Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To List and Trade Shares of the American Century Focused Dynamic Growth ETF and American Century Focused Large Cap Value ETF Under Currently Proposed Rule 14.11(k), 29912-29919 [2019-13405]

Download as PDF 29912 Federal Register / Vol. 84, No. 122 / Tuesday, June 25, 2019 / Notices unaffiliated exchange competitors that also trade ETPs. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: khammond on DSKBBV9HB2PROD with NOTICES Electronic Comments • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2019–34 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–NYSE–2019–34. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than VerDate Sep<11>2014 20:35 Jun 24, 2019 Jkt 247001 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–NYSE–2019–34 and should be submitted on or before July 16, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Vanessa A. Countryman, Acting Secretary. [FR Doc. 2019–13407 Filed 6–24–19; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–86155; File No. SR– CboeBZX–2019–057] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To List and Trade Shares of the American Century Focused Dynamic Growth ETF and American Century Focused Large Cap Value ETF Under Currently Proposed Rule 14.11(k) June 19, 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 June 6, 2019, Cboe BZX Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 19 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes a rule change to list and trade shares of the following under currently proposed Rule 14.11(k): American Century Focused Dynamic Growth ETF and American Century Focused Large Cap Value ETF (each a ‘‘Fund’’ and, collectively, the ‘‘Funds’’). The text of the proposed rule change is also available on the Exchange’s website (http://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 Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange has submitted a proposal to add new Rule 14.11(k) for the purpose of permitting the listing and trading of Managed Portfolio Shares, which are securities issued by an actively managed open-end investment management company, which has not yet been published by the Commission.3 3 As proposed, the term ‘‘Managed Portfolio Share’’ means a security that (a) represents an interest in a registered investment company (‘‘Investment Company’’) organized as an open-end management investment company, that invests in a portfolio of securities selected by the Investment Company’s investment adviser consistent with the Investment Company’s investment objectives and policies; (b) is issued in a specified aggregate minimum number of shares equal to a Creation Unit, or multiples thereof, in return for a designated portfolio of securities (and/or an amount of cash) with a value equal to the next determined net asset value which the AP Representative (defined below) will provide through a confidential account; and (c) when aggregated in the same specified aggregate number of shares equal to a Redemption Unit, or multiples thereof, may be redeemed at the request of an Authorized Participant (as defined in the Investment Company’s Form N–1A filed with the SEC), which Authorized Participant will be paid through a confidential account established for its benefit a portfolio of securities and/or cash with a E:\FR\FM\25JNN1.SGM 25JNN1 Federal Register / Vol. 84, No. 122 / Tuesday, June 25, 2019 / Notices Proposed Rule 14.11(k)(2)(A) would require the Exchange to file separate proposals under Section 19(b) of the Act before listing and trading any series of Managed Portfolio Shares on the Exchange. As such, the Exchange is submitting this proposal in order to list and trade shares of the American Century Focused Dynamic Growth ETF and the American Century Focused Large Cap Value ETF under proposed Rule 14.11(k). Description of the Funds and the Trust khammond on DSKBBV9HB2PROD with NOTICES The shares of each Fund will be issued by American Century ETF Trust (the ‘‘Trust’’), a statutory trust organized under the laws of the State of Delaware and registered with the Commission as an open-end management investment company.4 The investment adviser to the Trust will be American Century Investment Management, Inc. (the ‘‘Adviser’’). Foreside Fund Services, LLC (the ‘‘Distributor’’) will serve as the distributor of each of the Fund’s 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 VIIV, reference assets, and intraday indicative values, and the applicability of Exchange rules shall constitute continued listing value equal to the next determined net asset value. See SR–CboeBZX–2019–047 (the ‘‘Proposal’’). 4 The Trust is registered under the 1940 Act. On June 18, 2018, the Trust filed a registration statement on Form N–1A relating to the Funds (File No. 811–23305) (the ‘‘Registration Statement’’). The Exchange notes that the names of the Funds have been changed since the Registration Statement was filed and that such names will be updated in a subsequent filing. The Shares will not be listed on the Exchange until an order (‘‘Exemptive Order’’) under the 1940 Act has been issued by the Commission with respect to the application for exemptive relief (the ‘‘Exemptive Application’’) (File No. 812–15035). Investments made by the Funds will comply with the conditions set forth in the Exemptive Order. The description of the operation of the Trust and the Funds herein is based, in part, on the Registration Statement. The Exchange notes that the Exemptive Application is very similar to the application for exemptive relieve submitted by Precidian ETFs Trust, et al. for which an order granting the requested relief was issued on May 20, 2019 (File No. 812–14405) (the ‘‘Order’’). The Order specifically notes that ‘‘granting the requested exemptions is appropriate in and consistent with the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. It is further found that the terms of the proposed transactions, including the consideration to be paid or received, are reasonable and fair and do not involve overreaching on the part of any person concerned, and that the proposed transactions are consistent with the policy of each registered investment company concerned and with the general purposes of the Act.’’ See Investment Company Act Release Nos. 33440 and 33477. VerDate Sep<11>2014 20:35 Jun 24, 2019 Jkt 247001 requirements for listing the shares on the Exchange. Proposed Rule 14.11(k)(2)(E) provides that, if the investment adviser to the investment company issuing Managed Portfolio Shares is registered as a broker-dealer or is affiliated with a broker-dealer, such investment adviser will erect and maintain a ‘‘fire wall’’ between the investment adviser and personnel of the broker-dealer or brokerdealer affiliate, as applicable, with respect to access to information concerning the composition and/or changes to such investment company portfolio.5 In addition, proposed Rule 14.11(k)(2)(E) further requires 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. Proposed Rule 14.11(k)(2)(E) is similar to Rule 14.11(i)(7), related to Managed Fund Shares, and Rule 14.11(c)(5)(A)(i), related to Index Fund Shares, except that proposed Rule 14.11(k)(2)(E) relates to the establishment of a ‘‘fire wall’’ between the investment adviser and the broker-dealer as applicable to an Investment Company’s portfolio, not an underlying benchmark index, as is the case with index-based funds. The Adviser is not registered as a brokerdealer, but is affiliated with a brokerdealer and has implemented and will maintain a ‘‘fire wall’’ with respect to such broker-dealer regarding access to information concerning the composition and/or changes to a Fund’s portfolio. In the event (a) the Adviser becomes registered as a broker-dealer or becomes 5 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 will be 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 violations, by the investment adviser and its supervised persons, of the Advisers Act and the Commission rules adopted thereunder; (ii) implemented, at a minimum, an annual review regarding the adequacy of the policies and procedures established pursuant to subparagraph (i) above and the effectiveness of their implementation; and (iii) designated an individual (who is a supervised person) responsible for administering the policies and procedures adopted under subparagraph (i) above. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 29913 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 its broker-dealer affiliate 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 nonpublic information regarding such portfolio. The portfolio for each Fund will consist primarily of U.S. exchange-listed equity securities and shares issued by other U.S. exchange-listed ETFs.6 All exchange-listed equity securities in which the Funds will invest will be listed and traded on U.S. national securities exchanges. Description of the Funds American Century Focused Dynamic Growth ETF The Fund seeks long-term capital growth. Under Normal Market Conditions,7 the Fund intends to invest primarily in U.S. exchange-listed equity securities. The portfolio managers look for stocks of companies they believe will increase in value over time. In implementing this strategy, the portfolio managers make their investment decisions based primarily on their analysis of individual companies, rather than on broad economic forecasts. Management of the Fund is based on the belief that, over the long term, stock price movements follow growth in earnings, revenues and/or cash flow. The portfolio managers use a variety of analytical research tools and techniques to identify the stocks of companies that meet their investment criteria. In addition to investing primarily in U.S. exchange-listed equity securities, the Fund may also invest in exchangetraded funds, exchange-listed ADRs, U.S. exchange-listed equity futures contracts, and U.S. exchange-listed 6 For purposes of describing the holdings of the Funds, ETFs include Portfolio Depository Receipts (as described in Rule 14.11(b)); Index Fund Shares (as described in Rule 14.11(c)); and Managed Fund Shares (as described in Rule 14.11(i)). The ETFs in which a Fund will invest all will be listed and traded on U.S. national securities exchanges. While the Funds may invest in inverse ETFs, the Funds will not invest in leveraged (e.g., 2X, –2X, 3X or –3X) ETFs. 7 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. E:\FR\FM\25JNN1.SGM 25JNN1 29914 Federal Register / Vol. 84, No. 122 / Tuesday, June 25, 2019 / Notices equity index futures contracts. The Fund may also hold cash and Cash Equivalents 8 without limitation. The Exchange notes that the Fund’s holdings will meet the generic listing standards applicable to series of Managed Fund Shares under Rule 14.11(i)(4)(C). While such standards do not apply directly to series of Managed Portfolio Shares, the Exchange believes that the overarching policy issues related to liquidity, market cap, diversity, and concentration of portfolio holdings that Rule 14.11(i)(4)(C) is intended to address are equally applicable to series of Managed Portfolio Shares. khammond on DSKBBV9HB2PROD with NOTICES American Century Focused Large Cap Value ETF The Fund seeks long-term capital growth. Under Normal Market Conditions, the Fund intends to invest primarily in U.S. exchange-listed equity securities. The portfolio managers look for companies whose stock price may not reflect the company’s value. The managers attempt to purchase the stocks of these undervalued companies and hold each stock until the price has increased to, or is higher than, a level the managers believe more accurately reflects the fair value of the company. The portfolio managers may sell stocks from the fund’s portfolio if they believe a stock no longer meets their valuation criteria, a stock’s risk parameters outweigh its return opportunity, more attractive alternatives are identified or specific events alter a stock’s prospects. In addition to investing primarily in U.S. exchange-listed equity securities, the Fund may also invest in exchangetraded funds, exchange-listed ADRs, U.S. exchange-listed equity futures contracts, and U.S. exchange-listed equity index futures contracts. The Fund may also hold cash and Cash Equivalents without limitation. The Exchange notes that the Fund’s holdings will meet the generic listing 8 For purposes of this filing and consistent with Rule 14.11(i)(4)(C)(iii) related to Managed Fund Shares, Cash Equivalents are short-term instruments with maturities of less than three months, which includes only the following: (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. VerDate Sep<11>2014 20:35 Jun 24, 2019 Jkt 247001 standards applicable to series of Managed Fund Shares under Rule 14.11(i)(4)(C). While such standards do not apply directly to series of Managed Portfolio Shares, the Exchange believes that the overarching policy issues related to liquidity, market cap, diversity, and concentration of portfolio holdings that Rule 14.11(i)(4)(C) is intended to address are equally applicable to series of Managed Portfolio Shares. Investment Restrictions Each Fund may hold up to an aggregate amount of 15% of its total assets in illiquid assets,9 consistent with Commission guidance. Each Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will consider taking appropriate steps in order to maintain adequate liquidity. Illiquid assets include securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets as determined in accordance with Commission staff guidance.10 In any event, the Funds will not purchase any securities that are illiquid investments at the time of purchase. According to the Registration Statement, each Fund will seek to qualify for treatment as a Regulated 9 In reaching liquidity decisions, the Adviser may consider the following factors: The frequency of trades and quotes for the security; the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; dealer undertakings to make a market in the security; and the nature of the security and the nature of the marketplace in which it trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of transfer). 10 The Commission has stated that long-standing Commission guidelines have required open-end funds to hold no more than 15% of their net assets in illiquid securities and other illiquid assets. See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 14618 (March 18, 2008), footnote 34. See also, Investment Company Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 1970) (Statement Regarding ‘‘Restricted Securities’’); Investment Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 20, 1992) (Revisions of Guidelines to Form N–1A). A fund’s portfolio security is illiquid if it cannot be disposed of in the ordinary course of business within seven days at approximately the value ascribed to it by the fund. See Investment Company Act Release No. 14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting amendments to Rule 2a–7 under the 1940 Act); Investment Company Act Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) (adopting Rule 144A under the Securities Act of 1933). The Commission recently codified this long standing position in Rule 22e–4. See Investment Company Act Release No. 32315 (October 13, 2016), 81 FR 82142 (November 18, 2016) (adopting requirements for investment company liquidity risk management programs). PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 Investment Company (‘‘RIC’’) under the Internal Revenue Code.11 The shares of each Fund will conform to the initial and continued listing criteria under proposed Rule 14.11(k). The Funds will not invest in forwards or swaps. Each Fund’s investments will be consistent with its investment objective and will not be used to enhance leverage. While a Fund may invest in inverse ETFs, a Fund will not invest in leveraged (e.g., 2X, –2X, 3X or –3X) ETFs. Creations and Redemptions of Shares Creations and redemptions of the shares will occur as described in the Proposal. More specifically, in connection with the creation and redemption of Creation Units and Redemption Units, the delivery or receipt of any portfolio securities inkind will be required to be effected through a separate confidential brokerage account (a ‘‘Confidential Account’’). Authorized Participants (as defined in the Funds’ registration statements, ‘‘AP’’) will sign an agreement with an agent (an ‘‘AP Representative’’ 12) establishing the Confidential Account for the benefit of the AP. AP Representatives will be broker-dealers. An AP must be a Depository Trust Company (‘‘DTC’’) Participant that has executed a ‘‘Participant Agreement’’ with the Distributor with respect to the creation and redemption of Creation Units and Redemption Units and formed a Confidential Account for its benefit in accordance with the terms of the Participant Agreement. For purposes of creations or redemptions, all transactions will be effected through the respective AP’s Confidential Account, for the benefit of the AP without disclosing the identity of such securities to the AP. Each AP Representative will be given, before the commencement of trading each Business Day (defined below), the Creation Basket (as described below) for that day. This information will permit an AP that has established a Confidential Account with an AP Representative, to instruct the AP Representative to buy and sell positions in the portfolio securities to permit creation and redemption of Creation Units and Redemption Units. Shares of each Fund will be issued in Creation Units of 5,000 or more shares. The Funds will offer and redeem Creation 11 26 U.S.C. 851. AP shall enter into its own separate Confidential Account agreement (‘‘Confidential Account Agreement’’) with an AP Representative. 12 Each E:\FR\FM\25JNN1.SGM 25JNN1 Federal Register / Vol. 84, No. 122 / Tuesday, June 25, 2019 / Notices Units and Redemption Units on a continuous basis at the NAV per share next determined after receipt of an order in proper form. The NAV per share of each Fund will be determined as of the close of regular trading on the Exchange on each day that the Exchange is open (a ‘‘Business Day’’). The Funds will sell and redeem Creation Units and Redemption Units only on Business Days. The Adviser anticipates that the initial price of a share will range from $20 to $60, and that the price of a Creation Unit will be at least $100,000. To keep costs low and permit each Fund to be as fully invested as possible, shares will be purchased and redeemed in Creation Units and Redemption Units and generally on an in-kind basis. Accordingly, except where the purchase or redemption will include cash under the circumstances described in the Registration Statement, APs will be required to purchase Creation Units by making an in-kind deposit of specified instruments (‘‘Deposit Instruments’’), and APs redeeming their shares will receive an in-kind transfer of specified instruments (‘‘Redemption Instruments’’) through the AP Representative in their Confidential Account.13 On any given Business Day, the names and quantities of the instruments that constitute the Deposit Instruments and the names and quantities of the instruments that constitute the Redemption Instruments will be identical, and these instruments may be referred to, in the case of either a purchase or a redemption, as the ‘‘Creation Basket.’’ 14 khammond on DSKBBV9HB2PROD with NOTICES Placement of Purchase Orders Each Fund will issue shares through the Distributor on a continuous basis at NAV. The Exchange represents that the issuance of shares will operate in a manner similar to that of other ETFs. Each Fund will issue shares only at the NAV per share next determined after an order in proper form is received. In the case of a creation, the AP would enter an irrevocable creation order with the Fund and then direct the AP Representative to purchase the necessary basket of portfolio securities. 13 The Funds must comply with the federal securities laws in accepting Deposit Instruments and satisfying redemptions with Redemption Instruments, including that the Deposit Instruments and Redemption Instruments are sold in transactions that would be exempt from registration under the 1933 Act. 14 In determining whether a particular Fund will sell or redeem Creation Units entirely on a cash or in-kind basis, whether for a given day or a given order, the key consideration will be the benefit that would accrue to a Fund and its investors. To the extent a fund allows creations or redemptions to be conducted in cash, such transactions will be effected in the same manner for all APs. VerDate Sep<11>2014 20:35 Jun 24, 2019 Jkt 247001 The AP Representative would then purchase the necessary securities in the Confidential Account. In purchasing the necessary securities, the AP Representative will use methods, such as breaking the transaction into multiple transactions and transacting in multiple marketplaces, to avoid revealing the composition of the Creation Basket. Once the necessary basket of securities has been acquired, the purchased securities held in the Confidential Account would be contributed in-kind to the Fund. The Distributor will furnish acknowledgements to those placing such orders that the orders have been accepted, but the Distributor may reject any order which is not submitted in proper form, as described in a Fund’s prospectus or Statement of Additional Information (‘‘SAI’’). The NAV of each Fund is expected to be determined once each Business Day at a time determined by the Trust’s Board of Trustees (‘‘Board’’), currently anticipated to be as of the close of the regular trading session on the Exchange (ordinarily 4:00 p.m. E.T.) (the ‘‘Valuation Time’’). Each Fund will establish a cut-off time (‘‘Order Cut-Off Time’’) for purchase orders in proper form. To initiate a purchase of shares, an AP must submit to the Distributor an irrevocable order to purchase such shares after the most recent prior Valuation Time. All orders to purchase Creation Units must be received by the Distributor no later than the Order Cut-Off Time in each case on the date such order is placed (‘‘Transmittal Date’’) for the purchaser to receive the NAV per share determined on the Transmittal Date. Purchases of shares will be settled inkind and/or cash for an amount equal to the applicable NAV per share purchased plus applicable ‘‘Transaction Fees,’’ as discussed below. Authorized Participant Redemption The shares may be redeemed to a Fund in Redemption Unit size or multiples thereof as described below. Redemption orders of Redemption Units must be placed by an AP (‘‘AP Redemption Order’’). Each Fund will establish an Order Cut-Off Time for redemption orders of Redemption Units in proper form. Redemption Units of the Fund will be redeemable at their NAV per share next determined after receipt of a request for redemption by the Trust in the manner specified below before the Order Cut-Off Time. To initiate an AP Redemption Order, an AP must submit to the Distributor an irrevocable order to redeem such Redemption Unit after the most recent prior Valuation PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 29915 Time, but not later than the Order CutOff Time. In the case of a redemption, the AP would enter into an irrevocable redemption order, and then immediately instruct the AP Representative to sell the underlying basket of securities that it will receive in the redemption. As with the purchase of securities, the AP Representative will use methods, such as breaking the transaction into multiple transactions and transacting in multiple marketplaces, to avoid revealing the composition of the Creation Basket. Consistent with the provisions of Section 22(e) of the 1940 Act and Rule 22e–2 thereunder, the right to redeem will not be suspended, nor payment upon redemption delayed, except for: (1) Any period during which the Exchange is closed other than customary weekend and holiday closings, (2) any period during which trading on the Exchange is restricted, (3) any period during which an emergency exists as a result of which disposal by a Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for a Fund to determine its NAV, and (4) for such other periods as the Commission may by order permit for the protection of shareholders. Redemptions will occur primarily inkind, although redemption payments may also be made partly or wholly in cash.15 The Participant Agreement signed by each AP will require establishment of a Confidential Account to receive distributions of securities inkind upon redemption. Each AP will be required to open a Confidential Account with an AP Representative in order to facilitate orderly processing of redemptions. While a Fund will generally distribute securities in-kind, the Adviser may determine from time to time that it is not in a Fund’s best interests to distribute securities in-kind, but rather to sell securities and/or distribute cash. For example, the Adviser may distribute cash to facilitate orderly portfolio management in connection with rebalancing or transitioning a portfolio in line with its investment objective, or if there is substantially more creation than redemption activity during the period immediately preceding a redemption request, or as necessary or appropriate in accordance with applicable laws and regulations. The Redemption Instruments will consist of the same securities for all APs on any given day subject to the 15 The value of any positions not susceptible to in-kind settlement may be paid in cash. E:\FR\FM\25JNN1.SGM 25JNN1 29916 Federal Register / Vol. 84, No. 122 / Tuesday, June 25, 2019 / Notices Adviser’s ability to make minor adjustments to address odd lots, fractional shares, tradeable sizes or other situations. khammond on DSKBBV9HB2PROD with NOTICES Net Asset Value The NAV per share of a Fund will be computed by dividing the value of the net assets of a Fund (i.e., the value of its total assets less total liabilities) by the total number of shares of a Fund outstanding, rounded to the nearest cent. Expenses and fees, including, without limitation, the management, administration and distribution fees, will be accrued daily and taken into account for purposes of determining NAV. Interest and investment income on the Trust’s assets accrue daily and will be included in the Fund’s total assets. The NAV per share for a Fund will be calculated by a Fund’s administrator (‘‘Administrator’’) and determined as of the close of the regular trading session on the Exchange (ordinarily 4:00 p.m., E.T.) on each day that the Exchange is open. Shares of U.S. exchange-listed equity securities, exchange-traded funds, exchange-listed ADRs, and U.S. exchange-listed futures will be valued at market value, which will generally be determined using the last reported official closing or last trading price on the exchange or market on which the securities are primarily traded at the time of valuation. Cash Equivalents will generally be valued on the basis of independent pricing services or quotes obtained from brokers and dealers or price quotations or other equivalent indications of value provided by a thirdparty pricing service. Availability of Information The Funds’ website (www.americancenturyetfs.com), which will be publicly available prior to the listing and trading of shares, will include a form of the prospectus for each Fund that may be downloaded. The Funds’ website will include additional quantitative information updated on a daily basis, including, for each Fund, (1) the prior Business Day’s NAV, market closing price or mid-point of the bid/ask spread at the time of calculation of such NAV (the ‘‘Bid/Ask Price’’),16 and a calculation of the premium and discount of the market closing price or Bid/Ask Price against the NAV, and (2) data in chart format displaying the frequency distribution of 16 The Bid/Ask Price of a Fund will be determined using the mid-point between the current NBB and NBO as of the time of calculation of a Fund’s NAV. The records relating to Bid/Ask Prices will be retained by each Fund and its service providers. VerDate Sep<11>2014 20:35 Jun 24, 2019 Jkt 247001 discounts and premiums of the daily Bid/Ask Price against the NAV, within appropriate ranges, for each of the four previous calendar quarters. The website and information will be publicly available at no charge. The Trust’s SAI and each Fund’s shareholder reports will be available free upon request from the Trust. These documents and forms may be viewed on-screen or downloaded from the Commission’s website at www.sec.gov. Information regarding market price and trading volume of the shares will be continually available on a real-time basis throughout the day on brokers’ computer screens and other electronic services. Quotation and last sale information for the shares will be available via the Consolidated Tape Association (‘‘CTA’’) high-speed line. In addition, the VIIV, as defined in proposed Rule 14.11(k)(3)(B) and as described further below, will be widely disseminated by one or more major market data vendors in one-second intervals during Regular Trading Hours. Dissemination of the VIIV According to the Exemptive Application, the pricing verification agent, on behalf of each Fund, will utilize two separate calculation engines to calculate intra-day indicative values (‘‘Calculation Engines’’), generally based on the mid-point between the current national best bid and offer disseminated by the Consolidated Quotation System (‘‘CQS’’) and Unlisted Trading Privileges (‘‘UTP’’) Plan Securities Information Processor,17 to provide the estimated real-time value on a per Share basis every second during the Exchange’s Regular Trading Hours.18 The specific methodology for calculating and disclosing the VIIV will be disclosed on each Fund’s website. The VIIV should not be viewed as a ‘‘real-time’’ update of NAV because the VIIV may not be calculated in the same manner as NAV, which is computed 17 According to the Exemptive Application, all Commission-registered exchanges and market centers send their trades and quotes to a central consolidator where the Consolidated Tape System (CTS) and CQS data streams are produced and distributed worldwide. See https:// www.ctaplan.com/index. Although there is only one source of market quotations, each Calculation Engine will receive the data directly and calculate an indicative value separately and independently from each other Calculation Engine. 18 The Adviser represents that the dissemination of VIIV at one second intervals strikes a balance of providing all investors with usable information at a rate that can be processed by retail investors, does not provide so much information so as to allow market participants to accurately determine the constituents, and their weightings, of the portfolio, can be accurately calculated and disseminated, and still provides professional traders with per second data. PO 00000 Frm 00078 Fmt 4703 Sfmt 4703 once per day. The VIIV for each Fund will be disseminated by one or more major market data vendors in onesecond intervals during Regular Trading Hours. For purposes of the VIIV, securities held by a Fund will be valued throughout the day based on the midpoint between the disseminated current national best bid and offer. If the Adviser determines that a portfolio security does not have a readily available market quotation, that fact, along with the identity and weighting of that security in a Fund’s VIIV calculation, will be publicly disclosed on each Fund’s website. Trading Halts With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the shares of the Funds. The Exchange will halt trading in the shares under the conditions specified in BZX Rule 11.18. Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the shares inadvisable, including whether unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the shares also will be subject to proposed Rule 14.11(k)(4)(B)(iii) in the Proposal, which sets forth circumstances under which shares of the Funds will be halted. Trading Rules The Exchange deems the shares to be equity securities, thus rendering trading in the shares subject to the Exchange’s existing rules governing the trading of equity securities. Shares will trade on the Exchange only during Regular Trading Hours as provided in proposed Rule 14.11(k)(2)(B). As provided in BZX Rule 11.11(a), the minimum price variation for quoting and entry of orders in securities traded on the Exchange is $0.01, with the exception of securities that are priced less than $1.00, for which the minimum price variation for order entry is $0.0001. The shares will conform to the initial and continued listing criteria under Rule 14.11(k). The Exchange represents that, for initial and/or continued listing, each Fund will be in compliance with Rule 10A–3 under the Act.19 A minimum of 100,000 shares of each Fund will be outstanding at the commencement of trading on the Exchange. The Exchange will obtain a representation from the issuer of the shares of each Fund that the NAV per 19 See E:\FR\FM\25JNN1.SGM 17 CFR 240.10A–3. 25JNN1 Federal Register / Vol. 84, No. 122 / Tuesday, June 25, 2019 / Notices share of each Fund will be calculated daily and will be made available to all market participants at the same time. khammond on DSKBBV9HB2PROD with NOTICES Surveillance The Exchange believes that its surveillance procedures are adequate to properly monitor the trading of the shares on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws. Trading of the shares through the Exchange will be subject to the Exchange’s surveillance procedures for derivative products, including Managed Portfolio 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 Exchange 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 procedures under Exchange Rule 14.12. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the shares, underlying equity securities and U.S. exchange-listed futures with other markets and other entities that are members of the Intermarket Surveillance Group (‘‘ISG’’), and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading such securities from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the shares, underlying stocks and U.S. exchange-listed futures from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement.20 In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees. Information Circular Prior to the commencement of trading, the Exchange will inform its members in an Information Circular (‘‘Circular’’) of the special characteristics and risks associated with trading the shares. Specifically, the Circular will discuss the following: (1) The procedures for purchases and redemptions of shares; (2) BZX Rule 3.7, which imposes suitability obligations on Exchange members with respect to 20 For a list of the current members of ISG, see www.isgportal.org. VerDate Sep<11>2014 20:35 Jun 24, 2019 Jkt 247001 recommending transactions in the shares to customers; (3) how information regarding the VIIV is disseminated; (4) the requirement that members deliver a prospectus to investors purchasing newly issued shares prior to or concurrently with the confirmation of a transaction; and (5) trading information. In addition, the Circular will reference that the Funds are subject to various fees and expenses described in the Registration Statement. The Circular will discuss any exemptive, no-action, and interpretive relief granted by the Commission from any rules under the Act. The Circular will also disclose that the NAV for the shares will be calculated after 4:00 p.m., E.T. each trading day. 2. Statutory Basis The Exchange believes that the Proposal is consistent with Section 6(b) of the Act 21 in general and Section 6(b)(5) of the Act 22 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 a national market system, and, in general, to protect investors and the public interest. The Exchange believes that, to the extent that the Proposal and, thus proposed Rule 14.11(k) is approved by the Commission, this proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Funds would meet each of the rules relating to listing and trading of Managed Portfolio Shares and, to the extent that a Fund is not in compliance with such rules, the Exchange would either prevent the Fund from listing and trading if it hadn’t started trading on the Exchange or would commence delisting procedures under Exchange Rule 14.12. More specifically, the Exchange will consider the suspension of trading in, and will commence delisting proceedings under Rule 14.12 for, a series of Managed Portfolio Shares under any of the following circumstances: (a) If, following the initial twelve-month period after commencement of trading on the Exchange of a series of Managed Portfolio Shares, there are fewer than 50 beneficial holders of the series of Managed Portfolio Shares; (b) if the value of the VIIV is no longer calculated or available to all market participants at the same time; (c) if the holdings of a 21 15 22 15 PO 00000 U.S.C. 78f. U.S.C. 78f(b)(5). Frm 00079 Fmt 4703 Sfmt 4703 29917 series of Managed Portfolio Shares are not made available on a quarterly basis as required under the 1940 Act or are not made available to all market participants at the same time; (d) if the Investment Company issuing the Managed Portfolio Shares has failed to file any filings required by the Commission or if the Exchange is aware that the Investment Company is not in compliance with the conditions of any exemptive order or no-action relief granted by the Commission to the Investment Company with respect to the series of Managed Portfolio Shares; (e) if any of the continued listing requirements set forth in Rule 14.11(k) are not continuously maintained; (f) if any of the applicable Continued Listing Representations for the issue of Managed Fund Shares are not continuously met; or (g) if such other event shall occur or condition exists which, in the opinion of the Exchange, makes further dealings on the Exchange inadvisable. The Adviser is not registered as a broker-dealer, but is affiliated with a broker-dealer and has implemented and will maintain a ‘‘fire wall’’ with respect to such broker-dealer regarding access to information concerning the composition and/or changes to a Fund’s portfolio. In the event (a) the Adviser becomes registered as a broker-dealer or becomes 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 its broker-dealer affiliate 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 nonpublic information regarding such portfolio. With respect to the proposed listing and trading of shares of the Funds, the Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in Rule 14.11(k). Price information for the U.S. exchange-listed equity securities held by the Funds will be available through major market data vendors or securities exchanges listing and trading such securities. The listing and trading of such securities is subject to rules of the exchanges on which they are listed and traded, as approved by the Commission. The Funds will primarily hold U.S.-listed equity securities. All exchange-listed equity securities in E:\FR\FM\25JNN1.SGM 25JNN1 khammond on DSKBBV9HB2PROD with NOTICES 29918 Federal Register / Vol. 84, No. 122 / Tuesday, June 25, 2019 / Notices which the Funds will invest will be listed and traded on U.S. national securities exchanges. A Fund’s investments will be consistent with its respective investment objective and will not be used to enhance leverage. The Funds will not invest in non-U.S. exchange-listed securities. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the shares, underlying stocks and U.S. exchangelisted futures with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading such securities from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the shares, underlying stocks, and U.S. exchangelisted futures from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. An AP Representative will provide information related to creations and redemption of Creation Units and Redemption Units to FINRA upon request. With respect to trading of shares of the Funds, the ability of market participants to buy and sell shares at prices near the VIIV is dependent upon their assessment that the VIIV is a reliable, indicative correlated value for a Fund’s underlying holdings. Market participants may view the VIIV as a reliable, indicative correlated value because (1) the VIIV will be calculated and disseminated based on a Fund’s actual portfolio holdings, (2) the securities in which the Funds plan to invest are generally highly liquid and actively traded and therefore generally have accurate real time pricing available, and (3) market participants will have a daily opportunity to evaluate whether the VIIV at or near the close of trading is indeed predictive of the actual NAV.23 The Exchange, however, notes that the VIIV should not be viewed as a ‘‘real-time’’ update of NAV because the VIIV may not be calculated in the same manner as NAV, which is computed once per day. The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the issuer of an issue of Managed Portfolio Shares that the NAV per share of the Funds 23 The statements in the Statutory Basis section of this filing relating to pricing efficiency, arbitrage, and activities of market participants, including market makers and APs, are based on representation by the Adviser and review by the Exchange. VerDate Sep<11>2014 20:35 Jun 24, 2019 Jkt 247001 will be calculated daily and that the NAV will be made available to all market participants at the same time. Investors can also obtain a Fund’s SAI, shareholder reports, Form N–CSR, and Form N–PORT. A Fund’s SAI and shareholder reports will be available free upon request from the applicable fund, and those documents and the Form N–CSR and Form N–PORT may be viewed on-screen or downloaded from the Commission’s website. In addition, with respect to the Funds, a large amount of information will be publicly available regarding the Funds and the shares, thereby promoting market transparency. Quotation and last sale information for the shares will be available via the CTA high-speed line. Information regarding the VIIV will be widely disseminated every second throughout Regular Trading Hours by one or more major market data vendors. The website for the Funds will include a prospectus for the Funds that may be downloaded, and additional data relating to NAV and other applicable quantitative information, updated on a daily basis. Moreover, prior to the commencement of trading, the Exchange will inform its members in a Circular of the special characteristics and risks associated with trading the shares. The Exchange will halt trading in the shares under the conditions specified in BZX Rule 11.18 or for reasons that, in the view of the Exchange, make trading in the shares inadvisable. Trading in the shares will be subject to proposed Rule 14.11(k)(4)(B)(iii), which sets forth circumstances under which shares of the Funds will be halted. In addition, as noted above, investors will have ready access to the VIIV, and quotation and last sale information for the shares. The shares will conform to the initial and continued listing criteria under proposed Rule 14.11(k). The Funds will not invest in forwards or swaps. Each Fund’s investments will be consistent with its investment objective and will not be used to enhance leverage. While a Fund may invest in inverse ETFs, a Fund will not invest in leveraged (e.g., 2X, –2X, 3X or–3X) ETFs. The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of activelymanaged exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the shares and may obtain information via PO 00000 Frm 00080 Fmt 4703 Sfmt 4703 ISG from other exchanges that are members of ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement. In addition, as noted above, investors will have ready access to information regarding the VIIV and quotation and last sale information for the shares. For the above reasons, the Exchange believes that the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange notes that the proposed rule change, rather will facilitate the listing and trading of actively-managed exchangetraded products that will enhance competition among both market participants and listing venues, to the benefit of investors and the marketplace. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received written comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: A. By order approve or disapprove such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s internet comment form (http://www.sec.gov/ rules/sro.shtml); or E:\FR\FM\25JNN1.SGM 25JNN1 Federal Register / Vol. 84, No. 122 / Tuesday, June 25, 2019 / Notices • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeBZX–2019–057 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–2019–057. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than 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–2019–057 and should be submitted on or before July 16, 2019. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.24 Vanessa A. Countryman, Acting Secretary. khammond on DSKBBV9HB2PROD with NOTICES [FR Doc. 2019–13405 Filed 6–24–19; 8:45 am] BILLING CODE 8011–01–P 24 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 20:35 Jun 24, 2019 Jkt 247001 SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 33513; File No. 812–14962] Lord Abbett Credit Opportunities Fund, et al. June 19, 2019. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. AGENCY: Notice of an application under section 6(c) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 18(a)(2), 18(c) and 18(i) of the Act, under sections 6(c) and 23(c) of the Act for an exemption from rule 23c–3 under the Act, and for an order pursuant to section 17(d) of the Act and rule 17d– 1 under the Act. SUMMARY OF APPLICATION: Applicants request an order to permit certain registered closed-end management investment companies to issue multiple classes of shares with varying sales loads and asset-based service and/or distribution fees and to impose early withdrawal charges. APPLICANTS: Lord Abbett Credit Opportunities Fund (the ‘‘Initial Fund’’), Lord, Abbett & Co. LLC (the ‘‘Adviser’’) and Lord Abbett Distributor LLC (the ‘‘Distributor’’, and together with the Initial Fund and the Adviser, the ‘‘Applicants’’). FILING DATES: The application was filed on October 5, 2018 and amended on March 1, 2019. HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission’s Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on July 15, 2019, and should be accompanied by proof of service on the applicants, in the form of an affidavit, or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission’s Secretary. ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549–1090; Applicants: John T. Fitzgerald, Vice President and Assistant Secretary, 90 Hudson Street, Jersey City, NJ 07302– PO 00000 Frm 00081 Fmt 4703 Sfmt 4703 29919 3973, and Bryan Chegwidden, Esq., Ropes & Gray LLP, 1211 Avenue of the Americas, New York, NY 10036–8704. FOR FURTHER INFORMATION CONTACT: Kyle R. Ahlgren, Senior Counsel or Aaron Gilbride, Branch Chief, at (202) 551– 6825 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission’s website by searching for the file number, or for an applicant using the Company name box, at or by calling (202) 551–8090. Applicants’ Representations 1. The Initial Fund is a Delaware statutory trust that is registered under the Act as a closed-end management investment company and will operate as a non-diversified investment company under the Act. The Initial Fund will operate as an ‘‘interval fund’’ pursuant to rule 23c–3 under the Act and intends to continuously offer its shares. 2. The Adviser is a limited liability company organized under the laws of the state of Delaware. The Adviser serves as investment adviser to the Initial Fund. The Adviser is registered with the Commission as an investment adviser under the Investment Advisers Act of 1940, as amended (the ‘‘Advisers Act’’). 3. The Applicants seek an order to permit the Initial Fund to issue multiple classes of shares of beneficial interest (‘‘Shares’’) with varying sales loads and asset-based service and/or distribution fees and to impose early withdrawal charges (‘‘EWCs’’). 4. The Applicants request that the order also apply to any other registered closed-end management investment company that conducts a continuous offering of its shares, existing now or in the future, for which the Adviser, its successors, the Distributor, its successors,1 or any entity controlling, controlled by, or under common control with the Adviser or the Distributor, or any successor in interest to such entity, acts as investment adviser or principal underwriter, and which provides periodic liquidity with respect to its Shares through tender offers conducted in compliance with either rule 23c–3 under the 1940 Act or rule 13e–4 under the Securities Exchange Act of 1934, as amended (the ‘‘1934 Act’’) (each a ‘‘Future Fund’’ and, together with the 1 A successor in interest is limited to an entity that results from a reorganization into another jurisdiction or a change in the type of business organization. E:\FR\FM\25JNN1.SGM 25JNN1

Agencies

[Federal Register Volume 84, Number 122 (Tuesday, June 25, 2019)]
[Notices]
[Pages 29912-29919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-13405]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86155; File No. SR-CboeBZX-2019-057]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To List and Trade Shares of the 
American Century Focused Dynamic Growth ETF and American Century 
Focused Large Cap Value ETF Under Currently Proposed Rule 14.11(k)

June 19, 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 June 6, 2019, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes a rule change to list and trade shares of the 
following under currently proposed Rule 14.11(k): American Century 
Focused Dynamic Growth ETF and American Century Focused Large Cap Value 
ETF (each a ``Fund'' and, collectively, the ``Funds'').
    The text of the proposed rule change is also available on the 
Exchange's website (http://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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange has submitted a proposal to add new Rule 14.11(k) for 
the purpose of permitting the listing and trading of Managed Portfolio 
Shares, which are securities issued by an actively managed open-end 
investment management company, which has not yet been published by the 
Commission.\3\

[[Page 29913]]

Proposed Rule 14.11(k)(2)(A) would require the Exchange to file 
separate proposals under Section 19(b) of the Act before listing and 
trading any series of Managed Portfolio Shares on the Exchange. As 
such, the Exchange is submitting this proposal in order to list and 
trade shares of the American Century Focused Dynamic Growth ETF and the 
American Century Focused Large Cap Value ETF under proposed Rule 
14.11(k).
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    \3\ As proposed, the term ``Managed Portfolio Share'' means a 
security that (a) represents an interest in a registered investment 
company (``Investment Company'') organized as an open-end management 
investment company, that invests in a portfolio of securities 
selected by the Investment Company's investment adviser consistent 
with the Investment Company's investment objectives and policies; 
(b) is issued in a specified aggregate minimum number of shares 
equal to a Creation Unit, or multiples thereof, in return for a 
designated portfolio of securities (and/or an amount of cash) with a 
value equal to the next determined net asset value which the AP 
Representative (defined below) will provide through a confidential 
account; and (c) when aggregated in the same specified aggregate 
number of shares equal to a Redemption Unit, or multiples thereof, 
may be redeemed at the request of an Authorized Participant (as 
defined in the Investment Company's Form N-1A filed with the SEC), 
which Authorized Participant will be paid through a confidential 
account established for its benefit a portfolio of securities and/or 
cash with a value equal to the next determined net asset value. See 
SR-CboeBZX-2019-047 (the ``Proposal'').
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Description of the Funds and the Trust
    The shares of each Fund will be issued by American Century ETF 
Trust (the ``Trust''), a statutory trust organized under the laws of 
the State of Delaware and registered with the Commission as an open-end 
management investment company.\4\ The investment adviser to the Trust 
will be American Century Investment Management, Inc. (the ``Adviser''). 
Foreside Fund Services, LLC (the ``Distributor'') will serve as the 
distributor of each of the Fund's 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 VIIV, reference 
assets, and intraday indicative values, and the applicability of 
Exchange rules shall constitute continued listing requirements for 
listing the shares on the Exchange.
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    \4\ The Trust is registered under the 1940 Act. On June 18, 
2018, the Trust filed a registration statement on Form N-1A relating 
to the Funds (File No. 811-23305) (the ``Registration Statement''). 
The Exchange notes that the names of the Funds have been changed 
since the Registration Statement was filed and that such names will 
be updated in a subsequent filing. The Shares will not be listed on 
the Exchange until an order (``Exemptive Order'') under the 1940 Act 
has been issued by the Commission with respect to the application 
for exemptive relief (the ``Exemptive Application'') (File No. 812-
15035). Investments made by the Funds will comply with the 
conditions set forth in the Exemptive Order. The description of the 
operation of the Trust and the Funds herein is based, in part, on 
the Registration Statement. The Exchange notes that the Exemptive 
Application is very similar to the application for exemptive relieve 
submitted by Precidian ETFs Trust, et al. for which an order 
granting the requested relief was issued on May 20, 2019 (File No. 
812-14405) (the ``Order''). The Order specifically notes that 
``granting the requested exemptions is appropriate in and consistent 
with the public interest and consistent with the protection of 
investors and the purposes fairly intended by the policy and 
provisions of the Act. It is further found that the terms of the 
proposed transactions, including the consideration to be paid or 
received, are reasonable and fair and do not involve overreaching on 
the part of any person concerned, and that the proposed transactions 
are consistent with the policy of each registered investment company 
concerned and with the general purposes of the Act.'' See Investment 
Company Act Release Nos. 33440 and 33477.
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    Proposed Rule 14.11(k)(2)(E) provides that, if the investment 
adviser to the investment company issuing Managed Portfolio Shares is 
registered as a broker-dealer or is affiliated with a broker-dealer, 
such investment adviser will erect and maintain a ``fire wall'' between 
the investment adviser and personnel of the broker-dealer or broker-
dealer affiliate, as applicable, with respect to access to information 
concerning the composition and/or changes to such investment company 
portfolio.\5\ In addition, proposed Rule 14.11(k)(2)(E) further 
requires 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. Proposed Rule 
14.11(k)(2)(E) is similar to Rule 14.11(i)(7), related to Managed Fund 
Shares, and Rule 14.11(c)(5)(A)(i), related to Index Fund Shares, 
except that proposed Rule 14.11(k)(2)(E) relates to the establishment 
of a ``fire wall'' between the investment adviser and the broker-dealer 
as applicable to an Investment Company's portfolio, not an underlying 
benchmark index, as is the case with index-based funds. The Adviser is 
not registered as a broker-dealer, but is affiliated with a broker-
dealer and has implemented and will maintain a ``fire wall'' with 
respect to such broker-dealer regarding access to information 
concerning the composition and/or changes to a Fund's portfolio.
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    \5\ 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 will be 
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 
violations, 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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    In the event (a) the Adviser becomes registered as a broker-dealer 
or becomes 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 its broker-dealer 
affiliate 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.
    The portfolio for each Fund will consist primarily of U.S. 
exchange-listed equity securities and shares issued by other U.S. 
exchange-listed ETFs.\6\ All exchange-listed equity securities in which 
the Funds will invest will be listed and traded on U.S. national 
securities exchanges.
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    \6\ For purposes of describing the holdings of the Funds, ETFs 
include Portfolio Depository Receipts (as described in Rule 
14.11(b)); Index Fund Shares (as described in Rule 14.11(c)); and 
Managed Fund Shares (as described in Rule 14.11(i)). The ETFs in 
which a Fund will invest all will be listed and traded on U.S. 
national securities exchanges. While the Funds may invest in inverse 
ETFs, the Funds will not invest in leveraged (e.g., 2X, -2X, 3X or -
3X) ETFs.
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Description of the Funds
American Century Focused Dynamic Growth ETF
    The Fund seeks long-term capital growth. Under Normal Market 
Conditions,\7\ the Fund intends to invest primarily in U.S. exchange-
listed equity securities. The portfolio managers look for stocks of 
companies they believe will increase in value over time. In 
implementing this strategy, the portfolio managers make their 
investment decisions based primarily on their analysis of individual 
companies, rather than on broad economic forecasts. Management of the 
Fund is based on the belief that, over the long term, stock price 
movements follow growth in earnings, revenues and/or cash flow. The 
portfolio managers use a variety of analytical research tools and 
techniques to identify the stocks of companies that meet their 
investment criteria.
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    \7\ 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.
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    In addition to investing primarily in U.S. exchange-listed equity 
securities, the Fund may also invest in exchange-traded funds, 
exchange-listed ADRs, U.S. exchange-listed equity futures contracts, 
and U.S. exchange-listed

[[Page 29914]]

equity index futures contracts. The Fund may also hold cash and Cash 
Equivalents \8\ without limitation.
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    \8\ For purposes of this filing and consistent with Rule 
14.11(i)(4)(C)(iii) related to Managed Fund Shares, Cash Equivalents 
are short-term instruments with maturities of less than three 
months, which includes only the following: (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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    The Exchange notes that the Fund's holdings will meet the generic 
listing standards applicable to series of Managed Fund Shares under 
Rule 14.11(i)(4)(C). While such standards do not apply directly to 
series of Managed Portfolio Shares, the Exchange believes that the 
overarching policy issues related to liquidity, market cap, diversity, 
and concentration of portfolio holdings that Rule 14.11(i)(4)(C) is 
intended to address are equally applicable to series of Managed 
Portfolio Shares.
American Century Focused Large Cap Value ETF
    The Fund seeks long-term capital growth. Under Normal Market 
Conditions, the Fund intends to invest primarily in U.S. exchange-
listed equity securities. The portfolio managers look for companies 
whose stock price may not reflect the company's value. The managers 
attempt to purchase the stocks of these undervalued companies and hold 
each stock until the price has increased to, or is higher than, a level 
the managers believe more accurately reflects the fair value of the 
company. The portfolio managers may sell stocks from the fund's 
portfolio if they believe a stock no longer meets their valuation 
criteria, a stock's risk parameters outweigh its return opportunity, 
more attractive alternatives are identified or specific events alter a 
stock's prospects.
    In addition to investing primarily in U.S. exchange-listed equity 
securities, the Fund may also invest in exchange-traded funds, 
exchange-listed ADRs, U.S. exchange-listed equity futures contracts, 
and U.S. exchange-listed equity index futures contracts. The Fund may 
also hold cash and Cash Equivalents without limitation.
    The Exchange notes that the Fund's holdings will meet the generic 
listing standards applicable to series of Managed Fund Shares under 
Rule 14.11(i)(4)(C). While such standards do not apply directly to 
series of Managed Portfolio Shares, the Exchange believes that the 
overarching policy issues related to liquidity, market cap, diversity, 
and concentration of portfolio holdings that Rule 14.11(i)(4)(C) is 
intended to address are equally applicable to series of Managed 
Portfolio Shares.
Investment Restrictions
    Each Fund may hold up to an aggregate amount of 15% of its total 
assets in illiquid assets,\9\ consistent with Commission guidance. Each 
Fund will monitor its portfolio liquidity on an ongoing basis to 
determine whether, in light of current circumstances, an adequate level 
of liquidity is being maintained, and will consider taking appropriate 
steps in order to maintain adequate liquidity. Illiquid assets include 
securities subject to contractual or other restrictions on resale and 
other instruments that lack readily available markets as determined in 
accordance with Commission staff guidance.\10\ In any event, the Funds 
will not purchase any securities that are illiquid investments at the 
time of purchase.
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    \9\ In reaching liquidity decisions, the Adviser may consider 
the following factors: The frequency of trades and quotes for the 
security; the number of dealers wishing to purchase or sell the 
security and the number of other potential purchasers; dealer 
undertakings to make a market in the security; and the nature of the 
security and the nature of the marketplace in which it trades (e.g., 
the time needed to dispose of the security, the method of soliciting 
offers and the mechanics of transfer).
    \10\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the Securities Act of 1933). The 
Commission recently codified this long standing position in Rule 
22e-4. See Investment Company Act Release No. 32315 (October 13, 
2016), 81 FR 82142 (November 18, 2016) (adopting requirements for 
investment company liquidity risk management programs).
---------------------------------------------------------------------------

    According to the Registration Statement, each Fund will seek to 
qualify for treatment as a Regulated Investment Company (``RIC'') under 
the Internal Revenue Code.\11\
---------------------------------------------------------------------------

    \11\ 26 U.S.C. 851.
---------------------------------------------------------------------------

    The shares of each Fund will conform to the initial and continued 
listing criteria under proposed Rule 14.11(k). The Funds will not 
invest in forwards or swaps.
    Each Fund's investments will be consistent with its investment 
objective and will not be used to enhance leverage. While a Fund may 
invest in inverse ETFs, a Fund will not invest in leveraged (e.g., 2X, 
-2X, 3X or -3X) ETFs.
Creations and Redemptions of Shares
    Creations and redemptions of the shares will occur as described in 
the Proposal. More specifically, in connection with the creation and 
redemption of Creation Units and Redemption Units, the delivery or 
receipt of any portfolio securities in-kind will be required to be 
effected through a separate confidential brokerage account (a 
``Confidential Account''). Authorized Participants (as defined in the 
Funds' registration statements, ``AP'') will sign an agreement with an 
agent (an ``AP Representative'' \12\) establishing the Confidential 
Account for the benefit of the AP. AP Representatives will be broker-
dealers. An AP must be a Depository Trust Company (``DTC'') Participant 
that has executed a ``Participant Agreement'' with the Distributor with 
respect to the creation and redemption of Creation Units and Redemption 
Units and formed a Confidential Account for its benefit in accordance 
with the terms of the Participant Agreement. For purposes of creations 
or redemptions, all transactions will be effected through the 
respective AP's Confidential Account, for the benefit of the AP without 
disclosing the identity of such securities to the AP.
---------------------------------------------------------------------------

    \12\ Each AP shall enter into its own separate Confidential 
Account agreement (``Confidential Account Agreement'') with an AP 
Representative.
---------------------------------------------------------------------------

    Each AP Representative will be given, before the commencement of 
trading each Business Day (defined below), the Creation Basket (as 
described below) for that day. This information will permit an AP that 
has established a Confidential Account with an AP Representative, to 
instruct the AP Representative to buy and sell positions in the 
portfolio securities to permit creation and redemption of Creation 
Units and Redemption Units. Shares of each Fund will be issued in 
Creation Units of 5,000 or more shares. The Funds will offer and redeem 
Creation

[[Page 29915]]

Units and Redemption Units on a continuous basis at the NAV per share 
next determined after receipt of an order in proper form. The NAV per 
share of each Fund will be determined as of the close of regular 
trading on the Exchange on each day that the Exchange is open (a 
``Business Day''). The Funds will sell and redeem Creation Units and 
Redemption Units only on Business Days. The Adviser anticipates that 
the initial price of a share will range from $20 to $60, and that the 
price of a Creation Unit will be at least $100,000.
    To keep costs low and permit each Fund to be as fully invested as 
possible, shares will be purchased and redeemed in Creation Units and 
Redemption Units and generally on an in-kind basis. Accordingly, except 
where the purchase or redemption will include cash under the 
circumstances described in the Registration Statement, APs will be 
required to purchase Creation Units by making an in-kind deposit of 
specified instruments (``Deposit Instruments''), and APs redeeming 
their shares will receive an in-kind transfer of specified instruments 
(``Redemption Instruments'') through the AP Representative in their 
Confidential Account.\13\ On any given Business Day, the names and 
quantities of the instruments that constitute the Deposit Instruments 
and the names and quantities of the instruments that constitute the 
Redemption Instruments will be identical, and these instruments may be 
referred to, in the case of either a purchase or a redemption, as the 
``Creation Basket.'' \14\
---------------------------------------------------------------------------

    \13\ The Funds must comply with the federal securities laws in 
accepting Deposit Instruments and satisfying redemptions with 
Redemption Instruments, including that the Deposit Instruments and 
Redemption Instruments are sold in transactions that would be exempt 
from registration under the 1933 Act.
    \14\ In determining whether a particular Fund will sell or 
redeem Creation Units entirely on a cash or in-kind basis, whether 
for a given day or a given order, the key consideration will be the 
benefit that would accrue to a Fund and its investors. To the extent 
a fund allows creations or redemptions to be conducted in cash, such 
transactions will be effected in the same manner for all APs.
---------------------------------------------------------------------------

Placement of Purchase Orders
    Each Fund will issue shares through the Distributor on a continuous 
basis at NAV. The Exchange represents that the issuance of shares will 
operate in a manner similar to that of other ETFs. Each Fund will issue 
shares only at the NAV per share next determined after an order in 
proper form is received.
    In the case of a creation, the AP would enter an irrevocable 
creation order with the Fund and then direct the AP Representative to 
purchase the necessary basket of portfolio securities. The AP 
Representative would then purchase the necessary securities in the 
Confidential Account. In purchasing the necessary securities, the AP 
Representative will use methods, such as breaking the transaction into 
multiple transactions and transacting in multiple marketplaces, to 
avoid revealing the composition of the Creation Basket. Once the 
necessary basket of securities has been acquired, the purchased 
securities held in the Confidential Account would be contributed in-
kind to the Fund.
    The Distributor will furnish acknowledgements to those placing such 
orders that the orders have been accepted, but the Distributor may 
reject any order which is not submitted in proper form, as described in 
a Fund's prospectus or Statement of Additional Information (``SAI''). 
The NAV of each Fund is expected to be determined once each Business 
Day at a time determined by the Trust's Board of Trustees (``Board''), 
currently anticipated to be as of the close of the regular trading 
session on the Exchange (ordinarily 4:00 p.m. E.T.) (the ``Valuation 
Time''). Each Fund will establish a cut-off time (``Order Cut-Off 
Time'') for purchase orders in proper form. To initiate a purchase of 
shares, an AP must submit to the Distributor an irrevocable order to 
purchase such shares after the most recent prior Valuation Time. All 
orders to purchase Creation Units must be received by the Distributor 
no later than the Order Cut-Off Time in each case on the date such 
order is placed (``Transmittal Date'') for the purchaser to receive the 
NAV per share determined on the Transmittal Date.
    Purchases of shares will be settled in-kind and/or cash for an 
amount equal to the applicable NAV per share purchased plus applicable 
``Transaction Fees,'' as discussed below.
Authorized Participant Redemption
    The shares may be redeemed to a Fund in Redemption Unit size or 
multiples thereof as described below. Redemption orders of Redemption 
Units must be placed by an AP (``AP Redemption Order''). Each Fund will 
establish an Order Cut-Off Time for redemption orders of Redemption 
Units in proper form. Redemption Units of the Fund will be redeemable 
at their NAV per share next determined after receipt of a request for 
redemption by the Trust in the manner specified below before the Order 
Cut-Off Time. To initiate an AP Redemption Order, an AP must submit to 
the Distributor an irrevocable order to redeem such Redemption Unit 
after the most recent prior Valuation Time, but not later than the 
Order Cut-Off Time.
    In the case of a redemption, the AP would enter into an irrevocable 
redemption order, and then immediately instruct the AP Representative 
to sell the underlying basket of securities that it will receive in the 
redemption. As with the purchase of securities, the AP Representative 
will use methods, such as breaking the transaction into multiple 
transactions and transacting in multiple marketplaces, to avoid 
revealing the composition of the Creation Basket.
    Consistent with the provisions of Section 22(e) of the 1940 Act and 
Rule 22e-2 thereunder, the right to redeem will not be suspended, nor 
payment upon redemption delayed, except for: (1) Any period during 
which the Exchange is closed other than customary weekend and holiday 
closings, (2) any period during which trading on the Exchange is 
restricted, (3) any period during which an emergency exists as a result 
of which disposal by a Fund of securities owned by it is not reasonably 
practicable or it is not reasonably practicable for a Fund to determine 
its NAV, and (4) for such other periods as the Commission may by order 
permit for the protection of shareholders.
    Redemptions will occur primarily in-kind, although redemption 
payments may also be made partly or wholly in cash.\15\ The Participant 
Agreement signed by each AP will require establishment of a 
Confidential Account to receive distributions of securities in-kind 
upon redemption. Each AP will be required to open a Confidential 
Account with an AP Representative in order to facilitate orderly 
processing of redemptions. While a Fund will generally distribute 
securities in-kind, the Adviser may determine from time to time that it 
is not in a Fund's best interests to distribute securities in-kind, but 
rather to sell securities and/or distribute cash. For example, the 
Adviser may distribute cash to facilitate orderly portfolio management 
in connection with rebalancing or transitioning a portfolio in line 
with its investment objective, or if there is substantially more 
creation than redemption activity during the period immediately 
preceding a redemption request, or as necessary or appropriate in 
accordance with applicable laws and regulations.
---------------------------------------------------------------------------

    \15\ The value of any positions not susceptible to in-kind 
settlement may be paid in cash.
---------------------------------------------------------------------------

    The Redemption Instruments will consist of the same securities for 
all APs on any given day subject to the

[[Page 29916]]

Adviser's ability to make minor adjustments to address odd lots, 
fractional shares, tradeable sizes or other situations.
Net Asset Value
    The NAV per share of a Fund will be computed by dividing the value 
of the net assets of a Fund (i.e., the value of its total assets less 
total liabilities) by the total number of shares of a Fund outstanding, 
rounded to the nearest cent. Expenses and fees, including, without 
limitation, the management, administration and distribution fees, will 
be accrued daily and taken into account for purposes of determining 
NAV. Interest and investment income on the Trust's assets accrue daily 
and will be included in the Fund's total assets. The NAV per share for 
a Fund will be calculated by a Fund's administrator (``Administrator'') 
and determined as of the close of the regular trading session on the 
Exchange (ordinarily 4:00 p.m., E.T.) on each day that the Exchange is 
open.
    Shares of U.S. exchange-listed equity securities, exchange-traded 
funds, exchange-listed ADRs, and U.S. exchange-listed futures will be 
valued at market value, which will generally be determined using the 
last reported official closing or last trading price on the exchange or 
market on which the securities are primarily traded at the time of 
valuation. Cash Equivalents will generally be valued on the basis of 
independent pricing services or quotes obtained from brokers and 
dealers or price quotations or other equivalent indications of value 
provided by a third-party pricing service.
Availability of Information
    The Funds' website (www.americancenturyetfs.com), which will be 
publicly available prior to the listing and trading of shares, will 
include a form of the prospectus for each Fund that may be downloaded. 
The Funds' website will include additional quantitative information 
updated on a daily basis, including, for each Fund, (1) the prior 
Business Day's NAV, market closing price or mid-point of the bid/ask 
spread at the time of calculation of such NAV (the ``Bid/Ask 
Price''),\16\ and a calculation of the premium and discount of the 
market closing price or Bid/Ask Price against the NAV, and (2) data in 
chart format displaying the frequency distribution of discounts and 
premiums of the daily Bid/Ask Price against the NAV, within appropriate 
ranges, for each of the four previous calendar quarters. The website 
and information will be publicly available at no charge.
---------------------------------------------------------------------------

    \16\ The Bid/Ask Price of a Fund will be determined using the 
mid-point between the current NBB and NBO as of the time of 
calculation of a Fund's NAV. The records relating to Bid/Ask Prices 
will be retained by each Fund and its service providers.
---------------------------------------------------------------------------

    The Trust's SAI and each Fund's shareholder reports will be 
available free upon request from the Trust. These documents and forms 
may be viewed on-screen or downloaded from the Commission's website at 
www.sec.gov.
    Information regarding market price and trading volume of the shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services. Quotation 
and last sale information for the shares will be available via the 
Consolidated Tape Association (``CTA'') high-speed line. In addition, 
the VIIV, as defined in proposed Rule 14.11(k)(3)(B) and as described 
further below, will be widely disseminated by one or more major market 
data vendors in one-second intervals during Regular Trading Hours.
Dissemination of the VIIV
    According to the Exemptive Application, the pricing verification 
agent, on behalf of each Fund, will utilize two separate calculation 
engines to calculate intra-day indicative values (``Calculation 
Engines''), generally based on the mid-point between the current 
national best bid and offer disseminated by the Consolidated Quotation 
System (``CQS'') and Unlisted Trading Privileges (``UTP'') Plan 
Securities Information Processor,\17\ to provide the estimated real-
time value on a per Share basis every second during the Exchange's 
Regular Trading Hours.\18\ The specific methodology for calculating and 
disclosing the VIIV will be disclosed on each Fund's website. The VIIV 
should not be viewed as a ``real-time'' update of NAV because the VIIV 
may not be calculated in the same manner as NAV, which is computed once 
per day. The VIIV for each Fund will be disseminated by one or more 
major market data vendors in one-second intervals during Regular 
Trading Hours. For purposes of the VIIV, securities held by a Fund will 
be valued throughout the day based on the mid-point between the 
disseminated current national best bid and offer. If the Adviser 
determines that a portfolio security does not have a readily available 
market quotation, that fact, along with the identity and weighting of 
that security in a Fund's VIIV calculation, will be publicly disclosed 
on each Fund's website.
---------------------------------------------------------------------------

    \17\ According to the Exemptive Application, all Commission-
registered exchanges and market centers send their trades and quotes 
to a central consolidator where the Consolidated Tape System (CTS) 
and CQS data streams are produced and distributed worldwide. See 
https://www.ctaplan.com/index. Although there is only one source of 
market quotations, each Calculation Engine will receive the data 
directly and calculate an indicative value separately and 
independently from each other Calculation Engine.
    \18\ The Adviser represents that the dissemination of VIIV at 
one second intervals strikes a balance of providing all investors 
with usable information at a rate that can be processed by retail 
investors, does not provide so much information so as to allow 
market participants to accurately determine the constituents, and 
their weightings, of the portfolio, can be accurately calculated and 
disseminated, and still provides professional traders with per 
second data.
---------------------------------------------------------------------------

Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the shares of the Funds. The Exchange will halt trading in 
the shares under the conditions specified in BZX Rule 11.18. Trading 
may be halted because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the shares inadvisable, including 
whether unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present. Trading in the 
shares also will be subject to proposed Rule 14.11(k)(4)(B)(iii) in the 
Proposal, which sets forth circumstances under which shares of the 
Funds will be halted.
Trading Rules
    The Exchange deems the shares to be equity securities, thus 
rendering trading in the shares subject to the Exchange's existing 
rules governing the trading of equity securities. Shares will trade on 
the Exchange only during Regular Trading Hours as provided in proposed 
Rule 14.11(k)(2)(B). As provided in BZX Rule 11.11(a), the minimum 
price variation for quoting and entry of orders in securities traded on 
the Exchange is $0.01, with the exception of securities that are priced 
less than $1.00, for which the minimum price variation for order entry 
is $0.0001.
    The shares will conform to the initial and continued listing 
criteria under Rule 14.11(k). The Exchange represents that, for initial 
and/or continued listing, each Fund will be in compliance with Rule 
10A-3 under the Act.\19\ A minimum of 100,000 shares of each Fund will 
be outstanding at the commencement of trading on the Exchange. The 
Exchange will obtain a representation from the issuer of the shares of 
each Fund that the NAV per

[[Page 29917]]

share of each Fund will be calculated daily and will be made available 
to all market participants at the same time.
---------------------------------------------------------------------------

    \19\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of the shares on the Exchange during 
all trading sessions and to deter and detect violations of Exchange 
rules and the applicable federal securities laws. Trading of the shares 
through the Exchange will be subject to the Exchange's surveillance 
procedures for derivative products, including Managed Portfolio 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 Exchange 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 
procedures under Exchange Rule 14.12.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the shares, underlying 
equity securities and U.S. exchange-listed futures with other markets 
and other entities that are members of the Intermarket Surveillance 
Group (``ISG''), and the Exchange or FINRA, on behalf of the Exchange, 
or both, may obtain trading information regarding trading such 
securities from such markets and other entities. In addition, the 
Exchange may obtain information regarding trading in the shares, 
underlying stocks and U.S. exchange-listed futures from markets and 
other entities that are members of ISG or with which the Exchange has 
in place a comprehensive surveillance sharing agreement.\20\
---------------------------------------------------------------------------

    \20\ For a list of the current members of ISG, see 
www.isgportal.org.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
Information Circular
    Prior to the commencement of trading, the Exchange will inform its 
members in an Information Circular (``Circular'') of the special 
characteristics and risks associated with trading the shares. 
Specifically, the Circular will discuss the following: (1) The 
procedures for purchases and redemptions of shares; (2) BZX Rule 3.7, 
which imposes suitability obligations on Exchange members with respect 
to recommending transactions in the shares to customers; (3) how 
information regarding the VIIV is disseminated; (4) the requirement 
that members deliver a prospectus to investors purchasing newly issued 
shares prior to or concurrently with the confirmation of a transaction; 
and (5) trading information.
    In addition, the Circular will reference that the Funds are subject 
to various fees and expenses described in the Registration Statement. 
The Circular will discuss any exemptive, no-action, and interpretive 
relief granted by the Commission from any rules under the Act. The 
Circular will also disclose that the NAV for the shares will be 
calculated after 4:00 p.m., E.T. each trading day.
2. Statutory Basis
    The Exchange believes that the Proposal is consistent with Section 
6(b) of the Act \21\ in general and Section 6(b)(5) of the Act \22\ 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 a national market system, and, in 
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f.
    \22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that, to the extent that the Proposal and, 
thus proposed Rule 14.11(k) is approved by the Commission, this 
proposed rule change is designed to prevent fraudulent and manipulative 
acts and practices in that the Funds would meet each of the rules 
relating to listing and trading of Managed Portfolio Shares and, to the 
extent that a Fund is not in compliance with such rules, the Exchange 
would either prevent the Fund from listing and trading if it hadn't 
started trading on the Exchange or would commence delisting procedures 
under Exchange Rule 14.12. More specifically, the Exchange will 
consider the suspension of trading in, and will commence delisting 
proceedings under Rule 14.12 for, a series of Managed Portfolio Shares 
under any of the following circumstances: (a) If, following the initial 
twelve-month period after commencement of trading on the Exchange of a 
series of Managed Portfolio Shares, there are fewer than 50 beneficial 
holders of the series of Managed Portfolio Shares; (b) if the value of 
the VIIV is no longer calculated or available to all market 
participants at the same time; (c) if the holdings of a series of 
Managed Portfolio Shares are not made available on a quarterly basis as 
required under the 1940 Act or are not made available to all market 
participants at the same time; (d) if the Investment Company issuing 
the Managed Portfolio Shares has failed to file any filings required by 
the Commission or if the Exchange is aware that the Investment Company 
is not in compliance with the conditions of any exemptive order or no-
action relief granted by the Commission to the Investment Company with 
respect to the series of Managed Portfolio Shares; (e) if any of the 
continued listing requirements set forth in Rule 14.11(k) are not 
continuously maintained; (f) if any of the applicable Continued Listing 
Representations for the issue of Managed Fund Shares are not 
continuously met; or (g) if such other event shall occur or condition 
exists which, in the opinion of the Exchange, makes further dealings on 
the Exchange inadvisable.
    The Adviser is not registered as a broker-dealer, but is affiliated 
with a broker-dealer and has implemented and will maintain a ``fire 
wall'' with respect to such broker-dealer regarding access to 
information concerning the composition and/or changes to a Fund's 
portfolio.
    In the event (a) the Adviser becomes registered as a broker-dealer 
or becomes 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 its broker-dealer 
affiliate 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.
    With respect to the proposed listing and trading of shares of the 
Funds, the Exchange believes that the proposed rule change is designed 
to prevent fraudulent and manipulative acts and practices in that the 
shares will be listed and traded on the Exchange pursuant to the 
initial and continued listing criteria in Rule 14.11(k). Price 
information for the U.S. exchange-listed equity securities held by the 
Funds will be available through major market data vendors or securities 
exchanges listing and trading such securities. The listing and trading 
of such securities is subject to rules of the exchanges on which they 
are listed and traded, as approved by the Commission. The Funds will 
primarily hold U.S.-listed equity securities. All exchange-listed 
equity securities in

[[Page 29918]]

which the Funds will invest will be listed and traded on U.S. national 
securities exchanges. A Fund's investments will be consistent with its 
respective investment objective and will not be used to enhance 
leverage. The Funds will not invest in non-U.S. exchange-listed 
securities. The Exchange or FINRA, on behalf of the Exchange, or both, 
will communicate as needed regarding trading in the shares, underlying 
stocks and U.S. exchange-listed futures with other markets and other 
entities that are members of the ISG, and the Exchange or FINRA, on 
behalf of the Exchange, or both, may obtain trading information 
regarding trading such securities from such markets and other entities. 
In addition, the Exchange may obtain information regarding trading in 
the shares, underlying stocks, and U.S. exchange-listed futures from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
An AP Representative will provide information related to creations and 
redemption of Creation Units and Redemption Units to FINRA upon 
request.
    With respect to trading of shares of the Funds, the ability of 
market participants to buy and sell shares at prices near the VIIV is 
dependent upon their assessment that the VIIV is a reliable, indicative 
correlated value for a Fund's underlying holdings. Market participants 
may view the VIIV as a reliable, indicative correlated value because 
(1) the VIIV will be calculated and disseminated based on a Fund's 
actual portfolio holdings, (2) the securities in which the Funds plan 
to invest are generally highly liquid and actively traded and therefore 
generally have accurate real time pricing available, and (3) market 
participants will have a daily opportunity to evaluate whether the VIIV 
at or near the close of trading is indeed predictive of the actual 
NAV.\23\ The Exchange, however, notes that the VIIV should not be 
viewed as a ``real-time'' update of NAV because the VIIV may not be 
calculated in the same manner as NAV, which is computed once per day.
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    \23\ The statements in the Statutory Basis section of this 
filing relating to pricing efficiency, arbitrage, and activities of 
market participants, including market makers and APs, are based on 
representation by the Adviser and review by the Exchange.
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    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Exchange will obtain a representation from the issuer of an 
issue of Managed Portfolio Shares that the NAV per share of the Funds 
will be calculated daily and that the NAV will be made available to all 
market participants at the same time. Investors can also obtain a 
Fund's SAI, shareholder reports, Form N-CSR, and Form N-PORT. A Fund's 
SAI and shareholder reports will be available free upon request from 
the applicable fund, and those documents and the Form N-CSR and Form N-
PORT may be viewed on-screen or downloaded from the Commission's 
website. In addition, with respect to the Funds, a large amount of 
information will be publicly available regarding the Funds and the 
shares, thereby promoting market transparency. Quotation and last sale 
information for the shares will be available via the CTA high-speed 
line. Information regarding the VIIV will be widely disseminated every 
second throughout Regular Trading Hours by one or more major market 
data vendors. The website for the Funds will include a prospectus for 
the Funds that may be downloaded, and additional data relating to NAV 
and other applicable quantitative information, updated on a daily 
basis.
    Moreover, prior to the commencement of trading, the Exchange will 
inform its members in a Circular of the special characteristics and 
risks associated with trading the shares. The Exchange will halt 
trading in the shares under the conditions specified in BZX Rule 11.18 
or for reasons that, in the view of the Exchange, make trading in the 
shares inadvisable. Trading in the shares will be subject to proposed 
Rule 14.11(k)(4)(B)(iii), which sets forth circumstances under which 
shares of the Funds will be halted. In addition, as noted above, 
investors will have ready access to the VIIV, and quotation and last 
sale information for the shares. The shares will conform to the initial 
and continued listing criteria under proposed Rule 14.11(k). The Funds 
will not invest in forwards or swaps. Each Fund's investments will be 
consistent with its investment objective and will not be used to 
enhance leverage. While a Fund may invest in inverse ETFs, a Fund will 
not invest in leveraged (e.g., 2X, -2X, 3X or-3X) ETFs.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
an additional type of actively-managed exchange-traded product that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace. As noted above, the Exchange has in 
place surveillance procedures relating to trading in the shares and may 
obtain information via ISG from other exchanges that are members of ISG 
or with which the Exchange has entered into a comprehensive 
surveillance sharing agreement. In addition, as noted above, investors 
will have ready access to information regarding the VIIV and quotation 
and last sale information for the shares.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change, rather will facilitate the listing and trading of 
actively-managed exchange-traded products that will enhance competition 
among both market participants and listing venues, to the benefit of 
investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or

[[Page 29919]]

     Send an email to [email protected]. Please include 
File Number SR-CboeBZX-2019-057 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-2019-057. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than 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-2019-057 and should be submitted 
on or before July 16, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019-13405 Filed 6-24-19; 8:45 am]
 BILLING CODE 8011-01-P