Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change Related to the 2x Long VIX Futures ETF (“UVIX”) and the -1x Short VIX Futures ETF (“SVIX”), 19741-19744 [2025-08120]

Download as PDF Federal Register / Vol. 90, No. 89 / Friday, May 9, 2025 / Notices • Send an email to rule-comments@ sec.gov. Please include File Number SR– DTC–2025–008 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549. All submissions should refer to File Number SR–DTC–2025–008. 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 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of DTC and on DTCC’s website (www.dtcc.com/ legal/sec-rule-filings). Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to File Number SR–DTC–2025–008 and should be submitted on or before May 30, 2025. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Sherry R. Haywood, Assistant Secretary. lotter on DSK11XQN23PROD with NOTICES1 [FR Doc. 2025–08117 Filed 5–8–25; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–102991; File No. SR– CboeBZX–2025–059] Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change Related to the 2x Long VIX Futures ETF (‘‘UVIX’’) and the –1x Short VIX Futures ETF (‘‘SVIX’’) May 5, 2025. 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 March 21, 2025, Cboe BZX Exchange, Inc. (‘‘Exchange’’) 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. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change Cboe BZX Exchange, Inc. (‘‘BZX’’ or the ‘‘Exchange’’) is filing with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) a proposed rule change related to the 2x Long VIX Futures ETF (‘‘UVIX’’) and the –1x Short VIX Futures ETF (‘‘SVIX’’) (each a ‘‘Fund’’ and, collectively, the ‘‘Funds’’), shares of which have been approved by the Commission to list and trade on the Exchange as Trust Issued Receipts pursuant to BZX Rule 14.11(f)(4), in order to amend certain representations from the original filings. 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 1 15 19 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 17:11 May 08, 2025 2 17 Jkt 265001 PO 00000 U.S.C. 78s(b)(1). CFR 240.19b–4. Frm 00074 Fmt 4703 Sfmt 4703 19741 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 Commission issued final approval of the rule filings proposing to list and trade shares of SVIX (the ‘‘SVIX Filing’’) 3 and UVIX (the ‘‘UVIX Filing,’’ 4 and collectively with the SVIX Filing, the ‘‘Filings’’) on the Exchange pursuant to Exchange Rule 14.11(f)(4), Trust Issued Receipts, on October 1, 2021.5 Both Filings include representations that limit the Funds participation in Cboe Volatility Index (‘‘VIX’’) futures contracts traded on the Cboe Futures Exchange, Inc. (‘‘CFE’’) (hereinafter referred to as ‘‘VIX Futures Contracts’’) to no more than ten percent (10%) during any ‘‘Rebalance Period,’’ defined as any fifteen minute period of continuous market trading.6 The Exchange is not aware of any existing comparable restrictions on market participation for: (i) any other single exchange-traded investment product not registered under the Investment Company Act of 1940 (the ‘‘Investment Company Act’’) (‘‘ETP’’); (ii) any exchange-traded note (‘‘ETN’’); or (iii) 3 See Securities Exchange Act Release Nos 91264 (March 5, 2021) 86 FR 13939 (March 11, 2021) (SR– CboeBZX–2020–070) (Notice of Filing of Amendment Nos. 1 and 3 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 and 3, To List and Trade Shares of the ¥1x Short VIX Futures ETF Under BZX Rule 14.11(f)(4) (Trust Issued Receipts)) (the ‘‘SVIX Notice and Approval Order’’). 4 See Securities Exchange Act Release Nos 91265 (March 5, 2021) 86 FR 13922 (March 11, 2021) (SR– CboeBZX–2020–053) (Notice of Filing of Amendment Nos. 2 and 4 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment Nos. 2 and 4, To List and Trade Shares of the 2x Long VIX Futures ETF Under BZX Rule 14.11(f)(4) (Trust Issued Receipts)) (the ‘‘UVIX Notice and Approval Order’’). 5 See Securities Exchange Act Release Nos. 93230 (October 1, 2021) 89 FR 2387 (January 12, 2024) (SR–CboeBZX–2020–070) (Order Setting Aside Action by Delegated Authority and Approving a Proposed Rule Change, as Modified by Amendment Nos. 1 and 3, To List and Trade Shares of the –1x Short VIX Futures ETF Under BZX Rule 14.11(f)(4) (Trust Issued Receipts)) (the ‘‘SVIX Order Setting Aside Action’’); and 93229 (October 1, 2021) 89 FR 3008 (January 17, 2024) (SR–CboeBZX–2020–053) (Order Setting Aside Action by Delegated Authority and Approving a Proposed Rule Change, as Modified by Amendment Nos. 2 and 4, To List and Trade Shares of the 2x Long VIX Futures ETF Under BZX Rule 14.11(f)(4) (Trust Issued Receipts)) (the ‘‘UVIX Order Setting Aside Action’’). 6 This restriction applies ‘‘across all exchange traded products based on VIX Futures Contracts (‘‘VIX ETPs’’) that Volatility Shares LLC (the ‘‘Sponsor’’) sponsors.’’ See note 21 and accompanying text of the Approval Orders. E:\FR\FM\09MYN1.SGM 09MYN1 19742 Federal Register / Vol. 90, No. 89 / Friday, May 9, 2025 / Notices lotter on DSK11XQN23PROD with NOTICES1 any exchange-traded fund registered under the Investment Company Act (‘‘ETF’’), regardless of underlying or reference asset by way of an exchange rule filing, and especially not across numerous existing and future products as is the case under the Approval Orders. More importantly, no competitor ETP, ETN, or ETF nor any sponsor or investment adviser of any such ETP, ETN, or ETF that would or could invest in VIX Futures Contracts, are subject to similar restrictions on VIX Futures Contracts participation. By way of example, the equivalent rule filings for ProShares Ultra VIX Short-Term Futures ETF (‘‘UVXY’’),7 ProShares Short VIX Short-Term Futures ETF (‘‘SVXY’’),8 ProShares VIX Mid-Term Futures ETF (‘‘VIXM’’), and ProShares VIX Short-Term Futures ETF (‘‘VIXY’’) were approved with no comparable restrictions on market participation, either on a per Fund basis, collective Fund basis or sponsorwide basis. UVXY seeks leveraged results of 1.5x whereas UVIX seeks leveraged results of 2x, and that SVXY seeks inverse results of –0.5x whereas SVIX seeks inverse results of –1x. However, it is critical to note that, from a futures market impact perspective, a $100 million fund with a 1.5x objective will have substantially the same market impact as a $75 million fund with a 2x objective. Similarly, a $100 million fund with a –0.5x objective will have substantially the same market impact as a $50 million fund with a –1x objective. Although asset levels of UVXY and SVXY, when compared with those of UVIX and SVIX, have varied over time, there are periods—including recent periods—when UVXY and SVXY have had larger market impacts on the VIX Futures Contracts market than UVIX and SVIX, respectively. The 7 See Securities Exchange Act Nos. 90685 (December 16, 2020) 85 FR 83650 (December 22, 2020) (SR–CboeBZX–2020–092) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To List and Trade Shares of the ProShares VIX Short-Term Futures ETF and the ProShares VIX Mid-Term Futures ETF, Each a Series of ProShares Trust II, Under Rule 14.11(f)(4) (Trust Issued Receipts); 63317 (November 16, 2010) 75 FR 71158 (November 22, 2010) (SR–NYSEArca–2010–101) (Proposal to list and trade Shares of the ProShares VIX Short-Term Futures ETF and the ProShares VIX Mid-Term Futures ETF); 63610 (December 27, 2010) 76 FR 199 (January 3, 2011) (SR–NYSEArca–2010– 101) (Order approving the listing and trading of the ProShares VIX Short-Term Futures ETF and the ProShares VIX Mid-Term Futures ETF). 8 See Securities Exchange Act No. 90691 (December 16, 2020) 85 FR 83643 (December 22, 2020) (SR–CboeBZX–2020–093) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To List and Trade Shares of the ProShares Short VIX Short-Term Futures ETF and the ProShares Ultra VIX Short-Term Futures ETF, Each a Series of ProShares Trust II, Under Rule 14.11(f)(4), Trust Issued Receipts). VerDate Sep<11>2014 17:11 May 08, 2025 Jkt 265001 Exchange notes that VIXY and VIXM also, though not leveraged or inverse products, buy and sell VIX futures contracts and, therefore, impact those markets. In addition, ETFs listed generically do not typically require exchange rule filings to list and trade. For example, the Simplify Volatility Premium ETF, which operates pursuant to Rule 6c–11 under the Investment Company Act can operate and approach any size without the kind of participation restrictions imposed by the Notice and Approval Orders. Similarly, ETNs also do not require separate listing rules, and so ETNs such as the iPath Series B S&P 500 VIX Mid-Term Futures ETN, iPath Series B S&P 500 Short-Term Futures ETN, and JP Morgan Chase’s Inverse VIX Short-Term Futures ETN also can operate and approach any size without participation restrictions.9 As a result, the Approval Orders have created an unfair playing field by applying restrictions to the Funds and their Sponsor but no other ETP, ETN, or ETF that references or invests in VIX Futures Contracts, or any of their sponsors. The Exchange also believes that these restrictions create potential negative outcomes for the Funds, their shareholders and the Funds’ sponsor, Volatility Shares LLC (the ‘‘Sponsor’’). For example, since the imposition of the market participation restrictions, the Sponsor has received multiple communications from potential investors and existing shareholders stating that the imposition of the participation limits creates inferior products due to the lack of certainty and confidence in Fund performance at times when the 10% threshold is approached or exceeded. These potential investors and existing shareholders have also stated that they will look to other products for investment instead of the Funds. Therefore, the Exchange is proposing to modify the following paragraphs from each Notice and Approval Order that prohibits each Fund’s participation in VIX Futures Contracts during the Rebalance Period. 9 ETNs are not pooled investment vehicles, but rather debt instruments issued by large financial services companies, and, therefore, do not directly invest in reference assets. However, the issuer of the ETN often will hedge its exposure to the underlying asset referenced by the ETN by purchasing and selling such underlying reference assets. Accordingly, that activity may not only have market impacts but also potential impacts on the market price of the ETN itself. See e.g., Pricing Supplement dated February 26, 2025 of iPath Series B S&P 500 VIX Short-Term Futures ETN, at page PS–21; available at https://ipathetn.cib.barclays/ipath/ details/341408/download-content/7824661. PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 Specifically, the UVIX Notice and Approval Order stated: 10 The time and manner in which the Fund will rebalance its portfolio is defined by the Index methodology but may vary from the Index methodology depending upon market conditions and other circumstances including the potential impact of the rebalance on the price of the VIX Futures Contracts. The Sponsor will seek to minimize the market impact of rebalances across all Funds 11 on the price of VIX Futures Contracts by limiting the Funds’ participation, on any given day, in VIX Futures Contracts to no more than ten percent (10%) of the VIX Futures Contracts traded on Cboe Futures Exchange, Inc. (‘‘CFE’’) during any ‘‘Rebalance Period,’’ defined as any fifteen minute period of continuous market trading.12 To limit participation during periods of market illiquidity, the Sponsor, on any given day, may vary the manner and period over which all funds it sponsors are rebalanced, and as such, the manner and period over which the Fund is rebalanced. The Sponsor believes that the Fund will enter an Extended Rebalance Period most often during periods of extraordinary market conditions or illiquidity in VIX Futures Contracts. In the event that the Fund participates in an Extended Rebalance Period, the Fund represents that it will notify the Exchange and the Commission of such participation as soon as practicable, but no later than 9:00 a.m. E.T. on the trading day following the event. The Exchange proposes to replace the above paragraph with the following: The time and manner in which the Fund will rebalance its portfolio is defined by the Index methodology but may vary from the Index methodology depending upon market conditions and other circumstances including the potential impact of the rebalance on the price of the VIX Futures Contracts. To limit participation during periods of market illiquidity, the Sponsor, on any given day, may vary the manner and period over which all funds it sponsors are rebalanced, and as such, the manner and 10 See UVIX Approval Order at 13924. See also UVIX Order Setting Aside Action at 55874. 11 For purposes of the filing, the Exchange states that the Funds include the Fund and the –1x Short VIX Futures ETF as proposed in SR–CboeBZX– 2020–070, but may in the future include additional VIX ETPs sponsored by the Sponsor or its affiliates. See Securities Exchange Act Release No. 89901 (September 17, 2020), 85 FR 59843 (September 23, 2020). 12 In the event that the Funds expect to hit the ten percent threshold during the primary Rebalance Period from 3:45 p.m. to 4:00 p.m. E.T., the Funds will extend their respective rebalances into additional Rebalance Periods and the TAS market. It is expected that this extension will provide the Funds with the flexibility to: begin rebalancing in an earlier period, end rebalancing in a later period, and execute contracts in TAS (each an ‘‘Extended Rebalance Period’’ and collectively the ‘‘Extended Rebalance Period’’) while remaining below the ten percent cap during any fifteen minute period of continuous market trading. The Funds will be allocated executions based on their percentage of notional transaction volume required. E:\FR\FM\09MYN1.SGM 09MYN1 Federal Register / Vol. 90, No. 89 / Friday, May 9, 2025 / Notices period over which the Fund is rebalanced. The Sponsor believes that the Fund will enter an Extended Rebalance Period most often during periods of extraordinary market conditions or illiquidity in VIX Futures Contracts. Similarly, the SVIX Notice and Approval Order stated: 13 The time and manner in which the Fund will rebalance its portfolio is defined by the Index methodology but may vary from the Index methodology depending upon market conditions and other circumstances including the potential impact of the rebalance on the price of the VIX Futures Contracts. The Sponsor will seek to minimize the market impact of rebalances across all exchange traded products based on VIX Futures Contracts (‘‘VIX ETPs’’) that it sponsors (‘‘Funds’’) 14 on the price of VIX Futures Contracts by limiting the Funds’ participation, on any given day, in VIX Futures Contracts to no more than 10% of the VIX Futures Contracts traded on Cboe Futures Exchange, Inc. (‘‘CFE’’) during any ‘‘Rebalance Period,’’ defined as any fifteen minute period of continuous market trading.15 To limit participation during periods of market illiquidity, the Sponsor, on any given day, may vary the manner and period over which all funds it sponsors are rebalanced, and as such, the manner and period over which the Fund is rebalanced. The Sponsor believes that the Fund will enter an Extended Rebalance Period most often during periods of extraordinary market conditions or illiquidity in VIX Futures Contracts. In the event that the Fund participates in an Extended Rebalance Period, the Fund represents that it will notify the Exchange and the Commission of such participation as soon as practicable, but no later than 9:00 a.m. E.T. on the trading day following the event. The Exchange proposes to replace the above paragraph with the following: lotter on DSK11XQN23PROD with NOTICES1 The time and manner in which the Fund will rebalance its portfolio is defined by the Index methodology but may vary from the Index methodology depending upon market conditions and other circumstances including the potential impact of the rebalance on the price of the VIX Futures 13 See SVIX Approval Order at 13941. See also SVIX Order Setting Aside Action at 55882–55883. 14 For purposes of the filing, the Exchange states that the Funds include the Fund and the 2x Long VIX Futures ETF (‘‘Long Fund’’), but may in the future include additional VIX ETPs sponsored by the Sponsor or its affiliates. See Securities Exchange Act Release No. 93229 (Oct. 1, 2021) (SR– CboeBZX–2020–053) (‘‘Long VIX Approval’’). 15 In the event that the Funds expect to hit the 10% threshold during the primary Rebalance Period from 3:45 p.m. to 4:00 p.m. ET, the Funds will extend their respective rebalances into additional Rebalance Periods and the Trade at Settlement (‘‘TAS’’) market. It is expected that this extension will provide the Funds with the flexibility to: begin rebalancing in an earlier period, end rebalancing in a later period, and execute contracts in TAS (each ‘‘an Extended Rebalance Period’’ and collectively ‘‘the Extended Rebalance Period’’) while remaining below the 10% cap during any 15-minute period of continuous market trading. VerDate Sep<11>2014 17:11 May 08, 2025 Jkt 265001 Contracts. To limit participation during periods of market illiquidity, the Sponsor, on any given day, may vary the manner and period over which all funds it sponsors are rebalanced, and as such, the manner and period over which the Fund is rebalanced. The Sponsor believes that the Fund will enter an Extended Rebalance Period most often during periods of extraordinary market conditions or illiquidity in VIX Futures Contracts. The Sponsor will continue to operate each Fund in a manner that seeks to minimize market impact across the Funds. For example, the Sponsor’s products already differ from previous and existing VIX ETPs in their approach to mitigating market impact by using a valuation method that is an average price over a longer time period instead of exclusively at the 4:00 p.m. ET settlement price. The Sponsor owes the Funds a fiduciary duty and operates the Funds accordingly.16 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.17 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 18 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. As noted above, the Exchange is not aware of any comparable restrictions on market participation for any single ETP, ETN, or ETF regardless of underlying asset that has been implemented by way of an exchange rule filing and especially not across numerous products as is the case for the Funds. More importantly, 16 The Sponsor, as a commodity pool operator (‘‘CPO’’) owes a fiduciary duty to the commodity pools it operates, i.e., the Funds. The U.S. Commodity Futures Trading Commission has recognized that CPOs hold fiduciary relationships in soliciting and advising commodity clients and in handling the funds of commodity pool participants. See generally, Weinberg v. NFA, CFTC Dkt. Nos. CRAA 86–1 & CRAA 86–2 (June 6, 1986) (stating that commodity pool operators ‘‘held fiduciary relationships in soliciting and advising commodity clients and in handling the money of commodity pool participants’’). 17 15 U.S.C. 78f(b). 18 15 U.S.C. 78f(b)(5). PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 19743 competitor ETPs, ETNs, or ETFs, or their sponsors or advisers, are not subject to these same restrictions on participation.19 First, this creates an unfair playing field for the Funds and, by arbitrarily singling out only the Funds and the Sponsor, creates a competitive advantage for their competitors. Second, the cap applying only to the Funds and the Sponsor does not actually provide any of the potential protections that the cap was perhaps intended to provide—regardless of how much and when the Funds are able to execute trades, competitors remain free to execute trades during whichever periods and at whatever size they deem appropriate. The result is that competitors operate with a competitive advantage which potentially leads to greater assets under management than the Funds, which, in turn, results in more volume needing to be executed in a way that is not subject to the caps. Finally, these anti-competitive and ineffective restrictions on executions actually could lead to negative impacts on investors. For example, in a scenario where a rebalance needed to be extended so as not to exceed 10% cap, the investor is likely to experience a deviation from the Funds’ investment objectives. Based on the foregoing, the Exchange believes that the proposal is consistent with the Act as it would eliminate the status quo—the caps restrict free competition among issuers, cannot accomplish their supposed policy goals because they do not apply uniformly, and ultimately leave investors exposed to potentially negative outcomes. 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 purposes of the Act. As noted above, the proposed amendment is intended to allow the Funds to better compete in the marketplace and to operate more efficiently. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received comments on the proposed rule change. 19 See E:\FR\FM\09MYN1.SGM supra notes 8 and 9. 09MYN1 19744 Federal Register / Vol. 90, No. 89 / Friday, May 9, 2025 / Notices 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. 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–2025–059 on the subject line. lotter on DSK11XQN23PROD with NOTICES1 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–2025–059. 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 a.m. and 3 p.m. Copies of the filing also will be available for inspection and 17:11 May 08, 2025 Jkt 265001 For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2025–08120 Filed 5–8–25; 8:45 am] IV. Solicitation of Comments VerDate Sep<11>2014 copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–CboeBZX–2025–059 and should be submitted on or before May 30, 2025. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 35566; File No. 812–15779] Credit Suisse Services AG, et al.; Notice of Application and Temporary Order May 5, 2025. Securities and Exchange Commission (‘‘Commission’’). ACTION: Temporary order and notice of application for a permanent order under section 9(c) of the Investment Company Act of 1940 (‘‘Act’’). AGENCY: Summary of Application: Applicants (defined below) have applied for a temporary order (‘‘Temporary Order’’) exempting them from section 9(a) of the Act with respect to a guilty plea entered by Credit Suisse Services AG (the ‘‘Pleading Entity’’ or ‘‘CSSAG’’) in connection with a plea agreement (the ‘‘2025 Plea Agreement’’) between the Pleading Entity and the United States Department of Justice (‘‘DOJ’’), until the Commission takes final action on an application for a permanent order (the ‘‘Permanent Order,’’ and with the Temporary Order, the ‘‘Orders’’). Applicants also have applied for a permanent order. Applicants: CSSAG, UBS Asset Management (Americas) LLC (‘‘UBSAM’’), UBS Asset Management (US) Inc. (‘‘UBSAM (US)’’), UBS Asset Managers of Puerto Rico (‘‘UBSAM (PR)’’), and UBS Financial Services Inc. (‘‘UBSFS’’) (each, an ‘‘Applicant’’ and, collectively, the ‘‘Applicants’’), and UBS AG (‘‘UBS AG’’).1 20 17 CFR 200.30–3(a)(12). 1 UBS AG is a party to the application solely for purposes of making the representations and agreeing to the conditions in the application that apply to it. PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 Filing Date: The application was filed and amended on May 5, 2025. Hearing or Notification of Hearing: The Temporary Order will be effective until such time as the Commission takes final action on the application by issuing an order granting the requested relief, unless the Commission orders a hearing. Interested persons may request a hearing by emailing the Commission’s Secretary at Secretarys-Office@sec.gov and serving the Applicants with a copy of the request by email, if an email address is listed for the relevant Applicant below, or personally or by mail, if a physical address is listed for the relevant Applicant below. Hearing requests should be received by the Commission by 5:30 p.m. on May 30, 2025, 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 emailing the Commission’s Secretary. The Commission: Secretarys-Office@sec.gov. Applicants: Patrick Shilling, UBS AG, 11 Madison Avenue, New York, New York 10010; Norm Champ, P.C. and Mark Filip, P.C., Kirkland & Ellis LLP, 601 Lexington Avenue, New York, New York 10022. ADDRESSES: FOR FURTHER INFORMATION CONTACT: Christopher D. Carlson, Senior Counsel, or Daniele Marchesani, Assistant Chief Counsel, at (202) 551–6825 (Division of Investment Management, Chief Counsel’s Office). The following is a temporary order and a summary of the application. The complete application may be obtained via the Commission’s website by searching for the file number at the top of this document, or for an Applicant using the Company name search field, on the SEC’s EDGAR system. The SEC’s EDGAR system may be searched at https://www.sec.gov/edgar/searchedgar/ legacy/companysearch.html. You may also call the SEC’s Office of Investor Education and Advocacy at (202) 551– 8090. SUPPLEMENTARY INFORMATION: Applicants’ Representations 1. CSSAG, a company organized under the laws of Switzerland, provided banking, administrative, legal and E:\FR\FM\09MYN1.SGM 09MYN1

Agencies

[Federal Register Volume 90, Number 89 (Friday, May 9, 2025)]
[Notices]
[Pages 19741-19744]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08120]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102991; File No. SR-CboeBZX-2025-059]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change Related to the 2x Long VIX Futures ETF 
(``UVIX'') and the -1x Short VIX Futures ETF (``SVIX'')

May 5, 2025.
    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 March 21, 2025, Cboe BZX Exchange, Inc. (``Exchange'') 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.
---------------------------------------------------------------------------

    \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

    Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a proposed rule change related to the 2x Long VIX Futures ETF 
(``UVIX'') and the -1x Short VIX Futures ETF (``SVIX'') (each a 
``Fund'' and, collectively, the ``Funds''), shares of which have been 
approved by the Commission to list and trade on the Exchange as Trust 
Issued Receipts pursuant to BZX Rule 14.11(f)(4), in order to amend 
certain representations from the original filings.
    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
    The Commission issued final approval of the rule filings proposing 
to list and trade shares of SVIX (the ``SVIX Filing'') \3\ and UVIX 
(the ``UVIX Filing,'' \4\ and collectively with the SVIX Filing, the 
``Filings'') on the Exchange pursuant to Exchange Rule 14.11(f)(4), 
Trust Issued Receipts, on October 1, 2021.\5\
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    \3\ See Securities Exchange Act Release Nos 91264 (March 5, 
2021) 86 FR 13939 (March 11, 2021) (SR-CboeBZX-2020-070) (Notice of 
Filing of Amendment Nos. 1 and 3 and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 
and 3, To List and Trade Shares of the -1x Short VIX Futures ETF 
Under BZX Rule 14.11(f)(4) (Trust Issued Receipts)) (the ``SVIX 
Notice and Approval Order'').
    \4\ See Securities Exchange Act Release Nos 91265 (March 5, 
2021) 86 FR 13922 (March 11, 2021) (SR-CboeBZX-2020-053) (Notice of 
Filing of Amendment Nos. 2 and 4 and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment Nos. 2 
and 4, To List and Trade Shares of the 2x Long VIX Futures ETF Under 
BZX Rule 14.11(f)(4) (Trust Issued Receipts)) (the ``UVIX Notice and 
Approval Order'').
    \5\ See Securities Exchange Act Release Nos. 93230 (October 1, 
2021) 89 FR 2387 (January 12, 2024) (SR-CboeBZX-2020-070) (Order 
Setting Aside Action by Delegated Authority and Approving a Proposed 
Rule Change, as Modified by Amendment Nos. 1 and 3, To List and 
Trade Shares of the -1x Short VIX Futures ETF Under BZX Rule 
14.11(f)(4) (Trust Issued Receipts)) (the ``SVIX Order Setting Aside 
Action''); and 93229 (October 1, 2021) 89 FR 3008 (January 17, 2024) 
(SR-CboeBZX-2020-053) (Order Setting Aside Action by Delegated 
Authority and Approving a Proposed Rule Change, as Modified by 
Amendment Nos. 2 and 4, To List and Trade Shares of the 2x Long VIX 
Futures ETF Under BZX Rule 14.11(f)(4) (Trust Issued Receipts)) (the 
``UVIX Order Setting Aside Action'').
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    Both Filings include representations that limit the Funds 
participation in Cboe Volatility Index (``VIX'') futures contracts 
traded on the Cboe Futures Exchange, Inc. (``CFE'') (hereinafter 
referred to as ``VIX Futures Contracts'') to no more than ten percent 
(10%) during any ``Rebalance Period,'' defined as any fifteen minute 
period of continuous market trading.\6\ The Exchange is not aware of 
any existing comparable restrictions on market participation for: (i) 
any other single exchange-traded investment product not registered 
under the Investment Company Act of 1940 (the ``Investment Company 
Act'') (``ETP''); (ii) any exchange-traded note (``ETN''); or (iii)

[[Page 19742]]

any exchange-traded fund registered under the Investment Company Act 
(``ETF''), regardless of underlying or reference asset by way of an 
exchange rule filing, and especially not across numerous existing and 
future products as is the case under the Approval Orders. More 
importantly, no competitor ETP, ETN, or ETF nor any sponsor or 
investment adviser of any such ETP, ETN, or ETF that would or could 
invest in VIX Futures Contracts, are subject to similar restrictions on 
VIX Futures Contracts participation.
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    \6\ This restriction applies ``across all exchange traded 
products based on VIX Futures Contracts (``VIX ETPs'') that 
Volatility Shares LLC (the ``Sponsor'') sponsors.'' See note 21 and 
accompanying text of the Approval Orders.
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    By way of example, the equivalent rule filings for ProShares Ultra 
VIX Short-Term Futures ETF (``UVXY''),\7\ ProShares Short VIX Short-
Term Futures ETF (``SVXY''),\8\ ProShares VIX Mid-Term Futures ETF 
(``VIXM''), and ProShares VIX Short-Term Futures ETF (``VIXY'') were 
approved with no comparable restrictions on market participation, 
either on a per Fund basis, collective Fund basis or sponsor-wide 
basis.
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    \7\ See Securities Exchange Act Nos. 90685 (December 16, 2020) 
85 FR 83650 (December 22, 2020) (SR-CboeBZX-2020-092) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To List 
and Trade Shares of the ProShares VIX Short-Term Futures ETF and the 
ProShares VIX Mid-Term Futures ETF, Each a Series of ProShares Trust 
II, Under Rule 14.11(f)(4) (Trust Issued Receipts); 63317 (November 
16, 2010) 75 FR 71158 (November 22, 2010) (SR-NYSEArca-2010-101) 
(Proposal to list and trade Shares of the ProShares VIX Short-Term 
Futures ETF and the ProShares VIX Mid-Term Futures ETF); 63610 
(December 27, 2010) 76 FR 199 (January 3, 2011) (SR-NYSEArca-2010-
101) (Order approving the listing and trading of the ProShares VIX 
Short-Term Futures ETF and the ProShares VIX Mid-Term Futures ETF).
    \8\ See Securities Exchange Act No. 90691 (December 16, 2020) 85 
FR 83643 (December 22, 2020) (SR-CboeBZX-2020-093) (Notice of Filing 
and Immediate Effectiveness of a Proposed Rule Change To List and 
Trade Shares of the ProShares Short VIX Short-Term Futures ETF and 
the ProShares Ultra VIX Short-Term Futures ETF, Each a Series of 
ProShares Trust II, Under Rule 14.11(f)(4), Trust Issued Receipts).
---------------------------------------------------------------------------

    UVXY seeks leveraged results of 1.5x whereas UVIX seeks leveraged 
results of 2x, and that SVXY seeks inverse results of -0.5x whereas 
SVIX seeks inverse results of -1x. However, it is critical to note 
that, from a futures market impact perspective, a $100 million fund 
with a 1.5x objective will have substantially the same market impact as 
a $75 million fund with a 2x objective. Similarly, a $100 million fund 
with a -0.5x objective will have substantially the same market impact 
as a $50 million fund with a -1x objective. Although asset levels of 
UVXY and SVXY, when compared with those of UVIX and SVIX, have varied 
over time, there are periods--including recent periods--when UVXY and 
SVXY have had larger market impacts on the VIX Futures Contracts market 
than UVIX and SVIX, respectively. The Exchange notes that VIXY and VIXM 
also, though not leveraged or inverse products, buy and sell VIX 
futures contracts and, therefore, impact those markets.
    In addition, ETFs listed generically do not typically require 
exchange rule filings to list and trade. For example, the Simplify 
Volatility Premium ETF, which operates pursuant to Rule 6c-11 under the 
Investment Company Act can operate and approach any size without the 
kind of participation restrictions imposed by the Notice and Approval 
Orders. Similarly, ETNs also do not require separate listing rules, and 
so ETNs such as the iPath Series B S&P 500 VIX Mid-Term Futures ETN, 
iPath Series B S&P 500 Short-Term Futures ETN, and JP Morgan Chase's 
Inverse VIX Short-Term Futures ETN also can operate and approach any 
size without participation restrictions.\9\
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    \9\ ETNs are not pooled investment vehicles, but rather debt 
instruments issued by large financial services companies, and, 
therefore, do not directly invest in reference assets. However, the 
issuer of the ETN often will hedge its exposure to the underlying 
asset referenced by the ETN by purchasing and selling such 
underlying reference assets. Accordingly, that activity may not only 
have market impacts but also potential impacts on the market price 
of the ETN itself. See e.g., Pricing Supplement dated February 26, 
2025 of iPath Series B S&P 500 VIX Short-Term Futures ETN, at page 
PS-21; available at https://ipathetn.cib.barclays/ipath/details/341408/download-content/7824661.
---------------------------------------------------------------------------

    As a result, the Approval Orders have created an unfair playing 
field by applying restrictions to the Funds and their Sponsor but no 
other ETP, ETN, or ETF that references or invests in VIX Futures 
Contracts, or any of their sponsors. The Exchange also believes that 
these restrictions create potential negative outcomes for the Funds, 
their shareholders and the Funds' sponsor, Volatility Shares LLC (the 
``Sponsor''). For example, since the imposition of the market 
participation restrictions, the Sponsor has received multiple 
communications from potential investors and existing shareholders 
stating that the imposition of the participation limits creates 
inferior products due to the lack of certainty and confidence in Fund 
performance at times when the 10% threshold is approached or exceeded. 
These potential investors and existing shareholders have also stated 
that they will look to other products for investment instead of the 
Funds.
    Therefore, the Exchange is proposing to modify the following 
paragraphs from each Notice and Approval Order that prohibits each 
Fund's participation in VIX Futures Contracts during the Rebalance 
Period.
    Specifically, the UVIX Notice and Approval Order stated: \10\
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    \10\ See UVIX Approval Order at 13924. See also UVIX Order 
Setting Aside Action at 55874.

    The time and manner in which the Fund will rebalance its 
portfolio is defined by the Index methodology but may vary from the 
Index methodology depending upon market conditions and other 
circumstances including the potential impact of the rebalance on the 
price of the VIX Futures Contracts. The Sponsor will seek to 
minimize the market impact of rebalances across all Funds \11\ on 
the price of VIX Futures Contracts by limiting the Funds' 
participation, on any given day, in VIX Futures Contracts to no more 
than ten percent (10%) of the VIX Futures Contracts traded on Cboe 
Futures Exchange, Inc. (``CFE'') during any ``Rebalance Period,'' 
defined as any fifteen minute period of continuous market 
trading.\12\ To limit participation during periods of market 
illiquidity, the Sponsor, on any given day, may vary the manner and 
period over which all funds it sponsors are rebalanced, and as such, 
the manner and period over which the Fund is rebalanced. The Sponsor 
believes that the Fund will enter an Extended Rebalance Period most 
often during periods of extraordinary market conditions or 
illiquidity in VIX Futures Contracts. In the event that the Fund 
participates in an Extended Rebalance Period, the Fund represents 
that it will notify the Exchange and the Commission of such 
participation as soon as practicable, but no later than 9:00 a.m. 
E.T. on the trading day following the event.
---------------------------------------------------------------------------

    \11\ For purposes of the filing, the Exchange states that the 
Funds include the Fund and the -1x Short VIX Futures ETF as proposed 
in SR-CboeBZX-2020-070, but may in the future include additional VIX 
ETPs sponsored by the Sponsor or its affiliates. See Securities 
Exchange Act Release No. 89901 (September 17, 2020), 85 FR 59843 
(September 23, 2020).
    \12\ In the event that the Funds expect to hit the ten percent 
threshold during the primary Rebalance Period from 3:45 p.m. to 4:00 
p.m. E.T., the Funds will extend their respective rebalances into 
additional Rebalance Periods and the TAS market. It is expected that 
this extension will provide the Funds with the flexibility to: begin 
rebalancing in an earlier period, end rebalancing in a later period, 
and execute contracts in TAS (each an ``Extended Rebalance Period'' 
and collectively the ``Extended Rebalance Period'') while remaining 
below the ten percent cap during any fifteen minute period of 
continuous market trading. The Funds will be allocated executions 
based on their percentage of notional transaction volume required.

    The Exchange proposes to replace the above paragraph with the 
---------------------------------------------------------------------------
following:

    The time and manner in which the Fund will rebalance its 
portfolio is defined by the Index methodology but may vary from the 
Index methodology depending upon market conditions and other 
circumstances including the potential impact of the rebalance on the 
price of the VIX Futures Contracts. To limit participation during 
periods of market illiquidity, the Sponsor, on any given day, may 
vary the manner and period over which all funds it sponsors are 
rebalanced, and as such, the manner and

[[Page 19743]]

period over which the Fund is rebalanced. The Sponsor believes that 
the Fund will enter an Extended Rebalance Period most often during 
periods of extraordinary market conditions or illiquidity in VIX 
Futures Contracts.

    Similarly, the SVIX Notice and Approval Order stated: \13\
---------------------------------------------------------------------------

    \13\ See SVIX Approval Order at 13941. See also SVIX Order 
Setting Aside Action at 55882-55883.

    The time and manner in which the Fund will rebalance its 
portfolio is defined by the Index methodology but may vary from the 
Index methodology depending upon market conditions and other 
circumstances including the potential impact of the rebalance on the 
price of the VIX Futures Contracts. The Sponsor will seek to 
minimize the market impact of rebalances across all exchange traded 
products based on VIX Futures Contracts (``VIX ETPs'') that it 
sponsors (``Funds'') \14\ on the price of VIX Futures Contracts by 
limiting the Funds' participation, on any given day, in VIX Futures 
Contracts to no more than 10% of the VIX Futures Contracts traded on 
Cboe Futures Exchange, Inc. (``CFE'') during any ``Rebalance 
Period,'' defined as any fifteen minute period of continuous market 
trading.\15\ To limit participation during periods of market 
illiquidity, the Sponsor, on any given day, may vary the manner and 
period over which all funds it sponsors are rebalanced, and as such, 
the manner and period over which the Fund is rebalanced. The Sponsor 
believes that the Fund will enter an Extended Rebalance Period most 
often during periods of extraordinary market conditions or 
illiquidity in VIX Futures Contracts. In the event that the Fund 
participates in an Extended Rebalance Period, the Fund represents 
that it will notify the Exchange and the Commission of such 
participation as soon as practicable, but no later than 9:00 a.m. 
E.T. on the trading day following the event.
---------------------------------------------------------------------------

    \14\ For purposes of the filing, the Exchange states that the 
Funds include the Fund and the 2x Long VIX Futures ETF (``Long 
Fund''), but may in the future include additional VIX ETPs sponsored 
by the Sponsor or its affiliates. See Securities Exchange Act 
Release No. 93229 (Oct. 1, 2021) (SR-CboeBZX-2020-053) (``Long VIX 
Approval'').
    \15\ In the event that the Funds expect to hit the 10% threshold 
during the primary Rebalance Period from 3:45 p.m. to 4:00 p.m. ET, 
the Funds will extend their respective rebalances into additional 
Rebalance Periods and the Trade at Settlement (``TAS'') market. It 
is expected that this extension will provide the Funds with the 
flexibility to: begin rebalancing in an earlier period, end 
rebalancing in a later period, and execute contracts in TAS (each 
``an Extended Rebalance Period'' and collectively ``the Extended 
Rebalance Period'') while remaining below the 10% cap during any 15-
minute period of continuous market trading.

    The Exchange proposes to replace the above paragraph with the 
---------------------------------------------------------------------------
following:

    The time and manner in which the Fund will rebalance its 
portfolio is defined by the Index methodology but may vary from the 
Index methodology depending upon market conditions and other 
circumstances including the potential impact of the rebalance on the 
price of the VIX Futures Contracts. To limit participation during 
periods of market illiquidity, the Sponsor, on any given day, may 
vary the manner and period over which all funds it sponsors are 
rebalanced, and as such, the manner and period over which the Fund 
is rebalanced. The Sponsor believes that the Fund will enter an 
Extended Rebalance Period most often during periods of extraordinary 
market conditions or illiquidity in VIX Futures Contracts.

    The Sponsor will continue to operate each Fund in a manner that 
seeks to minimize market impact across the Funds. For example, the 
Sponsor's products already differ from previous and existing VIX ETPs 
in their approach to mitigating market impact by using a valuation 
method that is an average price over a longer time period instead of 
exclusively at the 4:00 p.m. ET settlement price. The Sponsor owes the 
Funds a fiduciary duty and operates the Funds accordingly.\16\
---------------------------------------------------------------------------

    \16\ The Sponsor, as a commodity pool operator (``CPO'') owes a 
fiduciary duty to the commodity pools it operates, i.e., the Funds. 
The U.S. Commodity Futures Trading Commission has recognized that 
CPOs hold fiduciary relationships in soliciting and advising 
commodity clients and in handling the funds of commodity pool 
participants. See generally, Weinberg v. NFA, CFTC Dkt. Nos. CRAA 
86-1 & CRAA 86-2 (June 6, 1986) (stating that commodity pool 
operators ``held fiduciary relationships in soliciting and advising 
commodity clients and in handling the money of commodity pool 
participants'').
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\17\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \18\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    As noted above, the Exchange is not aware of any comparable 
restrictions on market participation for any single ETP, ETN, or ETF 
regardless of underlying asset that has been implemented by way of an 
exchange rule filing and especially not across numerous products as is 
the case for the Funds. More importantly, competitor ETPs, ETNs, or 
ETFs, or their sponsors or advisers, are not subject to these same 
restrictions on participation.\19\ First, this creates an unfair 
playing field for the Funds and, by arbitrarily singling out only the 
Funds and the Sponsor, creates a competitive advantage for their 
competitors. Second, the cap applying only to the Funds and the Sponsor 
does not actually provide any of the potential protections that the cap 
was perhaps intended to provide--regardless of how much and when the 
Funds are able to execute trades, competitors remain free to execute 
trades during whichever periods and at whatever size they deem 
appropriate. The result is that competitors operate with a competitive 
advantage which potentially leads to greater assets under management 
than the Funds, which, in turn, results in more volume needing to be 
executed in a way that is not subject to the caps. Finally, these anti-
competitive and ineffective restrictions on executions actually could 
lead to negative impacts on investors. For example, in a scenario where 
a rebalance needed to be extended so as not to exceed 10% cap, the 
investor is likely to experience a deviation from the Funds' investment 
objectives.
---------------------------------------------------------------------------

    \19\ See supra notes 8 and 9.
---------------------------------------------------------------------------

    Based on the foregoing, the Exchange believes that the proposal is 
consistent with the Act as it would eliminate the status quo--the caps 
restrict free competition among issuers, cannot accomplish their 
supposed policy goals because they do not apply uniformly, and 
ultimately leave investors exposed to potentially negative outcomes.

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 purposes of the Act. As noted above, the proposed 
amendment is intended to allow the Funds to better compete in the 
marketplace and to operate more efficiently.

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

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

[[Page 19744]]

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2025-059 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-2025-059. 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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2025-059 and should 
be submitted on or before May 30, 2025.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-08120 Filed 5-8-25; 8:45 am]
BILLING CODE 8011-01-P
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