[Federal Register Volume 81, Number 67 (Thursday, April 7, 2016)]
[Notices]
[Pages 20428-20432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-07938]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77499; File No. SR-BATS-2016-04]


Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of 
Filing of Amendment No. 2, and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 2, To List and Trade 
Shares of the SPDR DoubleLine Short Duration Total Return Tactical ETF 
of the SSgA Active Trust

April 1, 2016.

I. Introduction

    On February 4, 2016, BATS Exchange, Inc. (``BATS'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to list and trade shares (``Shares'') of the SPDR 
DoubleLine Short Duration Total Return Tactical ETF (``Fund'') of the 
SSgA Active Trust (``Trust'') pursuant to BATS Rule 14.11(i). A notice 
of the proposed rule change was published in the Federal Register on 
February 12, 2016.\3\ On March 8, 2016, the Exchange filed Amendment 
No. 1 to the proposed rule change. On March 24, 2016, the Exchange 
withdrew Amendment No. 1 and filed Amendment No. 2 to the proposed rule 
change.\4\ On March 25, 2016, pursuant to Section 19(b)(2) of the 
Act,\5\ the Commission designated a longer period within which to 
approve the proposed rule change, disapprove the proposed rule change, 
or institute proceedings to determine whether to disapprove the 
proposed rule change.\6\ The Commission received no comments on the 
proposal. The Commission is publishing this notice to solicit comments 
on Amendment No. 2 from interested persons, and is approving the 
proposed rule change, as modified by Amendment No. 2, on an accelerated 
basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 77078 (February 8, 
2016), 81 FR 7599.
    \4\ In Amendment No. 2, which replaced the original filing in 
its entirety, the Exchange: (1) Modified the name of the Fund by 
replacing the word ``Term'' with ``Duration;'' (2) clarified that, 
under normal circumstances, at least 80% of the Fund's net assets 
(plus the amount of borrowings for investment purposes) will be 
invested in its principal holdings; (3) stated that the Fund may 
invest up to 20% of its portfolio in securities issued or guaranteed 
by state or local governments or their agencies or 
instrumentalities; (4) clarified which assets held by the Fund would 
trade on markets that are members of the Intermarket Surveillance 
Group or that have entered into a comprehensive surveillance 
agreement with the Exchange; (5) clarified the application of the 
investment restrictions to derivatives and restricted securities; 
(6) described how fixed income instruments, including municipal 
securities, would be valued for purposes of calculating the net 
asset value of the Fund; (7) clarified that all statements and 
representations made in the filing regarding the description of the 
portfolio, limitations on portfolio holdings or reference assets, or 
the applicability of Exchange rules and surveillance procedures 
constitute continued listing requirements for listing the Shares on 
the Exchange; (8) stated that the issuer has represented to the 
Exchange that it will advise the Exchange of any failure by the Fund 
to comply with the continued listing requirements, and, pursuant to 
its obligations under Section 19(g)(1) of the Act, the Exchange will 
surveil for compliance with the continued listing requirements, and 
if the Fund is not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under 
Exchange Rule 14.12; and (9) made other technical amendments. 
Amendment No. 2 is available at: http://www.sec.gov/comments/sr-bats-2016-04/bats201604.shtml.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 77451, 81 FR 18660 
(March 31, 2016).
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II. The Exchange's Description of the Proposal

    The Exchange proposes to list and trade the Shares under BATS Rule 
14.11(i), which governs the listing and

[[Page 20429]]

trading of Managed Fund Shares on the Exchange. The Shares will be 
offered by the Trust, which is registered with the Commission as an 
investment company.\7\ The investment adviser to the Fund will be SSGA 
Funds Management, Inc. (``Adviser''), and the sub-adviser to the Fund 
will be DoubleLine Capital LP (``Sub-Adviser'').\8\ The Adviser will 
serve as the Fund's administrator. State Street Global Markets, LLC 
will be the principal underwriter and distributor of the Fund's Shares. 
State Street Bank and Trust Company will serve as the sub-
administrator, custodian, transfer agent, and, where applicable, 
lending agent for the Fund.
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    \7\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act''). See Registration Statement on Form N-1A for the 
Trust, dated October 8, 2015 (File Nos. 333-173276 and 811-22542) 
(``Registration Statement''). In addition, the Exchange states that 
the Commission has issued an order granting certain exemptive relief 
to the Trust under the 1940 Act. See Investment Company Act Release 
No. 29524 (December 13, 2010) (File No. 812-13487).
    \8\ The Adviser and Sub-Adviser are not registered as broker-
dealers, but the Adviser is affiliated with a broker-dealer and has 
implemented a fire wall with respect to its broker-dealer affiliate 
regarding access to information concerning the composition of or 
changes to the portfolio. In the event (a) the Adviser or Sub-
Adviser become registered broker-dealers or newly affiliated with a 
broker-dealer, or (b) any new adviser or sub-adviser is a registered 
broker-dealer or becomes affiliated with a broker-dealer, it will 
implement a fire wall with respect to its relevant personnel or its 
broker-dealer affiliate regarding access to information concerning 
the composition of or changes to the portfolio, and it will be 
subject to procedures designed to prevent the use and dissemination 
of material non-public information regarding such portfolio.
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    The investment objective of the Fund is to seek to maximize current 
income with a dollar-weighted average effective duration between one 
and three years. To achieve its objective, the Fund will invest, under 
normal circumstances,\9\ in a diversified portfolio of fixed income 
securities of any credit quality, subject to certain limitations set 
forth below.
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    \9\ The term ``under normal circumstances'' includes, but is not 
limited to, the absence of extreme volatility or trading halts in 
the fixed income markets or the financial markets generally; 
operational issues causing dissemination of inaccurate market 
information; or force majeure type events such as systems failure, 
natural or man-made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption or any similar intervening 
circumstance.
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A. The Fund's Principal Investments

    The Fund intends to achieve its investment objective by investing, 
under normal circumstances, at least 80% of its net assets (plus the 
amount of borrowings for investment purposes) in a diversified 
portfolio of Fixed Income Securities, which are defined as the 
following instruments: Securities issued or guaranteed by the U.S. 
government or its agencies, instrumentalities or sponsored 
corporations; inflation protected public obligations of the U.S. 
Treasury; securities issued or guaranteed by state or local governments 
or their agencies or instrumentalities; \10\ asset-backed securities 
(``ABS''), which include the following: Agency and non-agency 
residential mortgage-backed securities, agency and non-agency 
commercial mortgage-backed securities, and any other agency and non-
agency asset-backed securities, collateralized debt obligations, 
collateralized loan obligations, collateralized bond obligations, 
collateralized mortgage obligations, Real Estate Mortgage Investment 
Conduits (``REMICs''), and REMICs that have been resecuritized; \11\ 
stripped securities; zero coupon securities; foreign (including 
emerging markets) and domestic corporate bonds;\12\ sovereign debt; 
bank loans; \13\ preferred securities; and exchange traded products 
(``ETPs'') that invest in Fixed Income Securities.\14\ To the extent 
applicable, debt instruments that comprise Fixed Income Securities may 
be either fixed rate securities, floating securities, or variable rate 
securities.
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    \10\ No more 20% of the Fund's net assets will be invested in 
securities issued or guaranteed by state or local governments or 
their agencies or instrumentalities. See Amendment No. 2, supra note 
4.
    \11\ The Fund intends to invest at least 25% of its net assets 
in mortgage-backed securities of any maturity or type guaranteed by, 
or secured by collateral that is guaranteed by, the United States 
Government, its agencies, instrumentalities or sponsored 
corporations. The Fund may invest up to 20% of its net assets in the 
aggregate in non-agency ABS.
    \12\ The Sub-Adviser expects that, under normal circumstances, 
the Fund will generally seek to invest in corporate bond issuances 
that have at least $100,000,000 par amount outstanding in developed 
countries and at least $200,000,000 par amount outstanding in 
emerging market countries. Corporate bonds that in the aggregate 
account for at least 75% of the weight of the Fund's corporate bonds 
will have a minimum original principal outstanding of $100 million 
or more.
    \13\ No more 20% of the Fund's net assets will be invested in 
junior bank loans.
    \14\ For purposes of this filing, ETPs include those securities 
described in BATS Rule 14.11, and all ETPs held by the Fund will be 
listed and traded in the U.S. on national securities exchanges. 
While the Fund may invest in inverse ETPs, the Fund will not invest 
in leveraged or inverse leveraged ETPs. The Fund may invest up to 
20% of its net assets in one or more ETPs that are qualified 
publicly traded partnerships and whose principal activities are the 
buying and selling of commodities or options, futures, or forwards 
with respect to commodities.
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B. The Fund's Non-Principal Investments

    While the Adviser and Sub-Adviser, under normal circumstances, will 
invest at least 80% of the Fund's net assets (plus the amount of any 
borrowings for investment purposes) in the instruments described above, 
the Adviser and Sub-Adviser may invest up to 20% of the Fund's net 
assets in other securities and financial instruments, as described 
below.
    The Fund may invest in repurchase agreements with commercial banks, 
brokers or dealers to generate income from its excess cash balances and 
to invest securities lending cash collateral. The Fund may also enter 
into reverse repurchase agreements.\15\
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    \15\ The Fund's exposure to reverse repurchase agreements will 
be covered by securities having a value equal to or greater than 
such commitments. The Fund does not expect to engage, under normal 
circumstances, in reverse repurchase agreements with respect to more 
than 10% of its net assets.
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    The Fund may invest in exchange-traded \16\ and over-the-counter 
(``OTC'') U.S. common stocks, exchange-traded common stocks of foreign 
corporations,\17\ and unsponsored ADRs.
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    \16\ All exchange-traded equity securities in which the Fund may 
invest will trade on markets that are members of the Intermarket 
Surveillance Group (``ISG'') or that have entered into a 
comprehensive surveillance agreement with the Exchange.
    \17\ The Fund's investments in common stocks of foreign 
corporations may also be in the form of American Depositary Receipts 
(``ADRs''), Global Depositary Receipts, and European Depositary 
Receipts (collectively ``Depositary Receipts''). The Fund may invest 
in sponsored or unsponsored ADRs; however, not more than 10% of the 
net assets of the Fund will be invested in unsponsored ADRs.
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    The Fund may invest in convertible securities.
    The Fund may lend its portfolio securities in an amount not to 
exceed 33\1/3\% of the value of its total assets via a securities 
lending program.\18\
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    \18\ A securities lending program allows the Fund to receive a 
portion of the income generated by lending its securities and 
investing the respective collateral. The Fund will receive 
collateral for each loaned security which is at least equal to 102% 
of the market value of that security, marked to market each trading 
day.
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    In addition to repurchase agreements, the Fund may invest in short-
term instruments, including money market instruments, cash, and cash 
equivalents, on an ongoing basis to provide liquidity or for other 
reasons.\19\
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    \19\ Money market instruments are generally short-term 
investments that may include but are not limited to: (1) Shares of 
money market funds; (2) obligations issued or guaranteed by the U.S. 
government, its agencies or instrumentalities (including government-
sponsored enterprises); (3) negotiable certificates of deposit, 
bankers' acceptances, fixed time deposits, and other obligations of 
U.S. and foreign banks (including foreign branches) and similar 
institutions; (4) commercial paper rated at the date of purchase 
``Prime-1'' by Moody's or ``A-1'' by S&P, or if unrated, of 
comparable quality as determined by the Adviser; (5) non-convertible 
corporate debt securities with remaining maturities at the date of 
purchase of not more than 397 days and that satisfy the rating 
requirements set forth in Rule 2a-7 under the 1940 Act; and (6) 
short-term U.S. dollar-denominated obligations of foreign banks 
(including U.S. branches) that, in the opinion of the Adviser, are 
of comparable quality to obligations of U.S. banks which may be 
purchased by the Fund.

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[[Page 20430]]

    The Fund may conduct foreign currency transactions on a spot or 
forward basis.
    The Fund may invest in inverse floating rate debt instruments.
    In addition to ETPs that invest in Fixed Income Securities, the 
Fund may also invest in the securities of non-exchange traded 
investment companies, including affiliated funds and money market 
funds, subject to applicable limitations under Section 12(d)(1) of the 
1940 Act.
    The Fund may invest in the securities of real estate investment 
trusts.
    The Fund may invest up to 20% of its assets in the following 
derivatives: Exchange-traded futures on Treasuries or Eurodollars; U.S. 
exchange-traded or OTC put and call options contracts, and OTC or 
exchange-traded swap agreements on Fixed Income Securities and/or 
derivatives on indices based on Fixed Income Securities (including 
interest rate swaps, total return swaps, excess return swaps, and 
credit default swaps).\20\
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    \20\ This 20% limit on derivatives will be calculated according 
to the total absolute notional value of the Fund's derivatives. 
Additionally, to the extent that the derivatives held by the Fund 
overlie any of the assets subject to limitations described in the 
proposed rule change, such derivatives will be counted toward those 
limitations.
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    The Fund may also invest in Restricted Securities.\21\
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    \21\ ``Restricted Securities,'' for purposes of this filing, are 
defined as Rule 144A securities. To the extent that the Fund's 
holding of Restricted Securities include any of the assets subject 
to limitations described in the proposed rule change, such holdings 
will be subject to those limitations.
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C. The Fund's Investment Restrictions

    The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid assets (calculated at the time of investment), 
including Restricted Securities deemed illiquid by the Adviser or Sub-
Adviser \22\ under the 1940 Act. The Fund will monitor its portfolio 
liquidity on an ongoing basis to determine whether, in light of current 
circumstances, an adequate level of liquidity is being maintained, and 
will consider taking appropriate steps in order to maintain adequate 
liquidity if, through a change in values, net assets, or other 
circumstances, more than 15% of the Fund's net assets are invested in 
illiquid assets. Illiquid assets include securities subject to 
contractual or other restrictions on resale and other instruments that 
lack readily available markets as determined in accordance with 
Commission staff guidance.
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    \22\ In reaching liquidity decisions, the Adviser and Sub-
Adviser may consider factors including: The frequency of trades and 
quotes for the security; the number of dealers wishing to purchase 
or sell the security and the number of other potential purchasers; 
dealer undertakings to make a market in the security; and the nature 
of the security and the nature of the marketplace in which it trades 
(e.g., the time needed to dispose of the security, the method of 
soliciting offers, and the mechanics of transfer).
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    The Fund intends to qualify each year as a regulated investment 
company under the Internal Revenue Code.
    The Fund's investments will be consistent with its investment 
objective and will not be used to seek to achieve leveraged or inverse 
leveraged returns.
    Under normal circumstances, the combined total of corporate, 
sovereign, non-agency, and all other debt rated below investment grade 
will not exceed 40% of the Fund's net assets.
    The Fund may invest up to 15% of its net assets in securities 
denominated in foreign currencies, and may invest beyond this limit in 
U.S. dollar-denominated securities of foreign issuers. The Fund may 
invest up to 20% of its net assets in securities and instruments that 
are economically tied to emerging market countries.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's 
proposal to list and trade the Shares is consistent with the Exchange 
Act and the rules and regulations thereunder applicable to a national 
securities exchange.\23\ In particular, the Commission finds that the 
proposed rule change, as modified by Amendment No. 2, is consistent 
with Section 6(b)(5) of the Exchange Act,\24\ which requires, among 
other things, that the Exchange's rules be designed 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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    \23\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \24\ 15 U.S.C. 78f(b)(5).
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    The Commission also finds that the proposal is consistent with 
Section 11A(a)(1)(C)(iii) of the Exchange Act,\25\ which sets forth 
Congress's finding that it is in the public interest and appropriate 
for the protection of investors and the maintenance of fair and orderly 
markets to assure the availability to brokers, dealers, and investors 
of information with respect to quotations for and transactions in 
securities.
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    \25\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    Quotation and last-sale information for the Shares will be 
available on the facilities of the Consolidated Tape Association 
(``CTA''). With respect to the Fund, an estimated value, defined in 
BATS Rule 14.11(i)(3)(C) as the ``Intraday Indicative Value,'' which 
reflects an estimated intraday value of the Fund's portfolio, will be 
based upon the current value for the components of the Disclosed 
Portfolio \26\ and will be updated and widely disseminated by one or 
more major market data vendors at least every 15 seconds during the 
Exchange's Regular Trading Hours.\27\ On each business day, before 
commencement of trading in Shares during Regular Trading Hours, the 
Fund will disclose on its Web site the Disclosed Portfolio that will 
form the basis for the Fund's calculation of the net asset value 
(``NAV'') at the end of the business day.\28\ The Fund's Web site will 
also include a form of the prospectus for the Fund and additional data 
relating to NAV and other applicable quantitative information. 
Information regarding market price and volume of the Shares will be 
continually available on a real-time basis throughout the day on 
brokers' computer screens and other electronic services. The previous 
day's closing price and trading volume information for the Shares will 
be published daily in the financial section of newspapers. The intra-
day, closing, and settlement prices of exchange-listed instruments 
(including exchange-traded Depositary Receipts, preferred securities, 
convertible securities, common stock, futures, ETPs, and QPTPs) will be 
readily available from the exchanges trading such instruments as well 
as automated quotation systems, published or other public sources, or 
online information services such as Bloomberg or Reuters.

[[Page 20431]]

Price information regarding U.S. exchange-listed equities will also be 
available on the facilities of the CTA. Intraday and closing price 
information for exchange-traded options and futures will be available 
from the applicable exchange and from major market data vendors. In 
addition, price information for U.S. exchange-traded options will be 
available from the Options Price Reporting Authority. Quotation 
information from brokers and dealers or pricing services will be 
available for Fixed Income Securities. Price information regarding spot 
currency transactions and OTC-traded derivative instruments, including 
options, swaps, and forward currency transactions, as well as equity 
securities traded in the OTC market, including Restricted Securities, 
inverse floaters, short-term instruments, OTC-traded preferred 
securities, OTC-traded ADRs, and OTC-traded convertible securities, is 
available from major market data vendors. Price information for 
repurchase and reverse repurchase agreements will generally be 
available through nationally recognized data service providers through 
subscription arrangements.
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    \26\ The term ``Disclosed Portfolio'' is defined in BATS Rule 
14.11(i)(3)(B). The Disclosed Portfolio will include, as applicable: 
Ticker symbol; CUSIP number or other identifier, if any; a 
description of the holding (including the type of holding); the 
identity of the security, commodity, index, or other asset or 
instrument underlying the holding, if any; for options, the option 
strike price; quantity held (as measured by, for example, par value, 
notional value, or number of shares, contracts, or units); maturity 
date, if any; coupon rate, if any; effective date, if any; market 
value of the holding; and the percentage weighting of the holding in 
the Fund's portfolio. The Web site information will be publicly 
available at no charge.
    \27\ According to the Exchange, several major market data 
vendors display and/or make widely available Intraday Indicative 
Values published via the CTA or other data feeds.
    \28\ The NAV of the Shares generally will be calculated once 
daily Monday through Friday as of the close of regular trading on 
the Exchange, generally 4:00 p.m. Eastern Time (``NAV Calculation 
Time'') on each day that the Exchange is open for trading, based on 
prices at the NAV Calculation Time.
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    The Commission further believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. The Exchange will obtain a representation from the issuer of 
the Shares that the NAV per Share will be calculated daily and that the 
NAV and the Disclosed Portfolio will be made available to all market 
participants at the same time. The Exchange will halt trading in the 
Shares under the conditions specified in BATS Rule 11.18. Trading may 
be halted because of market conditions or for reasons that, in the view 
of the Exchange, make trading in the Shares inadvisable.\29\ Trading in 
the Shares also will be subject to BATS Rule 14.11(i)(4)(B)(iv), which 
sets forth circumstances under which Shares of the Fund may be halted. 
The Exchange states it prohibits the distribution of material non-
public information by its employees. The Adviser and Sub-Adviser are 
not registered as broker-dealers, but the Adviser is affiliated with a 
broker-dealer and has implemented a fire wall with respect to its 
broker-dealer affiliate regarding access to information concerning the 
composition of or changes to the portfolio.\30\
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    \29\ These may include: (1) The extent to which trading is not 
occurring in the securities and/or the financial instruments 
composing the Disclosed Portfolio of the Fund; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance 
of a fair and orderly market are present.
    \30\ See supra note 8. The Exchange represents that an 
investment adviser to an open-end fund is required to be registered 
under the Investment Advisers Act of 1940.
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    Prior to the commencement of trading, the Exchange will inform its 
members in an Information Circular of the special characteristics and 
risks associated with trading the Shares. The Exchange represents that 
trading in the Shares will be subject to the Exchange's surveillance 
procedures, which are adequate to properly monitor the trading of the 
Shares on the Exchange during all trading sessions and to deter and 
detect violations of Exchange rules and the applicable federal 
securities laws.
    The Exchange represents that it deems the Shares to be equity 
securities, thus rendering trading in the Shares subject to the 
Exchange's existing rules governing the trading of equity securities. 
In support of this proposal, the Exchange has made the following 
representations:
    (1) The Shares will be subject to BATS Rule 14.11(i), which sets 
forth the initial and continued listing criteria applicable to Managed 
Fund Shares.
    (2) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (3) The Exchange believes that its surveillance procedures are 
adequate to properly monitor the trading of the Shares on the Exchange 
during all trading sessions and to deter and detect violations of 
Exchange rules and the applicable federal securities laws. Trading of 
the Shares through the Exchange will be subject to the Exchange's 
surveillance procedures for derivative products, including Managed Fund 
Shares.
    (4) The Exchange may obtain information regarding trading in the 
Shares and the underlying exchange traded investment companies, equity 
securities, futures, and options via the ISG, from other exchanges who 
are members or affiliates of the ISG, or with which the Exchange has 
entered into a comprehensive surveillance sharing agreement. In 
addition, the Exchange is able to access, as needed, trade information 
for certain fixed income instruments reported to FINRA's Trade 
Reporting and Compliance Engine. The Exchange can also access municipal 
bond trading activity for surveillance purposes in connection with 
trading in the Shares through the Municipal Securities Rulemaking 
Board's Electronic Municipal Market Access.
    (5) All of the exchange-listed assets will trade on markets that 
are a member of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
    (6) Prior to the commencement of trading, the Exchange will inform 
its members in an Information Circular of the special characteristics 
and risks associated with trading the Shares. Specifically, the 
Information Circular will discuss the following: (i) The procedures for 
purchases and redemptions of Shares in Creation Units (and that Shares 
are not individually redeemable); (ii) BATS Rule 3.7, which imposes 
suitability obligations on Exchange members with respect to 
recommending transactions in the Shares to customers; (iii) how 
information regarding the Intraday Indicative Value and the Disclosed 
Portfolio is disseminated; (iv) the risks involved in trading the 
Shares during the Pre-Opening and After Hours Trading Sessions when an 
updated Intraday Indicative Value will not be calculated or publicly 
disseminated; (v) the requirement that members deliver a prospectus to 
investors purchasing newly issued Shares prior to or concurrently with 
the confirmation of a transaction; and (vi) trading information.
    (7) For initial and continued listing, the Fund must be in 
compliance with Rule 10A-3 under the Act.\31\
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    \31\ 17 CFR 240.10A-3.
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    (8) The Fund will not invest more than 20% of its net assets in the 
aggregate in non-agency ABS.
    (9) Under normal circumstances, the Fund will generally seek to 
invest in corporate bond issuances that have at least $100,000,000 par 
amount outstanding in developed countries and at least $200,000,000 par 
amount outstanding in emerging market countries. Corporate bonds that 
in the aggregate account for at least 75% of the weight of the Fund's 
corporate bonds will have a minimum original principal outstanding of 
$100 million or more.
    (10) Under normal circumstances, the combined total of corporate, 
sovereign, non-agency, and all other debt rated below investment grade 
will not exceed 40% of the Fund's net assets.
    (11) The Fund will not invest more than 15% of its net assets in 
securities denominated in foreign currencies, and will not invest more 
than 20% of its net assets in securities and instruments that are 
economically tied to emerging market countries.

[[Page 20432]]

    (12) No more 20% of the Fund's net assets will be invested in 
junior bank loans.
    (13) While the Fund may invest in inverse ETPs, the Fund will not 
invest in leveraged or inverse leveraged ETPs.
    (14) A minimum of 100,000 Shares for the Fund will be outstanding 
at the commencement of trading on the Exchange.

The Exchange represents that all statements and representations made in 
the filing regarding (a) the description of the portfolio, (b) 
limitations on portfolio holdings or reference assets, or (c) the 
applicability of Exchange rules and surveillance procedures constitute 
continued listing requirements for listing the Shares on the Exchange. 
In addition, the issuer has represented to the Exchange that it will 
advise the Exchange of any failure by the Fund to comply with the 
continued listing requirements, and, pursuant to its obligations under 
Section 19(g)(1) of the Act, the Exchange will surveil for compliance 
with the continued listing requirements. If a Fund is not in compliance 
with the applicable listing requirements, the Exchange will commence 
delisting procedures under BATS Rule 14.12.
    This approval order is based on all of the Exchange's 
representations, including those set forth above and in Amendment No. 
2. The Commission notes that the Fund and the Shares must comply with 
the requirements of BATS Rule 14.11(i) to be initially and continuously 
listed and traded on the Exchange.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 2, is consistent with Section 
6(b)(5) of the Exchange Act \32\ and Section 11A(a)(1)(C)(iii) of the 
Exchange Act \33\ and the rules and regulations thereunder applicable 
to a national securities exchange.
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    \32\ 15 U.S.C. 78f(b)(5).
    \33\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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IV. Solicitation of Comments on Amendment No. 2

    Interested persons are invited to submit written data, views, and 
arguments concerning whether Amendment No. 2 is consistent with the 
Act. Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. SR-BATS-2016-04 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 No. SR-BATS-2016-04. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site 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 such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File No. SR-BATS-2016-04, and should be 
submitted on or before April 28, 2016.

V. Accelerated Approval of the Proposed Rule Change, as Modified by 
Amendment No. 2

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 2, prior to the thirtieth day 
after the date of publication of Amendment No. 2 in the Federal 
Register. The additional information in Amendments No. 2 helped the 
Commission to evaluate the Shares' susceptibility to manipulation and 
the Exchange's ability to investigate possible manipulative activity. 
Amendment No. 2 also provided clarifications and additional details to 
the proposed rule change. Accordingly, the Commission finds good cause 
for approving the proposed rule change, as modified by Amendment No. 2, 
on an accelerated basis, pursuant to Section 19(b)(2) of the Act.\34\
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    \34\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Exchange Act,\35\ that the proposed rule change (SR-BATS-2016-04), as 
modified by Amendment No. 2, be, and it hereby is, approved on an 
accelerated basis.
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    \35\ 15 U.S.C. 78s(b)(2).
    \36\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
Brent J. Fields,
Secretary.
[FR Doc. 2016-07938 Filed 4-6-16; 8:45 am]
BILLING CODE 8011-01-P