Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Exempt Tracking Fund Shares Listed Pursuant to Rule 14.11(m) From Certain Governance Requirements, 35490-35492 [2020-12517]
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35490
Federal Register / Vol. 85, No. 112 / Wednesday, June 10, 2020 / Notices
available to Users who believe it may
better effect their trading strategies.
Therefore, the Commission believes that
providing market participants the ability
to use this optional tool to potentially
improve the quality of their executions
would promote just and equitable
principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest.
The Commission also notes that there
is current, existing functionality for
discretionary orders that is similar,
although not identical, to both the offset
and QDP instructions on the
Exchange 23 and other national
securities exchanges.24 For the NBBO
offset in particular, the Commission
notes that the proposed offset
instruction is a close variant of the
discretion and pegging functionality
that the Commission has approved
under past exchange proposals.25 These
functionalities continue to exist on the
Exchange and on other exchanges.26
Accordingly, for the foregoing
reasons, the Commission believes that
this proposed rule change, as modified
by Amendment No. 1, is consistent with
the Exchange Act. The Commission
believes that the proposed rule change
is reasonably designed to promote fair
and orderly markets, promote just and
equitable principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market, and, in general,
to protect investors and the public
interest.
IV. Solicitation of Comments on
Amendment No. 1 to the Proposed Rule
Change
Interested persons are invited to
submit written data, views, and
arguments concerning whether
Amendment No. 1 is consistent with the
23 See,
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24 See,
e.g., EDGA Rule 11.6(j)(2).
e.g., IEX Rule 11.190(b)(10), Nasdaq Rule
4703(g).
25 See, e.g., Securities Exchange Act Release No.
73592 (Nov. 13, 2014), 79 FR 68937 (Nov. 19, 2014).
26 See, e.g., EDGA Rule 11.6(d); EDGA Rule
11.6(j)(2); Nasdaq Rule 4703(g). The Commission
notes that the Exchange and other exchanges offer
order types or instructions that would permit an
order with discretion or an order with pegging
functionality (or both, in some cases) to rest more
passively on the exchange’s book (e.g., further away
from the NBB or NBO). As noted above, the
Exchange offers both a Discretionary Range
instruction (which would allow a discretionary
order to rest passively) and a Primary Peg
instruction (which would allow an order to be
pegged one or more MPVs away from the NBB or
NBO). Other exchange rules permit a discretionary
order to be combined with a pegged order and
would allow for a passive offset. See, e.g., Nasdaq
Rule 4703(g).
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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–
CboeEDGA–2020–005 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–CboeEDGA–2020–005. 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–CboeEDGA–2020–005, and
should be submitted on or before July 1,
2020.
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 1, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 1 in the Federal
Register. In Amendment No. 1, the
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Exchange further revised the proposal
to: (1) Modify the circumstances that
would enable or refresh a QDP active
period; (2) set the QDP active period as
2 milliseconds; (3) include additional
justification in support of the proposed
rule change, including data in support
of the QDP functionality; and (4) make
technical and conforming changes. The
changes and additional information in
Amendment No. 1 add additional clarity
to the original substance of the proposed
rule change. In addition, the content of
Amendment No. 1 assists the
Commission’s determination of whether
the proposed rule change is consistent
with the Act. Accordingly, the
Commission finds good cause, pursuant
to Section 19(b)(2) of the Act,27 to
approve the proposed rule change, as
modified by Amendment No. 1, on an
accelerated basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,28 that the
proposed rule change (SR–CboeEDGA–
2020–005), as modified by Amendment
No. 1, be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–12521 Filed 6–9–20; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89011; File No. SR–
CboeBZX–2020–049]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Exempt
Tracking Fund Shares Listed Pursuant
to Rule 14.11(m) From Certain
Governance Requirements
June 4, 2020.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 3,
Cboe BZX Exchange, Inc. (‘‘Exchange’’
or ‘‘BZX’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by the Exchange.
27 15
U.S.C. 78s(b)(2).
28 Id.
29 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 85, No. 112 / Wednesday, June 10, 2020 / Notices
The Exchange filed the proposal as a
‘‘non-controversial’’ proposed rule
change pursuant to Section
19(b)(3)(A)(iii) of the Act 3 and Rule
19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes a rule change
to provide an exemption to certain
governance requirements for series of
Tracking Fund Shares listed on the
Exchange pursuant to Rule 14.11(m).
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
jbell on DSKJLSW7X2PROD with NOTICES
On May 15, 2020, the Commission
approved an Exchange proposal to
adopt BZX Rule 14.11(m) related to the
listing and trading of Tracking Fund
3 15
U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
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Shares 5 on the Exchange.6 Currently,
Rule 14.10(e)(1)(E) provides an
exemption to certain audit committee
requirements provided under Rule
14.10(c)(3) for funds listed on the
Exchange that are Index Fund Shares,
Managed Fund Shares, Managed
Portfolio Shares, and ETF Shares.
Specifically, Rule 14.10(e)(1)(E)
provides that ‘‘management investment
companies that are Index Fund Shares,
Managed Fund Shares, Managed
Portfolio Shares, and ETF Shares, as
defined in Rules 14.11(c), 14.11(i),
14.11(k), and 14.11(l), respectively, are
exempt from the Audit Committee
requirements set forth in Rule
14.10(c)(3), except for the applicable
requirements of SEC Rule 10A–3.’’ 7
Index Fund Shares, Managed Fund
Shares, Managed Portfolio Shares, and
ETF Shares are exempted from the
requirements of Rule 14.10(c)(3) because
they are otherwise subject to the
accounting and auditing requirements of
the Investment Company Act of 1940
(the ‘‘1940 Act’’), including Section
32(a).8 Because Tracking Fund Shares
are also subject to the accounting and
auditing requirements under the 1940
Act and are so similarly situated to
Index Fund Shares, Managed Fund
Shares, Managed Portfolio Shares, and
ETF Shares, the Exchange believes that
Tracking Fund Shares should be subject
to and exempt from the same corporate
governance requirements associated
with listing on the Exchange. As such,
the Exchange is proposing to make a
change to amend Rule 14.10(e)(1)(E) in
5 The term ‘‘Tracking Fund Share’’ means a
security that: (i) Represents an interest in an
investment company registered under the
Investment Company Act of 1940 (‘‘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; (ii)
is issued in a specified aggregate minimum number
in return for a deposit of a specified Tracking
Basket and/or a cash amount with a value equal to
the next determined net asset value; (iii) when
aggregated in the same specified minimum number,
may be redeemed at a holder’s request, which
holder will be paid a specified Tracking Basket and/
or a cash amount with a value equal to the next
determined net asset value; and (iv) the portfolio
holdings for which are disclosed within at least 60
days following the end of every fiscal quarter.
6 See Securities Exchange Act Release No. 88887
(May 15, 2020), 85 FR 30990 (May 21, 2020) (SR–
CboeBZX–2019–107) (the ‘‘Approval Order’’).
While the Approval Order approved the listing and
trading of several series of Tracking Fund Shares,
the Exchange notes that those series have not yet
listed on the Exchange.
7 The Exchange notes that it recently submitted a
similar proposal to add Managed Portfolio Shares
to the exemption under Rule 14.10(e)(1)(E). See
Securities Exchange Act Release No. 88075 (January
29, 2020), 85 FR 6240 (February 4, 2020) (SR–
CboeBZX–2020–010).
8 15 U.S.C. 80a–31.
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Frm 00080
Fmt 4703
Sfmt 4703
35491
order to add Tracking Fund Shares to
the list of product types listed on the
Exchange that are exempted from the
Audit Committee requirements set forth
in Rule 14.10(c)(3), except for the
applicable requirements of SEC Rule
10A–3.9
2. Statutory Basis
The Exchange believes that the
proposal is consistent with Section 6(b)
of the Act 10 in general and Section
6(b)(5) of the Act 11 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 this
change to amend Rule 14.10(e)(1)(E) in
order to add Tracking Fund Shares to a
list of product types listed on the
Exchange, including Index Fund Shares,
Managed Fund Shares, Managed
Portfolio Shares, and ETF Shares, that
are exempted from the Audit Committee
requirements set forth in Rule
14.10(c)(3), except for the applicable
requirements of SEC Rule 10A–3 is
consistent with the Act because it is
meant only to subject Tracking Fund
Shares to the same corporate governance
requirements currently applicable to the
very similar product structures of Index
Fund Shares, Managed Fund Shares,
Managed Portfolio Shares, and ETF
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. To the
contrary, the Exchange believes that the
proposed rule change would promote
both intermarket and intramarket
competition by exempting Tracking
Fund Shares from the audit committee
requirements set forth in Rule
14.10(c)(3) except for the applicable
requirements of SEC Rule 10A–3. This
is consistent with exemptions provided
to Index Fund Shares, Managed Fund
Shares, Managed Portfolio Shares, and
ETF Shares, which, like Tracking Fund
Shares, are otherwise subject to the
9 17
CFR 240.10A–3.
U.S.C. 78f.
11 15 U.S.C. 78f(b)(5).
10 15
E:\FR\FM\10JNN1.SGM
10JNN1
35492
Federal Register / Vol. 85, No. 112 / Wednesday, June 10, 2020 / Notices
audit committee requirements of the
1940 Act, including Section 32(a).
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange has neither solicited
nor received written comments on the
proposed rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 12 and Rule 19b–
4(f)(6) thereunder.13
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 14 normally does not become
operative for 30 days after the date of its
filing. However, Rule 19b–4(f)(6)(iii) 15
permits the Commission to designate a
shorter time if such action is consistent
with the protection of investors and the
public interest. The Exchange has
requested that the Commission waive
the 30-day operative delay so that the
proposal may become operative upon
filing. The Exchange stated that it
believes that waiving the operative
delay will allow any series of Tracking
Fund Shares that lists on the Exchange
in the near future to take advantage of
this exemption to certain audit
committee requirements and not have to
either delay launch or take short-term
remedial measures to comply with all
requirements of Rule 14.10(c)(3).
The Commission believes that waiver
of the operative delay is appropriate
because, as the Exchange stated, the rule
proposal is requesting an exemption to
certain audit committee requirements
that is currently granted to Managed
Fund Shares, Index Fund Shares,
Managed Portfolio Shares, and ETF
Shares, and there are no unique issues
associated with proving such an
exemption to Tracking Fund Shares that
12 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
14 17 CFR 240.19b–4(f)(6).
15 17 CFR 240.19b–4(f)(6)(iii).
jbell on DSKJLSW7X2PROD with NOTICES
13 17
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17:06 Jun 09, 2020
Jkt 250001
have not already been considered by the
Commission or that would warrant
disparate treatment. Accordingly, the
Commission designates the proposed
rule change to be operative upon
filing.16
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act.
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–2020–049 and
should be submitted on or before July 1,
2020.
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
J. Matthew DeLesDernier,
Assistant Secretary.
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–2020–049 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–2020–049. 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
16 For purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
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Frm 00081
Fmt 4703
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[FR Doc. 2020–12517 Filed 6–9–20; 8:45 am]
BILLING CODE 8011–01–P
DEPARTMENT OF STATE
[Public Notice 11135]
60-Day Notice of Proposed Information
Collection: Passport Demand
Forecasting Survey
Notice of request for public
comment.
ACTION:
The Department of State is
seeking Office of Management and
Budget (OMB) approval for the
information collection described below.
In accordance with the Paperwork
Reduction Act of 1995, we are
requesting comments on this collection
from all interested individuals and
organizations. The purpose of this
notice is to allow 60 days for public
comment preceding submission of the
collection to OMB.
DATES: The Department will accept
comments from the public up to August
10, 2020.
ADDRESSES: You may submit comments
by any of the following methods:
• Web: Persons with access to the
internet may comment on this notice by
going to www.Regulations.gov. You can
search for the document by entering
‘‘Docket Number: DOS–2020–0023’’ in
the Search field. Then click the
‘‘Comment Now’’ button and complete
the comment form.
• Email: passportstudy@state.gov.
• Regular Mail: Send written
comments to: U.S. Department of State,
attn.: Division Chief, CA/PPT/S/PPS/SP,
44132 Mercure Circle, P.O. Box 1227,
Sterling, VA 20166–1227
SUMMARY:
17 17
E:\FR\FM\10JNN1.SGM
CFR 200.30–3(a)(12).
10JNN1
]]>Agencies
[Federal Register Volume 85, Number 112 (Wednesday, June 10, 2020)]
[Notices]
[Pages 35490-35492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-12517]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89011; File No. SR-CboeBZX-2020-049]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Exempt
Tracking Fund Shares Listed Pursuant to Rule 14.11(m) From Certain
Governance Requirements
June 4, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 3, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') filed with
the Securities and Exchange Commission (``Commission'') the proposed
rule change as described in Items I and II below, which Items have been
prepared by the Exchange.
[[Page 35491]]
The Exchange filed the proposal as a ``non-controversial'' proposed
rule change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and
Rule 19b-4(f)(6) thereunder.\4\ The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes a rule change to provide an exemption to
certain governance requirements for series of Tracking Fund Shares
listed on the Exchange pursuant to Rule 14.11(m).
The text of the proposed rule change is also available on the
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On May 15, 2020, the Commission approved an Exchange proposal to
adopt BZX Rule 14.11(m) related to the listing and trading of Tracking
Fund Shares \5\ on the Exchange.\6\ Currently, Rule 14.10(e)(1)(E)
provides an exemption to certain audit committee requirements provided
under Rule 14.10(c)(3) for funds listed on the Exchange that are Index
Fund Shares, Managed Fund Shares, Managed Portfolio Shares, and ETF
Shares. Specifically, Rule 14.10(e)(1)(E) provides that ``management
investment companies that are Index Fund Shares, Managed Fund Shares,
Managed Portfolio Shares, and ETF Shares, as defined in Rules 14.11(c),
14.11(i), 14.11(k), and 14.11(l), respectively, are exempt from the
Audit Committee requirements set forth in Rule 14.10(c)(3), except for
the applicable requirements of SEC Rule 10A-3.'' \7\
---------------------------------------------------------------------------
\5\ The term ``Tracking Fund Share'' means a security that: (i)
Represents an interest in an investment company registered under the
Investment Company Act of 1940 (``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; (ii) is issued in a specified
aggregate minimum number in return for a deposit of a specified
Tracking Basket and/or a cash amount with a value equal to the next
determined net asset value; (iii) when aggregated in the same
specified minimum number, may be redeemed at a holder's request,
which holder will be paid a specified Tracking Basket and/or a cash
amount with a value equal to the next determined net asset value;
and (iv) the portfolio holdings for which are disclosed within at
least 60 days following the end of every fiscal quarter.
\6\ See Securities Exchange Act Release No. 88887 (May 15,
2020), 85 FR 30990 (May 21, 2020) (SR-CboeBZX-2019-107) (the
``Approval Order''). While the Approval Order approved the listing
and trading of several series of Tracking Fund Shares, the Exchange
notes that those series have not yet listed on the Exchange.
\7\ The Exchange notes that it recently submitted a similar
proposal to add Managed Portfolio Shares to the exemption under Rule
14.10(e)(1)(E). See Securities Exchange Act Release No. 88075
(January 29, 2020), 85 FR 6240 (February 4, 2020) (SR-CboeBZX-2020-
010).
---------------------------------------------------------------------------
Index Fund Shares, Managed Fund Shares, Managed Portfolio Shares,
and ETF Shares are exempted from the requirements of Rule 14.10(c)(3)
because they are otherwise subject to the accounting and auditing
requirements of the Investment Company Act of 1940 (the ``1940 Act''),
including Section 32(a).\8\ Because Tracking Fund Shares are also
subject to the accounting and auditing requirements under the 1940 Act
and are so similarly situated to Index Fund Shares, Managed Fund
Shares, Managed Portfolio Shares, and ETF Shares, the Exchange believes
that Tracking Fund Shares should be subject to and exempt from the same
corporate governance requirements associated with listing on the
Exchange. As such, the Exchange is proposing to make a change to amend
Rule 14.10(e)(1)(E) in order to add Tracking Fund Shares to the list of
product types listed on the Exchange that are exempted from the Audit
Committee requirements set forth in Rule 14.10(c)(3), except for the
applicable requirements of SEC Rule 10A-3.\9\
---------------------------------------------------------------------------
\8\ 15 U.S.C. 80a-31.
\9\ 17 CFR 240.10A-3.
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2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act \10\ in general and Section 6(b)(5) of the Act \11\ 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.
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\10\ 15 U.S.C. 78f.
\11\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that this change to amend Rule 14.10(e)(1)(E)
in order to add Tracking Fund Shares to a list of product types listed
on the Exchange, including Index Fund Shares, Managed Fund Shares,
Managed Portfolio Shares, and ETF Shares, that are exempted from the
Audit Committee requirements set forth in Rule 14.10(c)(3), except for
the applicable requirements of SEC Rule 10A-3 is consistent with the
Act because it is meant only to subject Tracking Fund Shares to the
same corporate governance requirements currently applicable to the very
similar product structures of Index Fund Shares, Managed Fund Shares,
Managed Portfolio Shares, and ETF 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. To the contrary, the Exchange
believes that the proposed rule change would promote both intermarket
and intramarket competition by exempting Tracking Fund Shares from the
audit committee requirements set forth in Rule 14.10(c)(3) except for
the applicable requirements of SEC Rule 10A-3. This is consistent with
exemptions provided to Index Fund Shares, Managed Fund Shares, Managed
Portfolio Shares, and ETF Shares, which, like Tracking Fund Shares, are
otherwise subject to the
[[Page 35492]]
audit committee requirements of the 1940 Act, including Section 32(a).
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \14\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposal may become operative upon filing. The Exchange stated
that it believes that waiving the operative delay will allow any series
of Tracking Fund Shares that lists on the Exchange in the near future
to take advantage of this exemption to certain audit committee
requirements and not have to either delay launch or take short-term
remedial measures to comply with all requirements of Rule 14.10(c)(3).
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\14\ 17 CFR 240.19b-4(f)(6).
\15\ 17 CFR 240.19b-4(f)(6)(iii).
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The Commission believes that waiver of the operative delay is
appropriate because, as the Exchange stated, the rule proposal is
requesting an exemption to certain audit committee requirements that is
currently granted to Managed Fund Shares, Index Fund Shares, Managed
Portfolio Shares, and ETF Shares, and there are no unique issues
associated with proving such an exemption to Tracking Fund Shares that
have not already been considered by the Commission or that would
warrant disparate treatment. Accordingly, the Commission designates the
proposed rule change to be operative upon filing.\16\
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\16\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBZX-2020-049 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-2020-049. 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-2020-049 and should be submitted
on or before July 1, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-12517 Filed 6-9-20; 8:45 am]
BILLING CODE 8011-01-P
