Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of the Clearbridge Small Cap Value ETF Under BZX Rule 14.11(k), 3099-3101 [2020-00683]
Download as PDF
<![CDATA[
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Notices
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2020–001 on the subject line.
Paper Comments
lotter on DSKBCFDHB2PROD with NOTICES
• 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–2020–001. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2020–001 and
should be submitted on or before
February 7, 2020.
VerDate Sep<11>2014
18:20 Jan 16, 2020
Jkt 250001
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–00681 Filed 1–16–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–87951; File No. SR–
CboeBZX–2019–076]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Order Instituting
Proceedings To Determine Whether To
Approve or Disapprove a Proposed
Rule Change, as Modified by
Amendment No. 1, To List and Trade
Shares of the Clearbridge Small Cap
Value ETF Under BZX Rule 14.11(k)
January 13, 2020.
On September 26, 2019, Cboe BZX
Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to list and trade
shares (‘‘Shares’’) of the Clearbridge
Small Cap Value ETF (‘‘Fund’’) under
BZX Rule 14.11(k) (Managed Portfolio
Shares). On October 9, 2019, the
Exchange filed Amendment No. 1 to the
proposed rule change, which amended
and replaced the rule change in its
entirety. The proposed rule change, as
modified by Amendment No. 1, was
published for comment in the Federal
Register on October 17, 2019.3 On
November 21, 2019, pursuant to Section
19(b)(2) of the Exchange Act,4 the
Commission designated a longer period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to disapprove the
proposed rule change.5 The Commission
has received no comments on the
proposed rule change. This order
institutes proceedings under Section
19(b)(2)(B) of the Exchange Act 6 to
determine whether to approve or
19 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 87286
(October 10, 2019), 84 FR 55608 (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 87581,
84 FR 65434 (November 27, 2019). The Commission
designated January 15, 2020, as the date by which
the Commission shall approve or disapprove, or
institute proceedings to determine whether to
disapprove, the proposed rule change.
6 15 U.S.C. 78s(b)(2)(B).
1 15
PO 00000
Frm 00089
Fmt 4703
Sfmt 4703
3099
disapprove the proposed rule change, as
modified by Amendment No. 1.
I. Summary of the Exchange’s
Description of the Proposed Rule
Change, as Modified by Amendment
No. 1 7
The Exchange proposes to list and
trade Shares of the Fund under BZX
Rule 14.11(k).8 The Shares will be
issued by Precidian ETF Trust II
(‘‘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.9 The investment adviser to
the Trust will be Precidian Funds LLC
(‘‘Adviser’’) and the sub-adviser to the
Fund will be ClearBridge Investments,
LLC (‘‘Sub-Adviser’’).10 Legg Mason
Investor Services, LLC will serve as the
distributor of the Shares.
A. Description of the Fund
The Exchange states that the Fund
seeks long-term capital growth. The
Exchange states that Fund’s holdings
will be limited to and consistent with
what is permissible under the
Exemptive Order and described in the
Notice. Under Normal Market
Conditions,11 the Fund will invest at
7 For a complete description of the Exchange’s
proposal, see the Notice, supra note 3.
8 The Commission recently approved the
Exchange’s proposed rule change to adopt BZX
Rule 14.11(k) to permit the listing and trading of
Managed Portfolio Shares. See Securities Exchange
Act Release No. 87759 (December 16, 2019), 84 FR
70223 (December 20, 2019) (SR–CboeBZX–2019–
047).
9 According to the Exchange, the Trust is
registered under the Investment Company Act of
1940 (‘‘1940 Act’’) and plans to file a registration
statement on Form N–1A relating to the Fund. An
order granting exemptive relief to the Trust was
issued on May 20, 2019 (File No. 812–14405)
(‘‘Exemptive Order’’). The Exchange states that
investments made by the Fund will comply with
the conditions set forth in the Exemptive Order.
10 The Exchange states that the Adviser is not
registered as a broker-dealer or affiliated with a
broker-dealer. The Exchange states that the SubAdviser 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 of and/or changes to
the Fund’s portfolio and Creation Basket (as such
term is defined in BZX Rule 14.11(k). The Exchange
further states that in the event (a) the Adviser or
Sub-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 brokerdealer, it will implement and maintain a fire wall
with respect to its relevant personnel or its brokerdealer affiliate regarding access to information
concerning the composition of and/or changes to
the portfolio and the Creation Basket, and will be
subject to procedures designed to prevent the use
and dissemination of material non-public
information regarding such portfolio or Creation
Basket.
11 The term ‘‘Normal Market Conditions’’
includes, but is not limited to, the absence of
E:\FR\FM\17JAN1.SGM
Continued
17JAN1
3100
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Notices
least 80% of its net assets, plus
borrowings for investment purposes, in
U.S. exchange-listed common stocks
and other equity securities of small
capitalization U.S. companies or in
other U.S. exchange-listed investments
with similar economic characteristics,
including only the following U.S.
exchange-listed securities: Common
stocks, preferred securities, securities of
other investment companies and of real
estate investment companies (‘‘REITs’’),
and warrants and rights.
In addition, the Fund may also invest
up to 20% of its net assets, plus
borrowings for investment purposes, in
common stocks, preferred securities,
and warrants and rights of U.S.
exchange-listed companies with larger
market capitalizations, U.S. ETFs,12 U.S.
exchange-listed ADRs, U.S. exchangelisted equity futures contracts, and U.S.
exchange-listed equity index futures
contracts. The Fund may also hold cash
without limitation.
lotter on DSKBCFDHB2PROD with NOTICES
B. Investment Restrictions
The Fund may hold up to an aggregate
amount of 15% of its net assets in
illiquid assets. Illiquid securities and
other illiquid assets include those
subject to contractual or other
restrictions on resale and other
instruments or assets that lack readily
available markets as determined in
accordance with Commission staff
guidance. The Exchange states that the
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. In
any event, the Fund will not purchase
any securities that are illiquid
investments at the time of purchase.
The Shares will conform to the initial
and continued listing criteria under
BZX Rule 14.11(k). The Fund’s
investments will be consistent with its
investment objective and will not be
used to enhance leverage. While the
Fund may invest in inverse ETFs, the
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.
12 For purposes of describing the holdings of the
Fund, ETFs include Portfolio Depository Receipts
(as described in BZX Rule 14.11(b)); Index Fund
Shares (as described in BZX Rule 14.11(c)); and
Managed Fund Shares (as described in BZX Rule
14.11(i)). The ETFs in which the Fund may invest
all will be listed and traded on U.S. national
securities exchanges. While the Fund may invest in
inverse ETFs, the Fund will not invest in leveraged
(e.g., 2X, –2X, 3X or –3X) ETFs.
VerDate Sep<11>2014
18:20 Jan 16, 2020
Jkt 250001
Fund will not invest in leveraged (e.g.,
2X, ¥2X, 3X or ¥3X) ETFs.
The Exchange states that the Fund’s
holdings will also meet the generic
listing standards applicable to series of
Managed Fund Shares under BZX 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
capitalization, diversity, and
concentration of portfolio holdings that
BZX Rule 14.11(i)(4)(C) is intended to
address are equally applicable to series
of Managed Portfolio Shares.
II. Proceedings To Determine Whether
To Approve or Disapprove SR–
CboeBZX–2019–076 and Grounds for
Disapproval Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act 13 to
determine whether the proposed rule
change, as modified by Amendment No.
1, should be approved or disapproved.
Institution of such proceedings is
appropriate at this time in view of the
legal and policy issues raised by the
proposed rule change. Institution of
proceedings does not indicate that the
Commission has reached any
conclusions with respect to any of the
issues involved. Rather, as described
below, the Commission seeks and
encourages interested persons to
provide comments on the proposed rule
change.
Pursuant to Section 19(b)(2)(B) of the
Exchange Act,14 the Commission is
providing notice of the grounds for
disapproval under consideration. The
Commission is instituting proceedings
to allow for additional analysis of the
proposed rule change’s consistency with
Section 6(b)(5) of the Exchange Act,
which requires, among other things, that
the rules of a national securities
exchange be ‘‘designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, . . . 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.’’ 15
III. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
13 15
U.S.C. 78s(b)(2)(B).
14 Id.
15 15
PO 00000
U.S.C. 78f(b)(5).
Frm 00090
Fmt 4703
Sfmt 4703
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5) or any other provision of the
Exchange Act, or the rules and
regulations thereunder. Although there
do not appear to be any issues relevant
to approval or disapproval that would
be facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b–4, any request for an
opportunity to make an oral
presentation.16
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by February 7, 2020. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by February 21, 2020.
The Commission asks that
commenters address the sufficiency of
the Exchange’s statements in support of
the proposal, which are set forth in the
Notice,17 and any other issues raised by
the proposed rule change under the
Exchange Act. In particular, the
Commission seeks commenters’ views
regarding whether the Exchange’s
proposal to list and trade the Fund
under BZX Rule 14.11(k) (Managed
Portfolio Shares), which are actively
managed exchange-traded products for
which the portfolio holdings are
disclosed on a quarterly, rather than
daily, basis, is adequately designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and to
protect investors and the public interest,
and is consistent with the maintenance
of a fair and orderly market under the
Exchange Act.
Comments may be submitted by any
of the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
CboeBZX–2019–076 on the subject line.
16 Section 19(b)(2) of the Exchange Act, as
amended by the Securities Act Amendments of
1975, Public Law 94–29 (June 4, 1975), grants the
Commission flexibility to determine what type of
proceeding—either oral or notice and opportunity
for written comments—is appropriate for
consideration of a particular proposal by a selfregulatory organization. See Securities Act
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
17 See supra note 3.
E:\FR\FM\17JAN1.SGM
17JAN1
Federal Register / Vol. 85, No. 12 / Friday, January 17, 2020 / Notices
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–2019–076. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CboeBZX–2019–076 and
should be submitted on or before
February 7, 2020. Rebuttal comments
should be submitted by February 21,
2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–00683 Filed 1–16–20; 8:45 am]
BILLING CODE 8011–01–P
lotter on DSKBCFDHB2PROD with NOTICES
SMALL BUSINESS ADMINISTRATION
Surrender of License of Small
Business Investment Company
Pursuant to the authority granted to
the United States Small Business
Administration under the Small
Business Investment Act of 1958, as
18 17
VerDate Sep<11>2014
18:20 Jan 16, 2020
amended, under Section 309 of the Act
and Section 107.1900 of the Small
Business Administration Rules and
Regulations (13 CFR 107.1900) to
function as a small business investment
company under the Small Business
Investment Company License No. 01/
71–0393 issued to Champlain Capital
Partners, L.P. said license is hereby
declared null and void.
Dated: January 10, 2020.
A. Joseph Shepard,
Associate Administrator, Office of Investment
and Innovation.
United States Small Business Administration.
A. Joseph Shepard,
Associate Administrator, Office of Investment
and Innovation.
[Disaster Declaration #16202 and #16203;
SOUTH DAKOTA Disaster Number SD–
00098]
Jkt 250001
[FR Doc. 2020–00757 Filed 1–16–20; 8:45 am]
BILLING CODE P
SMALL BUSINESS ADMINISTRATION
BILLING CODE P
Presidential Declaration Amendment of
a Major Disaster for the State of South
Dakota
SMALL BUSINESS ADMINISTRATION
AGENCY:
Surrender of License of Small
Business Investment Company
ACTION:
[FR Doc. 2020–00755 Filed 1–16–20; 8:45 am]
Pursuant to the authority granted to
the United States Small Business
Administration under the Small
Business Investment Act of 1958, as
amended, under Section 309 of the Act
and Section 107.1900 of the Small
Business Administration Rules and
Regulations (13 CFR 107.1900) to
function as a small business investment
company under the Small Business
Investment Company License No. 09/
09–0484 issued to Trinity Capital Fund
III, L.P. said license is hereby declared
null and void.
United States Small Business
Administration.
Dated: January 10, 2020.
A. Joseph Shepard,
Associate Administrator, Office of Investment
and Innovation.
[FR Doc. 2020–00758 Filed 1–16–20; 8:45 am]
SMALL BUSINESS ADMINISTRATION
Surrender of License of Small
Business Investment Company
Pursuant to the authority granted to
the United States Small Business
Administration under the Small
Business Investment Act of 1958, as
amended, under Section 309 of the Act
and Section 107.1900 of the Small
Business Administration Rules and
Regulations (13 CFR 107.1900) to
function as a small business investment
company under the Small Business
Investment Company License No. 09/
09–0468 issued to Trinity Capital Fund
II, L.P. said license is hereby declared
null and void.
PO 00000
Frm 00091
U.S. Small Business
Administration.
Amendment 2.
This is an amendment of the
Presidential declaration of a major
disaster for the State of South Dakota
(FEMA–4469–DR), dated 11/18/2019.
Incident: Severe Storms, Tornadoes,
and Flooding.
Incident Period: 09/09/2019 through
09/26/2019.
SUMMARY:
Issued on 01/10/2020.
Physical Loan Application Deadline
Date: 01/31/2020.
Economic Injury (EIDL) Loan
Application Deadline Date: 08/18/2020.
DATES:
Submit completed loan
applications to: U.S. Small Business
Administration, Processing and
Disbursement Center, 14925 Kingsport
Road, Fort Worth, TX 76155.
ADDRESSES:
A.
Escobar, Office of Disaster Assistance,
U.S. Small Business Administration,
409 3rd Street SW, Suite 6050,
Washington, DC 20416, (202) 205–6734.
FOR FURTHER INFORMATION CONTACT:
BILLING CODE P
United States Small Business
Administration.
CFR 200.30–3(a)(57).
3101
Fmt 4703
Sfmt 9990
The notice
of the President’s major disaster
declaration for the State of South
Dakota, dated 11/18/2019, is hereby
amended to extend the deadline for
filing applications for physical damages
as a result of this disaster to 01/31/2020.
All other information in the original
declaration remains unchanged.
SUPPLEMENTARY INFORMATION:
(Catalog of Federal Domestic Assistance
Number 59008)
James Rivera,
Associate Administrator for Disaster
Assistance.
[FR Doc. 2020–00705 Filed 1–16–20; 8:45 am]
BILLING CODE 8026–03–P
E:\FR\FM\17JAN1.SGM
17JAN1
]]>Agencies
[Federal Register Volume 85, Number 12 (Friday, January 17, 2020)]
[Notices]
[Pages 3099-3101]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-00683]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87951; File No. SR-CboeBZX-2019-076]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade
Shares of the Clearbridge Small Cap Value ETF Under BZX Rule 14.11(k)
January 13, 2020.
On September 26, 2019, Cboe BZX Exchange, Inc. (``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to list and trade shares
(``Shares'') of the Clearbridge Small Cap Value ETF (``Fund'') under
BZX Rule 14.11(k) (Managed Portfolio Shares). On October 9, 2019, the
Exchange filed Amendment No. 1 to the proposed rule change, which
amended and replaced the rule change in its entirety. The proposed rule
change, as modified by Amendment No. 1, was published for comment in
the Federal Register on October 17, 2019.\3\ On November 21, 2019,
pursuant to Section 19(b)(2) of the Exchange Act,\4\ the Commission
designated a longer period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to disapprove the proposed rule change.\5\ The
Commission has received no comments on the proposed rule change. This
order institutes proceedings under Section 19(b)(2)(B) of the Exchange
Act \6\ to determine whether to approve or disapprove the proposed rule
change, as modified by Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 87286 (October 10,
2019), 84 FR 55608 (``Notice'').
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 87581, 84 FR 65434
(November 27, 2019). The Commission designated January 15, 2020, as
the date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
I. Summary of the Exchange's Description of the Proposed Rule Change,
as Modified by Amendment No. 1 \7\
---------------------------------------------------------------------------
\7\ For a complete description of the Exchange's proposal, see
the Notice, supra note 3.
---------------------------------------------------------------------------
The Exchange proposes to list and trade Shares of the Fund under
BZX Rule 14.11(k).\8\ The Shares will be issued by Precidian ETF Trust
II (``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.\9\ The investment adviser to the Trust
will be Precidian Funds LLC (``Adviser'') and the sub-adviser to the
Fund will be ClearBridge Investments, LLC (``Sub-Adviser'').\10\ Legg
Mason Investor Services, LLC will serve as the distributor of the
Shares.
---------------------------------------------------------------------------
\8\ The Commission recently approved the Exchange's proposed
rule change to adopt BZX Rule 14.11(k) to permit the listing and
trading of Managed Portfolio Shares. See Securities Exchange Act
Release No. 87759 (December 16, 2019), 84 FR 70223 (December 20,
2019) (SR-CboeBZX-2019-047).
\9\ According to the Exchange, the Trust is registered under the
Investment Company Act of 1940 (``1940 Act'') and plans to file a
registration statement on Form N-1A relating to the Fund. An order
granting exemptive relief to the Trust was issued on May 20, 2019
(File No. 812-14405) (``Exemptive Order''). The Exchange states that
investments made by the Fund will comply with the conditions set
forth in the Exemptive Order.
\10\ The Exchange states that the Adviser is not registered as a
broker-dealer or affiliated with a broker-dealer. The Exchange
states that the Sub-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 of and/or
changes to the Fund's portfolio and Creation Basket (as such term is
defined in BZX Rule 14.11(k). The Exchange further states that in
the event (a) the Adviser or Sub-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 of and/or changes to the portfolio and the Creation
Basket, and will be subject to procedures designed to prevent the
use and dissemination of material non-public information regarding
such portfolio or Creation Basket.
---------------------------------------------------------------------------
A. Description of the Fund
The Exchange states that the Fund seeks long-term capital growth.
The Exchange states that Fund's holdings will be limited to and
consistent with what is permissible under the Exemptive Order and
described in the Notice. Under Normal Market Conditions,\11\ the Fund
will invest at
[[Page 3100]]
least 80% of its net assets, plus borrowings for investment purposes,
in U.S. exchange-listed common stocks and other equity securities of
small capitalization U.S. companies or in other U.S. exchange-listed
investments with similar economic characteristics, including only the
following U.S. exchange-listed securities: Common stocks, preferred
securities, securities of other investment companies and of real estate
investment companies (``REITs''), and warrants and rights.
---------------------------------------------------------------------------
\11\ 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, the Fund may also invest up to 20% of its net assets,
plus borrowings for investment purposes, in common stocks, preferred
securities, and warrants and rights of U.S. exchange-listed companies
with larger market capitalizations, U.S. ETFs,\12\ U.S. 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
without limitation.
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\12\ For purposes of describing the holdings of the Fund, ETFs
include Portfolio Depository Receipts (as described in BZX Rule
14.11(b)); Index Fund Shares (as described in BZX Rule 14.11(c));
and Managed Fund Shares (as described in BZX Rule 14.11(i)). The
ETFs in which the Fund may invest all will be listed and traded on
U.S. national securities exchanges. While the Fund may invest in
inverse ETFs, the Fund will not invest in leveraged (e.g., 2X, -2X,
3X or -3X) ETFs.
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B. Investment Restrictions
The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid assets. Illiquid securities and other illiquid
assets include those subject to contractual or other restrictions on
resale and other instruments or assets that lack readily available
markets as determined in accordance with Commission staff guidance. The
Exchange states that the 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. In any event, the Fund will not purchase any securities that
are illiquid investments at the time of purchase.
The Shares will conform to the initial and continued listing
criteria under BZX Rule 14.11(k). The Fund's investments will be
consistent with its investment objective and will not be used to
enhance leverage. While the Fund may invest in inverse ETFs, the Fund
will not invest in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
The Exchange states that the Fund's holdings will also meet the
generic listing standards applicable to series of Managed Fund Shares
under BZX 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
capitalization, diversity, and concentration of portfolio holdings that
BZX Rule 14.11(i)(4)(C) is intended to address are equally applicable
to series of Managed Portfolio Shares.
II. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeBZX-2019-076 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \13\ to determine whether the proposed
rule change, as modified by Amendment No. 1, should be approved or
disapproved. Institution of such proceedings is appropriate at this
time in view of the legal and policy issues raised by the proposed rule
change. Institution of proceedings does not indicate that the
Commission has reached any conclusions with respect to any of the
issues involved. Rather, as described below, the Commission seeks and
encourages interested persons to provide comments on the proposed rule
change.
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\13\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Exchange Act,\14\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of the proposed rule change's consistency with
Section 6(b)(5) of the Exchange Act, which requires, among other
things, that the rules of a national securities exchange be ``designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, . . . 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.'' \15\
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\14\ Id.
\15\ 15 U.S.C. 78f(b)(5).
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III. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Exchange
Act, or the rules and regulations thereunder. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of views, data, and arguments,
the Commission will consider, pursuant to Rule 19b-4, any request for
an opportunity to make an oral presentation.\16\
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\16\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by February 7, 2020. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
February 21, 2020.
The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice,\17\ and any other issues raised by the proposed rule
change under the Exchange Act. In particular, the Commission seeks
commenters' views regarding whether the Exchange's proposal to list and
trade the Fund under BZX Rule 14.11(k) (Managed Portfolio Shares),
which are actively managed exchange-traded products for which the
portfolio holdings are disclosed on a quarterly, rather than daily,
basis, is adequately designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
and to protect investors and the public interest, and is consistent
with the maintenance of a fair and orderly market under the Exchange
Act.
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\17\ See supra note 3.
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Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2019-076 on the subject line.
[[Page 3101]]
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-2019-076. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeBZX-2019-076 and should be submitted
on or before February 7, 2020. Rebuttal comments should be submitted by
February 21, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(57).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-00683 Filed 1-16-20; 8:45 am]
BILLING CODE 8011-01-P
