a Fund is not in compliance with the
applicable listing requirements, the Exchange will commence delisting
proceedings under Rule 14.12. The Exchange may obtain information
regarding trading in the Funds, ADRs, ETFs, and certain of the Non-U.S.
Component Stocks that are held by each Fund via the ISG, from other
exchanges that are members or affiliates of the ISG, or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. Additionally, the Exchange or FINRA, on behalf of the
Exchange, are able to access, as needed, trade information for certain
fixed income instruments reported to TRACE.
2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act \25\ in general and Section 6(b)(5) of the Act \26\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest. Specifically, the Exchange believes that the proposal
is consistent with Rule 6(b)(5) of the Act in that is designed to
prevent fraudulent and manipulative acts and practices because the
policy concerns about limiting exposure to potentially manipulable
underlying reference assets that the Generic Listing Standards are
intended to address, specifically Rule 14.11(i)(4)(C)(v) related to OTC
derivatives holdings, are otherwise mitigated by the liquidity in the
underlying spot currency market that prevents manipulation of the
reference prices used by the Currency Hedge. Specifically, the Exchange
believes that the policy issues that Rule 14.11(i)(4)(C)(v) is intended
to address are mitigated by the way that the Funds would use OTC
currency swaps. The rule is intended to mitigate concerns around the
manipulability of a particular underlying reference asset or
derivatives contract and to minimize counterparty risk. As noted above,
while the Currency Hedge positions that might be taken by the Funds may
not meet the Generic Listing Standards related to OTC derivatives
holdings, the policy concerns about limiting exposure to potentially
manipulable underlying reference assets that the Generic Listing
Standards are intended to address are otherwise mitigated by the
liquidity in the underlying spot currency market that prevents
manipulation of the reference prices used by the Currency Hedge. The
Funds will attempt to limit counterparty risk in OTC currency swaps by:
(i) Entering into such contracts only with counterparties the Adviser
and/or Sub-Adviser believes are creditworthy; (ii) limiting a Fund's
exposure to each counterparty; and (iii) monitoring the
creditworthiness of each counterparty and the Fund's exposure to each
counterparty on an ongoing basis.
---------------------------------------------------------------------------
\25\ 15 U.S.C. 78f.
\26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange also notes that there are numerous instances in which
the Commission has approved the listing and trading of series of
Managed Fund Shares that employ nearly identical or substantially
similar hedging strategies.\27\ Specifically, the Hedged
[[Page 13375]]
ADR Approval Order approved the listing and trading of eighteen series
of Managed Fund Shares (the ``Hedged ADR Funds''), each of which
consisted of only two components: (i) A single ADR; and (ii) OTC
currency swaps used to hedge against fluctuations in the exchange rate
between the U.S. dollar and the local currency of the foreign security
underlying the ADR. In addition to not meeting Rule 14.11(i)(4)(C)(v)
related to the OTC currency swaps used to hedge currency exposure, each
series of the Hedged ADR Funds also did not meet the concentration \28\
and diversity \29\ requirements related to their respective equity
holdings. Stated another way, the Funds are proposing to implement a
Currency Hedge using the same instruments as the Hedged ADR Funds with
the same limits on such instruments, but do not require the additional
relief from the equity holdings portion of the Generic Listing
Standards that was necessary for the Hedged ADR Funds to list and
trade.
---------------------------------------------------------------------------
\27\ See Securities Exchange Act Release Nos. 84143 (September
14, 2018), 83 FR 47659 (September 20, 2018) (SR-CboeBZX-2018-019)
(order approving the listing and trading of eighteen series of
Managed Fund Shares that allowed each series to hedge its foreign
equity position with up to 50% gross notional exposure to OTC
currency swaps) (the ``Hedged ADR Approval Order''); 84818 (December
13, 2018), 83 FR 65189 (December 19, 2018) (SR-NYSEArca-2018-75)
(order approving the listing and trading of a series of Managed Fund
Shares that may hold up to 50% of the aggregate gross notional value
of the fund's portfolio in OTC derivatives for the purpose of
reducing currency, interest rate, credit, or duration risk, in
addition to allowing the fund to hold an additional 20% of non-
hedging OTC derivatives); 82591 (January 26, 2018) 83 FR 4707
(February 1, 2018) (SR-BatsBZX-2017-54) (the ``Inflation Hedged
Fund'') (order approving the listing and trading of a series of
Managed Fund Shares that could gain up to 50% gross notional
exposure to OTC derivatives in order to hedge against inflation in
the fund's portfolio); and 83363 (June 1, 2018), 83 FR 26531 (June
7, 2018) (SR-CboeBZX-2018-036) (notice of filing and immediate
effectiveness of a proposal to allow the Inflation Hedged Fund to
move increase its potential exposure to OTC derivative instruments
from 50% to 60% of the fund's gross notional value).
\28\ See Rule 14.11(i)(4)(C)(i)(a)(3).
\29\ See Rule 14.11(i)(4)(C)(i)(a)(4).
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The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Funds on the Exchange during all
trading sessions and to deter and detect violations of Exchange rules
and the applicable federal securities laws. Trading of the Funds
through the Exchange will be subject to the Exchange's surveillance
procedures for derivative products, including Managed Fund Shares. All
statements and representations made in this filing 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 this filing shall
constitute continued listing requirements for the Funds. The Trust, on
behalf of the Funds, has represented to the Exchange that it will
advise the Exchange of any failure by a Fund or the Shares to comply
with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Act, the Exchange will
surveil for compliance with the continued listing requirements. If a
Fund or the Shares are not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under
Exchange Rule 14.12.
As described above, all ADRs and ETFs will be listed on a U.S.
national securities exchange, all of which are members of ISG or are
exchanges with which the Exchange has in place a comprehensive
surveillance sharing agreement.\30\ The Exchange may obtain information
regarding trading in the Funds, ADRs, ETFs, and certain Non-U.S.
Component Stocks held by each Fund via the ISG, from other exchanges
that are members or affiliates of the ISG, or with which the Exchange
has entered into a comprehensive surveillance sharing agreement.
Additionally, the Exchange or FINRA, on behalf of the Exchange, are
able to access, as needed, trade information for certain fixed income
instruments reported to TRACE.
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\30\ For a list of the current members and affiliate members of
ISG, see www.isgportal.com. The Exchange notes that not all
components of the Disclosed Portfolio for the Fund may trade on
markets that are members of ISG or with which the Exchange has in
place a comprehensive surveillance sharing agreement.
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For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of
additional series of Managed Fund Shares that will enhance competition
among market participants, to the benefit of investors and the
marketplace.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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 \31\ and Rule 19b-
4(f)(6) thereunder.\32\
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\31\ 15 U.S.C. 78s(b)(3)(A).
\32\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
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.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \33\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \34\ 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 requested that the Commission waive the 30-day operative delay so
that the proposed rule change may become operative upon filing. The
Exchange asserts that there is no reason for delay because, as noted
above, the Funds are proposing to implement a Currency Hedge using the
same instruments as the Hedged ADR Funds with the same limits on such
instruments and requiring the 30-day delay before the filing becomes
operative will not further any underlying policy goals related to the
protection of investors and the public interest. According to the
Exchange, waiver of the 30-day operative delay would more quickly
facilitate the Adviser's ability to fully implement its Currency Hedge,
which would enhance competition among market participants, to the
benefit of investors and the marketplace. For those reasons, the
Exchange asserts that waiver of the operative delay would be consistent
with the protection of investors and the public interest. The
Commission believes that the proposal raises no new or substantive
issues and that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest. The Commission
hereby waives the operative delay and designates the proposed rule
change operative upon filing.\35\
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\33\ 17 CFR 240.19b-4(f)(6).
\34\ 17 CFR 240.19b-4(f)(6)(iii).
\35\ 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
[[Page 13376]]
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 will 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-2019-019 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-2019-019. 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-2019-019 and should be submitted
on or before April 25, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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\36\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-06528 Filed 4-3-19; 8:45 am]
BILLING CODE 8011-01-P
