[Federal Register Volume 81, Number 74 (Monday, April 18, 2016)]
[Notices]
[Pages 22681-22691]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-08825]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77594; File No. SR-BatsBZX-2016-01]


Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing of Proposed Rule Change To List and Trade Under BZX Rule 
14.11(c)(4) Shares of the Following Series of Market Vectors ETF Trust: 
Market Vectors 6-8 Year Municipal Index ETF; Market Vectors 8-12 Year 
Municipal Index ETF; and Market Vectors 12-17 Year Municipal Index ETF

April 12, 2016
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on March 29, 2016, Bats BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to list and trade under BZX Rule 
14.11(c)(4) the shares of the following series of Market Vectors ETF 
Trust (the ``Trust''): Market Vectors 6-8 Year Municipal Index ETF; 
Market Vectors 8-12 Year Municipal Index ETF; and Market Vectors 12-17 
Year Municipal Index ETF.
    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.com, at the principal office of the 
Exchange, 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 parts of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the 
following series of the Trust under BZX Rule 14.11(c)(4),\3\ which 
governs the listing and trading of index fund shares based on fixed 
income securities indexes: Market Vectors AMT-Free 6-8 Year Municipal 
Index ETF; Market Vectors AMT-Free 8-12 Year Municipal Index ETF; and 
Market Vectors AMT-Free 12-17 Year Municipal Index ETF (each a ``Fund'' 
and, collectively, the ``Funds'').\4\ The Shares will be offered by the 
Trust, which was established as a Delaware statutory trust on March 15, 
2001. The Trust is registered with the Commission as an open-end 
investment company and has filed a registration statement on behalf of 
the Funds on

[[Page 22682]]

Form N-1A (``Registration Statement'') with the Commission.\5\
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    \3\ The Commission approved BZX Rule 14.11(c) in Securities 
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 
(September 6, 2011) (SR-BATS-2011-018).
    \4\ The Commission previously has approved a proposed rule 
change relating to listing and trading of funds based on municipal 
bond indexes. See Securities Exchange Act Release Nos. 67985 
(October 4, 2012), 77 FR 61804 (October 11, 2012) (SR-NYSEArca-2012-
92) (order approving proposed rule change relating to the listing 
and trading of iShares 2018 S&P AMT-Free Municipal Series and 
iShares 2019 S&P AMT-Free Municipal Series under NYSE Arca, Inc. 
(``NYSE Arca'') Rule 5.2(j)(3), Commentary .02); 72523 (July 2, 
2014), 79 FR 39016 (July 9, 2014) (SR-NYSEArca-2014-37) (order 
approving proposed rule change relating to the listing and trading 
of iShares 2020 S&P AMT-Free Municipal Series under NYSE Arca Rule 
5.2(j)(3), Commentary .02); and 75468 (July 16, 2015), 80 FR 43500 
(July 22, 2015) (SR-NYSEArca-2015-25) (order approving proposed rule 
change relating to the listing and trading of the iShares iBonds Dec 
2021 AMT-Free Muni Bond ETF and iShares iBonds Dec 2022 AMT-Free 
Muni Bond ETF under NYSE Arca Rule 5.2(j)(3), Commentary .02). The 
Commission also has issued a notice of filing and immediate 
effectiveness of a proposed rule change relating to listing and 
trading on the Exchange of the iShares Taxable Municipal Bond Fund. 
See Securities Exchange Act Release No. 63176 (October 25, 2010), 75 
FR 66815 (October 29, 2010) (SR-NYSEArca-2010-94). The Commission 
has approved two actively managed funds of the PIMCO ETF Trust that 
hold municipal bonds. See Securities Exchange Act Release No. 60981 
(November 10, 2009), 74 FR 59594 (November 18, 2009) (SR-NYSEArca-
2009-79) (order approving listing and trading of PIMCO ShortTerm 
Municipal Bond Strategy Fund and PIMCO Intermediate Municipal Bond 
Strategy Fund, among others). The Commission also has approved 
listing and trading on the Exchange of the SPDR Nuveen S&P High 
Yield Municipal Bond Fund. See Securities Exchange Act Release 
No.63881 (February 9, 2011), 76 FR 9065 (February 16, 2011) (SR-
NYSEArca-2010-120).
    \5\ See Registration Statement on Form N-1A for the Trust, dated 
October 29, 2015 (File Nos. 333-123257 and 811-10325). The 
descriptions of the Funds and the Shares contained herein are based, 
in part, on information in the Registration Statement. The 
Commission has issued an order granting certain exemptive relief to 
the Trust under the Investment Company Act of 1940 (15 U.S.C. 80a-1) 
(``1940 Act'') (the ``Exemptive Order''). See Investment Company Act 
Release No. 28021 (October 24, 2007) (File No. 812-13426).
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Description of the Shares and the Funds
    Van Eck Associates Corporation will be the investment adviser 
(``Adviser'') to the Funds.\6\ The Adviser will serve as the 
administrator for the Fund (the ``Administrator''). The Bank of New 
York Mellon will serve as the custodian (``Custodian'') and transfer 
agent (``Transfer Agent'') for the Funds. Van Eck Securities 
Corporation (the ``Distributor'') will be the distributor of the 
Shares. Barclays Inc. will be the index provider (``Index Provider'').
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    \6\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940 (the ``Advisers 
Act''). As a result, the Adviser and its related personnel are 
subject to the provisions of Rule 204A-1 under the Advisers Act 
relating to codes of ethics. This Rule requires investment advisers 
to adopt a code of ethics that reflects the fiduciary nature of the 
relationship to clients as well as compliance with all applicable 
securities laws. Accordingly, procedures designed to prevent the 
communication and misuse of non-public information by an investment 
adviser must be consistent with Rule 204A-1 under the Advisers Act. 
In addition, Rule 206(4)-7 under the Advisers Act makes it unlawful 
for an investment adviser to provide investment advice to clients 
unless such investment adviser has (i) adopted and implemented 
written policies and procedures reasonably designed to prevent 
violation, by the investment adviser and its supervised persons, of 
the Advisers Act and the Commission rules adopted thereunder; (ii) 
implemented, at a minimum, an annual review regarding the adequacy 
of the policies and procedures established pursuant to subparagraph 
(i) above and the effectiveness of their implementation; and (iii) 
designated an individual (who is a supervised person) responsible 
for administering the policies and procedures adopted under 
subparagraph (i) above.
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Market Vectors AMT--Free 6-8 Year Municipal Index ETF
    According to the Registration Statement, the Fund will seek to 
replicate as closely as possible, before fees and expenses, the price 
and yield performance of the Barclays AMT-Free 6-8 Year Intermediate 
Continuous Municipal Index (the ``6-8 Year Index''). As of December 31, 
2015, there were 2,894 issues in the 6-8 Year Index. Unless otherwise 
noted, all statistics related to the 6-8 Year Index presented hereafter 
were accurate as of December 31, 2015.
    To be included in the 6-8 Year Index, a bond must be rated Baa3/
BBB- or higher by at least two of the following ratings agencies if all 
three agencies rate the security: Moody's, S&P and Fitch. If only two 
of the three agencies rate the security, the lower rating is used to 
determine index eligibility. If only one of the three agencies rates a 
security, the rating must be at least Baa3/BBB-. Potential constituents 
must have an outstanding par value of at least $7 million and be issued 
as part of a transaction of at least $75 million. The bonds must be 
fixed rate, have a dated date within the last five years and have an 
effective maturity of 6 to 8 years. The following types of bonds are 
excluded from the 6-8 Year Index: bonds subject to the alternative 
minimum tax, taxable municipal bonds, floating rate bonds and 
derivatives. The 6-8 Year Index is calculated using a market value 
weighting methodology.
    The composition of the 6-8 Year Index is rebalanced monthly. 
Interest and principal payments earned by the component securities are 
held in the 6-8 Year Index without a reinvestment return until month 
end when they are removed from the 6-8 Year Index. Qualifying 
securities issued, but not necessarily settled, on or before the month 
end rebalancing date qualify for inclusion in the 6-8 Year Index in the 
following month.
    The Fund normally invests at least 80% of its total assets in 
securities that comprise the Fund's benchmark index. The 6-8 Year Index 
is comprised of publicly traded municipal bonds that cover the U.S. 
dollar-denominated intermediate term tax-exempt bond market with final 
maturities of 6-8 years. The Fund's 80% investment policy is non-
fundamental and may be changed without shareholder approval upon 60 
days' prior written notice to shareholders. To-be-announced 
transactions (``TBAs'') \7\ representing securities in the 6-8 Year 
Index may be used by the Fund in seeking performance that corresponds 
to the 6-8 Year Index and in such cases would count towards the Fund's 
80% policy.
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    \7\ A TBA transaction is a method of trading mortgage-backed 
securities. In a TBA transaction, the buyer and seller agree upon 
general trade parameters such as agency, settlement date, par 
amount, and price. The actual pools delivered generally are 
determined two days prior to the settlement date.
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Other Portfolio Holdings
    While the Fund normally will invest at least 80% of its total 
assets in securities that compose the 6-8 Year Index, as described 
above, the Fund may invest its remaining assets in other financial 
instruments, as described below.
    The Fund may invest its remaining assets in securities not included 
in the 6-8 Year Index including only the following instruments: 
municipal bonds; \8\ money market instruments, including repurchase 
agreements or other funds which invest exclusively in money market 
instruments; convertible securities; structured notes (notes on which 
the amount of principal repayment and interest payments are based on 
the movement of one or more specified factors, such as the movement of 
a particular stock or stock index); \9\ certain derivative instruments 
described below; and, to the extent permitted by the 1940 Act, 
affiliated and unaffiliated funds, such as open-end or closed-end 
management investment companies, including other exchange-traded funds 
(``ETFs'').\10\ In addition to the use described above, TBAs not 
included in the 6-8 Year Index may also be used by the Fund in managing 
cash flows.
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    \8\ Municipal bonds that are not included in the 6-8 Year Index 
must be publicly traded municipal bonds that cover the U.S. dollar-
denominated intermediate term tax-exempt bond market with final 
maturities of 6-8 years. Such bonds must be rated Baa3/BBB- or 
higher by at least two of the following ratings agencies if all 
three agencies rate the security: Moody's, S&P and Fitch. If only 
two of the three agencies rate the security, the lower rating is 
used to determine index eligibility. If only one of the three 
agencies rates a security, the rating must be at least Baa3/BBB-. 
Such bonds must also have an outstanding par value of at least $7 
million and be issued as part of a transaction of at least $75 
million. The bonds must be fixed rate, have a dated date within the 
last five years and have an effective maturity of 6 to 8 years.
    \9\ Structured notes are derivative securities for which the 
amount of principal repayment and/or interest payments is based on 
the movement of one or more factors, including, but not limited to, 
currency exchange rates, interest rates (such as the prime lending 
rate or LIBOR), referenced bonds and stock indices.
    \10\ For purposes of this filing, ETFs include Index Fund Shares 
(as described in Rule 14.11(c)); Portfolio Depositary Receipts (as 
described in Rule 14.11(b)); and Managed Fund Shares (as described 
in Rule 14.11(i)). The ETFs all will be listed and traded in the 
U.S. on registered exchanges. The Fund may invest in the securities 
of ETFs registered under the 1940 Act consistent with the 
requirements of Section 12(d)(1) of the 1940 Act, or any rule, 
regulation or order of the Commission or interpretation thereof. 
While the Fund may invest in inverse ETFs, the Fund will not invest 
in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
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    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 use exchange-traded futures contracts and exchange-
traded or over-the-counter (``OTC'') options thereon, together with 
positions in cash and money market instruments, to simulate full 
investment in the 6-8 Year Index.
    The Fund may use cleared or non-cleared index, interest rate or 
credit

[[Page 22683]]

default swap agreements. Swap agreements are contracts between parties 
in which one party agrees to make payments to the other party based on 
the change in market value or level of a specified index or asset. The 
Adviser represents that currently interest rate swaps and credit 
default swaps on indexes are cleared. However, credit default swaps on 
a specific security are currently uncleared.
    The Fund may invest in exchange-traded warrants, which are equity 
securities in the form of options issued by a corporation which give 
the holder the right to purchase stock, usually at a price that is 
higher than the market price at the time the warrant is issued.
    The Fund may invest in participation notes, which are issued by 
banks or broker-dealers and are designed to offer a return linked to 
the performance of a particular underlying equity security or market.
    The Fund will only enter into transactions in derivative 
instruments with counterparties that the Adviser reasonably believes 
are capable of performing under the contract and will post as 
collateral as required by the counterparty.\11\
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    \11\ The Fund will seek, where possible, to use counterparties, 
as applicable, whose financial status is such that the risk of 
default is reduced; however, the risk of losses resulting from 
default is still possible. The Adviser will evaluate the 
creditworthiness of counterparties on a regular basis. In addition 
to information provided by credit agencies, the Adviser will review 
approved counterparties using various factors, which may include the 
counterparty's reputation, the Adviser's past experience with the 
counterparty and the price/market actions of debt of the 
counterparty.
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Index Overview
    The Exchange is submitting this proposed rule change because the 6-
8 Year Index for the Fund does not meet all of the ``generic'' listing 
requirements of Rule 14.11(c)(4) applicable to the listing of index 
fund shares based on fixed income securities indexes. The 6-8 Year 
Index meets all such requirements except for those set forth in Rule 
14.11(c)(4)(B)(i)(b).\12\ Specifically, as of December 31, 2015, 9.8% 
of the weight of the 6-8 Year Index components have a minimum original 
principal amount outstanding of $100 million or more.
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    \12\ Rule 14.11(c)(4)(B)(i)(b) provides that components that in 
the aggregate account for at least 75% of the weight of the index or 
portfolio each shall have a minimum original principal amount 
outstanding of $100 million or more.
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    As of December 31, 2015, 95.1% of the weight of the 6-8 Year Index 
components was comprised of individual maturities that were part of an 
entire municipal bond offering with a minimum original principal amount 
outstanding $100 million or more for all maturities of the offering. In 
addition, the total dollar amount outstanding of issues in the 6-8 Year 
Index was approximately $57.4 billion and the average dollar amount 
outstanding of issues in the 6-8 Year Index was approximately $19.8 
million. Further, the most heavily weighted component represented 1.07% 
of the weight of the 6-8 Year Index and the five most heavily weighted 
components represented 3.0% of the weight of the 6-8 Year Index.\13\ 
Therefore, the Exchange believes that, notwithstanding that the 6-8 
Year Index does not satisfy the criterion in Rule 14.11(c)(4)(B)(i)(b), 
the 6-8 Year Index is sufficiently broad-based to deter potential 
manipulation, given that it is comprised of approximately 2,894 issues. 
In addition, the 6-8 Year Index securities are sufficiently liquid to 
deter potential manipulation in that a substantial portion (95.1%) of 
the 6-8 Year Index weight is comprised of maturities that are part of a 
minimum original principal amount outstanding of $100 million or more, 
and in view of the substantial total dollar amount outstanding and the 
average dollar amount outstanding of the 6-8 Year Index issues, as 
referenced above.\14\ 63.8% of the 6-8 Year Index weight consisted of 
issues with a rating of AA/Aa2 or higher.
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    \13\ Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed-
income security (excluding Treasury Securities, as defined therein) 
shall represent more than 30% of the weight of the index or 
portfolio, and the five most heavily weighted component fixed-income 
securities in the index or portfolio shall not in the aggregate 
account for more than 65% of the weight of the index or portfolio.
    \14\ The Adviser represents that when bonds are close 
substitutes for one another, pricing vendors can use executed trade 
information from all similar bonds as pricing inputs for an 
individual security. This can make individual securities more 
liquid.
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    The 6-8 Year Index value, calculated and disseminated at least once 
daily, as well as the components of the 6-8 Year Index and their 
percentage weighting, will be available from major market data vendors. 
In addition, the portfolio of securities held by the Fund will be 
disclosed on the Fund's Web site at www.vaneck.com/etfs.
Market Vectors AMT--Free 8-12 Year Municipal Index ETF
    According to the Registration Statement, the Fund will seek to 
replicate as closely as possible, before fees and expenses, the price 
and yield performance of the Barclays AMT-Free 8-12 Year Intermediate 
Continuous Municipal Index (the ``8-12 Year Index''). As of December 
31, 2015, there were 5,662 issues in the 8-12 Year Index. Unless 
otherwise noted, all statistics related to the 8-12 Year Index 
presented hereafter were accurate as of December 31, 2015.
    To be included in the 8-12 Year Index, a bond must be rated Baa3/
BBB- or higher by at least two of the following ratings agencies if all 
three agencies rate the security: Moody's, S&P and Fitch. If only two 
of the three agencies rate the security, the lower rating is used to 
determine index eligibility. If only one of the three agencies rates a 
security, the rating must be at least Baa3/BBB-. Potential constituents 
must have an outstanding par value of at least $7 million and be issued 
as part of a transaction of at least $75 million. The bonds must be 
fixed rate, have a dated date within the last five years and have an 
effective maturity of 8 to 12 years. The following types of bonds are 
excluded from the 8-12 Year Index: bonds subject to the alternative 
minimum tax, taxable municipal bonds, floating rate bonds and 
derivatives. The 8-12 Year Index is calculated using a market value 
weighting methodology.
    The composition of the 8-12 Year Index is rebalanced monthly. 
Interest and principal payments earned by the component securities are 
held in the 8-12 Year Index without a reinvestment return until month 
end when they are removed from the 8-12 Year Index. Qualifying 
securities issued, but not necessarily settled, on or before the month 
end rebalancing date qualify for inclusion in the 8-12 Year Index in 
the following month.
    The Fund normally invests at least 80% of its total assets in 
securities that comprise the Fund's benchmark index. The 8-12 Year 
Index is comprised of publicly traded municipal bonds that cover the 
U.S. dollar-denominated intermediate term tax-exempt bond market with 
final maturities of 8-12 years. The Fund's 80% investment policy is 
non-fundamental and may be changed without shareholder approval upon 60 
days' prior written notice to shareholders. TBAs representing 
securities in the 8-12 Year Index may be used by the Fund in seeking 
performance that corresponds to the 8-12 Year Index and in such cases 
would count towards the Fund's 80% policy.
Other Portfolio Holdings
    While the Fund normally will invest at least 80% of its total 
assets in securities that compose the 8-12 Year Index, as described 
above, the Fund may invest its remaining assets in other financial 
instruments, as described below.
    The Fund may invest its remaining assets in securities not included 
in the 8-12 Year Index including only the

[[Page 22684]]

following instruments: municipal bonds; \15\ money market instruments, 
including repurchase agreements or other funds which invest exclusively 
in money market instruments; convertible securities; structured notes 
(notes on which the amount of principal repayment and interest payments 
are based on the movement of one or more specified factors, such as the 
movement of a particular stock or stock index); \16\ certain derivative 
instruments described below; and, to the extent permitted by the 1940 
Act, affiliated and unaffiliated funds, such as open-end or closed-end 
management investment companies, including other ETFs. In addition to 
the use described above, TBAs not included in the 8-12 Year Index may 
also be used by the Fund in managing cash flows.
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    \15\ Municipal bonds that are not included in the 8-12 Year 
Index must be publicly traded municipal bonds that cover the U.S. 
dollar-denominated intermediate term tax-exempt bond market with 
final maturities of 8-12 years. Such bonds must be rated Baa3/BBB- 
or higher by at least two of the following ratings agencies if all 
three agencies rate the security: Moody's, S&P and Fitch. If only 
two of the three agencies rate the security, the lower rating is 
used to determine index eligibility. If only one of the three 
agencies rates a security, the rating must be at least Baa3/BBB-. 
Such bonds must also have an outstanding par value of at least $7 
million and be issued as part of a transaction of at least $75 
million. The bonds must be fixed rate, have a dated date within the 
last five years and have an effective maturity of 8 to 12 years.
    \16\ Structured notes are derivative securities for which the 
amount of principal repayment and/or interest payments is based on 
the movement of one or more factors, including, but not limited to, 
currency exchange rates, interest rates (such as the prime lending 
rate or LIBOR), referenced bonds and stock indices.
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    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 use exchange-traded futures contracts and exchange-
traded or OTC options thereon, together with positions in cash and 
money market instruments, to simulate full investment in the 8-12 Year 
Index.
    The Fund may use cleared or non-cleared index, interest rate or 
credit default swap agreements. Swap agreements are contracts between 
parties in which one party agrees to make payments to the other party 
based on the change in market value or level of a specified index or 
asset. The Adviser represents that currently interest rate swaps and 
credit default swaps on indexes are cleared. However, credit default 
swaps on a specific security are currently uncleared.
    The Fund may invest in exchange-traded warrants, which are equity 
securities in the form of options issued by a corporation which give 
the holder the right to purchase stock, usually at a price that is 
higher than the market price at the time the warrant is issued.
    The Fund may invest in participation notes, which are issued by 
banks or broker-dealers and are designed to offer a return linked to 
the performance of a particular underlying equity security or market.
    The Fund will only enter into transactions in derivative 
instruments with counterparties that the Adviser reasonably believes 
are capable of performing under the contract and will post as 
collateral as required by the counterparty.\17\
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    \17\ The Fund will seek, where possible, to use counterparties, 
as applicable, whose financial status is such that the risk of 
default is reduced; however, the risk of losses resulting from 
default is still possible. The Adviser will evaluate the 
creditworthiness of counterparties on a regular basis. In addition 
to information provided by credit agencies, the Adviser will review 
approved counterparties using various factors, which may include the 
counterparty's reputation, the Adviser's past experience with the 
counterparty and the price/market actions of debt of the 
counterparty.
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Index Overview
    The Exchange is submitting this proposed rule change because the 8-
12 Year Index for the Fund does not meet all of the ``generic'' listing 
requirements of Rule 14.11(c)(4) applicable to the listing of index 
fund shares based on fixed income securities indexes. The 8-12 Year 
Index meets all such requirements except for those set forth in Rule 
14.11(c)(4)(B)(i)(b).\18\ Specifically, as of December 31, 2015, 5.7% 
of the weight of the 8-12 Year Index components have a minimum original 
principal amount outstanding of $100 million or more.
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    \18\ Rule 14.11(c)(4)(B)(i)(b) provides that components that in 
the aggregate account for at least 75% of the weight of the index or 
portfolio each shall have a minimum original principal amount 
outstanding of $100 million or more.
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    As of December 31, 2015, 95.1% of the weight of the 8-12 Year Index 
components was comprised of individual maturities that were part of an 
entire municipal bond offering with a minimum original principal amount 
outstanding of $100 million or more for all maturities of the offering. 
In addition, the total dollar amount outstanding of issues in the 8-12 
Year Index was approximately $108.6 billion and the average dollar 
amount outstanding of issues in the 8-12 Year Index was approximately 
$19.2 million. Further, the most heavily weighted component represented 
0.26% of the weight of the 8-12 Year Index and the five most heavily 
weighted components represented 1.04% of the weight of the 8-12 Year 
Index.\19\ Therefore, the Exchange believes that, notwithstanding that 
the 8-12 Year Index does not satisfy the criterion in Rule 
14.11(c)(4)(B)(i)(b), the 8-12 Year Index is sufficiently broad-based 
to deter potential manipulation, given that it is comprised of 
approximately 5,662 issues. In addition, the 8-12 Year Index securities 
are sufficiently liquid to deter potential manipulation in that a 
substantial portion (95.1%) of the 8-12 Year Index weight is comprised 
of maturities that are part of a minimum original principal amount 
outstanding of $100 million or more, and in view of the substantial 
total dollar amount outstanding and the average dollar amount 
outstanding of the 8-12 Year Index issues, as referenced above.\20\ 
64.7% of the 8-12 Year Index weight consisted of issues with a rating 
of AA/Aa2 or higher.
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    \19\ Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed-
income security (excluding Treasury Securities, as defined therein) 
shall represent more than 30% of the weight of the index or 
portfolio, and the five most heavily weighted component fixed-income 
securities in the index or portfolio shall not in the aggregate 
account for more than 65% of the weight of the index or portfolio.
    \20\ The Adviser represents that when bonds are close 
substitutes for one another, pricing vendors can use executed trade 
information from all similar bonds as pricing inputs for an 
individual security. This can make individual securities more 
liquid.
---------------------------------------------------------------------------

    The 8-12 Year Index value, calculated and disseminated at least 
once daily, as well as the components of the 8-12 Year Index and their 
percentage weighting, will be available from major market data vendors. 
In addition, the portfolio of securities held by the Fund will be 
disclosed on the Fund's Web site at www.vaneck.com/etfs.
Market Vectors AMT-Free 12-17 Year Municipal Index ETF
    According to the Registration Statement, the Fund will seek to 
replicate as closely as possible, before fees and expenses, the price 
and yield performance of the Barclays AMT-Free 12-17 Year Intermediate 
Continuous Municipal Index (the ``12-17 Year Index''). As of December 
31, 2015, there were 6,171 issues in the 12-17 Year Index. Unless 
otherwise noted, all statistics related to the 12-17 Year Index 
presented hereafter were accurate as of December 31, 2015.
    To be included in the 12-17 Year Index, a bond must be rated Baa3/
BBB- or higher by at least two of the following ratings agencies if all 
three agencies rate the security: Moody's, S&P and Fitch. If only two 
of the three agencies rate the security, the lower rating is used to 
determine index eligibility. If only one of the three agencies rates a 
security, the rating must be at least Baa3/BBB-. Potential constituents 
must have an outstanding par value of at least $7 million and be issued 
as part of a

[[Page 22685]]

transaction of at least $75 million. The bonds must be fixed rate, have 
a dated date within the last five years and have an effective maturity 
of 12 to 17 years. The following types of bonds are excluded from the 
12-17 Year Index: bonds subject to the alternative minimum tax, taxable 
municipal bonds, floating rate bonds and derivatives. The 12-17 Year 
Index is calculated using a market value weighting methodology.
    The composition of the 12-17 Year Index is rebalanced monthly. 
Interest and principal payments earned by the component securities are 
held in the 12-17 Year Index without a reinvestment return until month 
end when they are removed from the 12-17 Year Index. Qualifying 
securities issued, but not necessarily settled, on or before the month 
end rebalancing date qualify for inclusion in the 12-17 Year Index in 
the following month. TBAs representing securities in the 12-17 Year 
Index may be used by the Fund in seeking performance that corresponds 
to the 12-17 Year Index and in such cases would count towards the 
Fund's 80% policy.
    The Fund normally invests at least 80% of its total assets in 
securities that comprise the Fund's benchmark index. The 12-17 Year 
Index is comprised of publicly traded municipal bonds that cover the 
U.S. dollar-denominated intermediate term tax-exempt bond market with 
final maturities of 12-17 years. The Fund's 80% investment policy is 
non-fundamental and may be changed without shareholder approval upon 60 
days' prior written notice to shareholders.
Other Portfolio Holdings
    While the Fund normally will invest at least 80% of its total 
assets in securities that compose the 12-17 Year Index, as described 
above, the Fund may invest its remaining assets in other financial 
instruments, as described below.
    The Fund may invest its remaining assets in securities not included 
in the 12-17 Year Index including only the following instruments: 
municipal bonds; \21\ money market instruments, including repurchase 
agreements or other funds which invest exclusively in money market 
instruments; convertible securities; structured notes (notes on which 
the amount of principal repayment and interest payments are based on 
the movement of one or more specified factors, such as the movement of 
a particular stock or stock index); \22\ certain derivative instruments 
described below; and, to the extent permitted by the 1940 Act, 
affiliated and unaffiliated funds, such as open-end or closed-end 
management investment companies, including other ETFs. In addition to 
the use described above, TBAs not included in the 12-17 Year Index may 
also be used by the Fund in managing cash flows.
---------------------------------------------------------------------------

    \21\ Municipal bonds that are not included in the 12-17 Year 
Index must be publicly traded municipal bonds that cover the U.S. 
dollar-denominated intermediate term tax-exempt bond market with 
final maturities of 12-17 years. Such bonds must be rated Baa3/BBB- 
or higher by at least two of the following ratings agencies if all 
three agencies rate the security: Moody's, S&P and Fitch. If only 
two of the three agencies rate the security, the lower rating is 
used to determine index eligibility. If only one of the three 
agencies rates a security, the rating must be at least Baa3/BBB-. 
Such bonds must also have an outstanding par value of at least $7 
million and be issued as part of a transaction of at least $75 
million. The bonds must be fixed rate, have a dated date within the 
last five years and have an effective maturity of 12 to 17 years.
    \22\ Structured notes are derivative securities for which the 
amount of principal repayment and/or interest payments is based on 
the movement of one or more factors, including, but not limited to, 
currency exchange rates, interest rates (such as the prime lending 
rate or LIBOR), referenced bonds and stock indices.
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    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 use exchange-traded futures contracts and exchange-
traded or over-the-counter (``OTC'') options thereon, together with 
positions in cash and money market instruments, to simulate full 
investment in the 12-17 Year Index.
    The Fund may use cleared or non-cleared index, interest rate or 
credit default swap agreements. Swap agreements are contracts between 
parties in which one party agrees to make payments to the other party 
based on the change in market value or level of a specified index or 
asset. The Adviser represents that currently interest rate swaps and 
credit default swaps on indexes are cleared. However, credit default 
swaps on a specific security are currently uncleared.
    The Fund may invest in exchange-traded warrants, which are equity 
securities in the form of options issued by a corporation which give 
the holder the right to purchase stock, usually at a price that is 
higher than the market price at the time the warrant is issued.
    The Fund may invest in participation notes, which are issued by 
banks or broker-dealers and are designed to offer a return linked to 
the performance of a particular underlying equity security or market.
    The Fund will only enter into transactions in derivative 
instruments with counterparties that the Adviser reasonably believes 
are capable of performing under the contract and will post as 
collateral as required by the counterparty.\23\
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    \23\ The Fund will seek, where possible, to use counterparties, 
as applicable, whose financial status is such that the risk of 
default is reduced; however, the risk of losses resulting from 
default is still possible. The Adviser will evaluate the 
creditworthiness of counterparties on a regular basis. In addition 
to information provided by credit agencies, the Adviser will review 
approved counterparties using various factors, which may include the 
counterparty's reputation, the Adviser's past experience with the 
counterparty and the price/market actions of debt of the 
counterparty.
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Index Overview
    The Exchange is submitting this proposed rule change because the 
12-17 Year Index for the Fund does not meet all of the ``generic'' 
listing requirements of Rule 14.11(c)(4) applicable to the listing of 
index fund shares based on fixed income securities indexes. The 12-17 
Year Index meets all such requirements except for those set forth in 
Rule 14.11(c)(4)(B)(i)(b).\24\ Specifically, as of December 31, 2015, 
8.3% of the weight of the 12-17 Year Index components have a minimum 
original principal amount outstanding of $100 million or more.
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    \24\ Rule 14.11(c)(4)(B)(i)(b) provides that components that in 
the aggregate account for at least 75% of the weight of the index or 
portfolio each shall have a minimum original principal amount 
outstanding of $100 million or more.
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    As of December 31, 2015, 95.3% of the weight of the 12-17 Year 
Index components was comprised of individual maturities that were part 
of an entire municipal bond offering with a minimum original principal 
amount outstanding $100 million or more for all maturities of the 
offering. In addition, the total dollar amount outstanding of issues in 
the 12-17 Year Index was approximately $123.5 billion and the average 
dollar amount outstanding of issues in the 12-17 Year Index was 
approximately $20 million. Further, the most heavily weighted component 
represented 0.29% of the weight of the 12-17 Year Index and the five 
most heavily weighted components represented 1.11% of the weight of the 
12-17 Year Index.\25\ Therefore, the Exchange believes that, 
notwithstanding that the 12-17 Year Index does not satisfy the 
criterion in Rule 14.11(c)(4)(B)(i)(b), the 12-17 Year Index is 
sufficiently broad-based to deter potential manipulation, given that

[[Page 22686]]

it is comprised of approximately 6,171 issues. In addition, the 12-17 
Year Index securities are sufficiently liquid to deter potential 
manipulation in that a substantial portion (95.3%) of the 12-17 Year 
Index weight is comprised of maturities that are part of a minimum 
original principal amount outstanding of $100 million or more, and in 
view of the substantial total dollar amount outstanding and the average 
dollar amount outstanding of the 12-17 Year Index issues, as referenced 
above.\26\ 61.2% of the 12-17 Year Index weight consisted of issues 
with a rating of AA/Aa2 or higher.
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    \25\ Rule 14.11(c)(4)(B)(i)(d) provides that no component fixed-
income security (excluding Treasury Securities, as defined therein) 
shall represent more than 30% of the weight of the index or 
portfolio, and the five most heavily weighted component fixed-income 
securities in the index or portfolio shall not in the aggregate 
account for more than 65% of the weight of the index or portfolio.
    \26\ The Adviser represents that when bonds are close 
substitutes for one another, pricing vendors can use executed trade 
information from all similar bonds as pricing inputs for an 
individual security. This can make individual securities more 
liquid.
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    The 12-17 Year Index value, calculated and disseminated at least 
once daily, as well as the components of the 12-17 Year Index and their 
percentage weighting, will be available from major market data vendors. 
In addition, the portfolio of securities held by the Fund will be 
disclosed on the Fund's Web site at www.vaneck.com.
    The Exchange represents that: (1) Except for BZX Rule 
14.11(c)(4)(B)(i)(b), the 6-8 Year Index, the 8-12 Year Index, and the 
12-17 Year Index (together, the ``Indices'') currently and will 
continue to satisfy all of the generic listing standards under BZX Rule 
14.11(c)(4); (2) the continued listing standards under BZX Rule 
14.11(c) applicable to index fund shares shall apply to the Shares of 
each Fund; and (3) the Trust is required to comply with Rule 10A-3 \27\ 
under the Act for the initial and continued listing of the Shares of 
each Fund. In addition, the Exchange represents that the Shares of the 
Funds will comply with all other requirements applicable to index fund 
shares including, but not limited to, requirements relating to the 
dissemination of key information such as the value of the Indices and 
the Intraday Indicative Value, rules governing the trading of equity 
securities, trading hours, trading halts, surveillance, and the 
information circular, as set forth in Exchange rules applicable to 
index fund shares and the orders approving such rules.
---------------------------------------------------------------------------

    \27\ CFR 240.10A-3.
---------------------------------------------------------------------------

Correlation Among Municipal Bond Instruments With Common 
Characteristics
    With respect to the Funds, the Adviser represents that the nature 
of the municipal bond market and municipal bond instruments makes it 
feasible to categorize individual issues represented by CUSIPs (i.e., 
the specific identifying number for a security) into categories 
according to common characteristics, specifically, rating, geographical 
region, purpose, and maturity. Bonds that share similar characteristics 
tend to trade similarly to one another; therefore, within these 
categories, the issues may be considered fungible from a portfolio 
management perspective, allowing one CUSIP to be represented by another 
that shares similar characteristics for purposes of developing an 
investment strategy. Therefore, while 9.8% of the weight of the 6-8 
Year Index, 5.7% of the weight of the 8-12 Year Index, and 8.3% of the 
12-17 Year Index components have a minimum original principal amount 
outstanding of $100 million or more, the nature of the municipal bond 
market makes the issues relatively fungible for investment purposes 
when aggregated into categories such as ratings, geographical region, 
purpose and maturity. In addition, within a single municipal bond 
issuer, there are often multiple contemporaneous or sequential 
issuances that have the same rating, structure and maturity, but have 
different CUSIPs; these separate issues by the same issuer are also 
likely to trade similarly to one another.
    The Adviser represents that the Funds are managed utilizing the 
principle that municipal bond issues are generally fungible in nature 
when sharing common characteristics, and specifically make use of the 
four categories referred to above. In addition, this principle is used 
in, and consistent with, the portfolio construction process in order to 
facilitate the creation and redemption process, and to enhance 
liquidity (among other benefits, such as reducing transaction costs), 
while still allowing each Fund to closely track its reference index.
Net Asset Value
    According to the Registration Statement, the net asset value 
(``NAV'') of each Fund will be determined each business day as of the 
close of trading (ordinarily 4:00 p.m. Eastern time) on the Exchange. 
Any assets or liabilities denominated in currencies other than the U.S. 
dollar are converted into U.S. dollars at the current market rates on 
the date of valuation as quoted by one or more sources.
    The values of each Fund's portfolio securities are based on the 
securities' closing prices, when available. In the absence of a last 
reported sales price, or if no sales were reported, and for other 
assets for which market quotes are not readily available, values may be 
based on quotes obtained from a quotation reporting system, established 
market makers or by an outside independent pricing service. Fixed 
income securities are normally valued on the basis of quotes from 
brokers or dealers, established market makers or an outside independent 
pricing service using data reflecting the earlier closing of the 
principal markets for those securities. Prices obtained by an outside 
independent pricing service may use information provided by market 
makers or estimates of market values obtained from yield data related 
to investments or securities with similar characteristics and may use a 
computerized grid matrix of securities and its evaluations in 
determining what it believes is the fair value of the portfolio 
securities. Debt securities and money market instruments with 
maturities of more than 60 days will typically be priced based on 
valuations provided by independent, third-party pricing agents. Such 
values will generally reflect the last reported sales price if the 
security is actively traded. Short-term investments and money market 
instruments having a maturity of 60 days or less are valued at 
amortized cost. Repurchase agreements will generally be valued at bid 
prices received from independent pricing services as of the announced 
closing time for trading in such instruments. Futures contracts will be 
valued at the settlement price established each day by the board or 
exchange on which they are traded. Exchange-traded options will be 
valued at the closing price in the market where such contracts are 
principally traded. OTC options will generally be valued on a basis of 
quotes obtained from established market makers or by an outside 
independent pricing service. Swaps, structured notes, participation 
notes, convertible securities, and TBAs will be valued based on 
valuations provided by independent, third-party pricing agents. 
Securities of non-exchange-traded investment companies will be valued 
at NAV. Exchange-traded instruments, including investment companies and 
warrants, will be valued at the last reported sale price on the primary 
exchange or market on which they are traded.
    If a market quotation for a security is not readily available or 
the Adviser believes it does not otherwise accurately reflect the 
market value of the security at the time the Fund calculates its NAV, 
the security will be fair valued by the Adviser in accordance with the 
Trust's valuation policies and procedures approved by the Board of 
Trustees and in accordance with the 1940 Act. The Fund may also use 
fair value pricing in

[[Page 22687]]

a variety of circumstances, including but not limited to, situations 
when the value of a security in the Fund's portfolio has been 
materially affected by events occurring after the close of the market 
on which the security is principally traded (such as a corporate action 
or other news that may materially affect the price of a security) or 
trading in a security has been suspended or halted.
Creation and Redemption of Shares
    The NAV of the Funds will be determined each business day as of the 
close of trading, (normally 4:00 p.m. Eastern time) on the exchange. 
The Funds currently anticipate that a ``Creation Unit'' will consist of 
100,000 Shares, though this number may change from time to time, 
including prior to the listing of a Fund. The exact number of Shares 
that will comprise a Creation Unit will be disclosed in the 
Registration Statement of each Fund. The Trust will issue and sell 
Shares of the Funds only in Creation Units on a continuous basis 
through the Distributor, without an initial sales load (but subject to 
transaction fees), at their NAV per Share next determined after 
receipt, on any business day, of an order in proper form.
    The consideration for purchase of a Creation Unit of a Fund 
generally will consist of either (i) the in-kind deposit of a 
designated portfolio of fixed income securities (the ``Deposit 
Securities'') per each Creation Unit and the Cash Component (defined 
below), computed as described below, or (ii) as permitted or required 
by the Funds, of cash. The Cash Component together with the Deposit 
Securities, as applicable, are referred to as the ``Fund Deposit,'' 
which represents the minimum initial and subsequent investment amount 
for Shares. The Cash Component represents the difference between the 
NAV of a Creation Unit and the market value of Deposit Securities and 
may include a Dividend Equivalent Payment. The ``Dividend Equivalent 
Payment'' enables the Funds to make a complete distribution of 
dividends on the next dividend payment date, and is an amount equal, on 
a per Creation Unit basis, to the dividends on all the securities held 
by each of the Funds (``Fund Securities'') with ex-dividend dates 
within the accumulation period for such distribution (the 
``Accumulation Period''), net of expenses and liabilities for such 
period, as if all of the Fund Securities had been held by the Trust for 
the entire Accumulation Period. The Accumulation Period begins on the 
ex-dividend date for each Fund and ends on the next ex-dividend date.
    The Administrator, through the National Securities Clearing 
Corporation (``NSCC''), makes available on each business day, 
immediately prior to the opening of business on the Exchange (currently 
9:30 a.m. Eastern time), the list of the names and the required number 
of shares of each Deposit Security to be included in the current Fund 
Deposit (based on information at the end of the previous business day) 
as well as the Cash Component for each Fund. Such Fund Deposit is 
applicable, subject to any adjustments as described below, in order to 
effect creations of Creation Units of each Fund until such time as the 
next-announced Fund Deposit composition is made available.
    Shares may be redeemed only in Creation Units at their NAV next 
determined after receipt of a redemption request in proper form by the 
Distributor,\28\ only on a business day and only through a 
Participating Party or DTC Participant who has executed a Participation 
Agreement.
---------------------------------------------------------------------------

    \28\ To be eligible to place orders with the Distributor to 
create Creation Units of the Funds, an entity or person either must 
be: (1) A ``Participating Party,'' i.e., a broker-dealer or other 
participant in the Clearing Process through the Continuous Net 
Settlement System of the NSCC; or (2) a DTC Participant (as defined 
below); and, in either case, must have executed an agreement with 
the Distributor and the Transfer Agent (as it may be amended from 
time to time in accordance with its terms) (``Participant 
Agreement''). DTC Participants are participants of the Depository 
Trust Company (``DTC'') that acts as securities depositary for Index 
Fund Shares. A Participating Party and DTC Participant are 
collectively referred to as an ``Authorized Participant.''
---------------------------------------------------------------------------

    The Administrator, through NSCC, makes available immediately prior 
to the opening of business on the Exchange (currently 9:30 a.m. Eastern 
time) on each day that the Exchange is open for business, the Fund 
Securities that will be applicable (subject to possible amendment or 
correction) to redemption requests received in proper form (as defined 
below) on that day.
    Unless cash redemptions are permitted or required for the Fund, the 
redemption proceeds for a Creation Unit generally consist of Fund 
Securities as announced by the Administrator on the business day of the 
request for redemption, plus cash in an amount equal to the difference 
between the NAV of the Shares being redeemed, as next determined after 
a receipt of a request in proper form, and the value of the Fund 
Securities, less the redemption transaction fee and variable fees 
described below. Should the Fund Securities have a value greater than 
the NAV of the Shares being redeemed, a compensating cash payment to 
the Trust equal to the differential plus the applicable redemption 
transaction fee will be required to be arranged for by or on behalf of 
the redeeming shareholder. Each Fund reserves the right to honor a 
redemption request by delivering a basket of securities or cash that 
differs from the Fund Securities.\29\
---------------------------------------------------------------------------

    \29\ The Adviser represents that, to the extent that the Trust 
permits or requires a ``cash in lieu'' amount, such transactions 
will be effected in the same or equitable manner for all Authorized 
Participants.
---------------------------------------------------------------------------

    Orders to redeem Creation Units of the Funds must be delivered 
through a DTC Participant that has executed the Participant Agreement 
with the Distributor and with the Trust. A DTC Participant who wishes 
to place an order for redemption of Creation Units of a Fund to be 
effected need not be a Participating Party, but such orders must state 
that redemption of Creation Units of the Fund will instead be effected 
through transfer of Creation Units of the Fund directly through DTC. An 
order to redeem Creation Units of a Fund is deemed received by the 
Administrator on the transmittal date if (i) such order is received by 
the Administrator not later than 4:00 p.m. Eastern time on such 
transmittal date; (ii) such order is preceded or accompanied by the 
requisite number of Shares of Creation Units specified in such order, 
which delivery must be made through DTC to the Administrator no later 
than 11:00 a.m. Eastern time, on such transmittal date (the ``DTC Cut-
Off-Time''); and (iii) all other procedures set forth in the 
Participant Agreement are properly followed.
    After the Administrator has deemed an order for redemption 
received, the Administrator will initiate procedures to transfer the 
requisite Fund Securities (or contracts to purchase such Fund 
Securities) which are expected to be delivered within three business 
days and the cash redemption payment to the redeeming beneficial owner 
by the third business day following the transmittal date on which such 
redemption order is deemed received by the Administrator.
Availability of Information
    Each Fund's Web site, which will be publicly available prior to the 
public offering of Shares, will include a form of the prospectus for 
the Fund that may be downloaded. The Web site will include additional 
quantitative information updated on a daily basis, including, for the 
Fund: (1) The prior business day's reported NAV, mid-point of the bid/
ask spread at the time of calculation of such NAV (the ``Bid/Ask

[[Page 22688]]

Price''),\30\ daily trading volume, and a calculation of the premium 
and discount of the Bid/Ask Price against the NAV; and (2) data in 
chart format displaying the frequency distribution of discounts and 
premiums of the daily Bid/Ask Price against the NAV, within appropriate 
ranges, for each of the four previous calendar quarters. Daily trading 
volume information for the Funds will also be available in the 
financial section of newspapers, through subscription services such as 
Bloomberg, Thomson Reuters, and International Data Corporation, which 
can be accessed by authorized participants and other investors, as well 
as through other electronic services, including major public Web sites. 
On each business day, before commencement of trading in Shares during 
Regular Trading Hours \31\ on the Exchange, each Fund will disclose on 
its Web site the identities and quantities of the portfolio of 
securities and other assets in the daily disclosed portfolio held by 
the Funds that will form the basis for each Fund's calculation of NAV 
at the end of the business day.\32\ The daily disclosed portfolio will 
include, as applicable: The ticker symbol; CUSIP number or other 
identifier, if any; a description of the holding (including the type of 
holding, such as the type of swap); the identity of the security, 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 each Fund's portfolio. The Web site and information will be 
publicly available at no charge. The value, components, and percentage 
weightings of each of the Indices will be calculated and disseminated 
at least once daily and will be available from major market data 
vendors.
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    \30\ The Bid/Ask Price of a Fund will be determined using the 
midpoint of the highest bid and the lowest offer on the Exchange as 
of the time of calculation of the Fund's NAV. The records relating 
to Bid/Ask Prices will be retained by each Fund and its service 
providers.
    \31\ Regular Trading Hours are 9:30 a.m. to 4:00 p.m. Eastern 
Time.
    \32\ Under accounting procedures to be followed by each Fund, 
trades made on the prior business day (``T'') will be booked and 
reflected in NAV on the current business day (``T+1''). Accordingly, 
each Fund will be able to disclose at the beginning of the business 
day the portfolio that will form the basis for the NAV calculation 
at the end of the business day.
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    In addition, for each Fund, an estimated value, defined in BZX Rule 
14.11(c)(6)(A) as the ``Intraday Indicative Value,'' that reflects an 
estimated intraday value of each Fund's portfolio, will be 
disseminated. Moreover, the Intraday Indicative Value will be based 
upon the current value for the components of the daily disclosed 
portfolio 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.\33\ In addition, the quotations of 
certain of each Fund's holdings may not be updated during U.S. trading 
hours if updated prices cannot be ascertained.
---------------------------------------------------------------------------

    \33\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available 
Intraday Indicative Values published via the Consolidated Tape 
Association (``CTA'') or other data feeds.
---------------------------------------------------------------------------

    The dissemination of the Intraday Indicative Value, together with 
the daily disclosed portfolio, will allow investors to determine the 
value of the underlying portfolio of the Funds on a daily basis and 
provide a close estimate of that value throughout the trading day.
    Quotation and last sale information for the Shares of each Fund 
will be available via the Consolidated Tape Association (``CTA'') high 
speed line. Quotation information for investment company securities 
(excluding ETFs) may be obtained through nationally recognized pricing 
services through subscription agreements or from brokers and dealers 
who make markets in such securities. Price information regarding 
municipal bonds, convertible securities, and non-exchange traded 
assets, including investment companies, derivatives, money market 
instruments, repurchase agreements, structured notes, participation 
notes, and TBAs is available from third party pricing services and 
major market data vendors. For exchange-traded assets, including 
investment companies, futures, warrants, and options, such intraday 
information is available directly from the applicable listing exchange.
Initial and Continued Listing
    The Shares of each Fund will conform to the initial and continued 
listing criteria under BZX Rule 14.11(c)(4), except for those set forth 
in 14.11(c)(4)(B)(i)(b). The Exchange represents that, for initial and/
or continued listing, the Funds and the Trust must be in compliance 
with Rule 10A-3 under the Act.\34\ A minimum of 100,000 Shares of each 
Fund will be outstanding at the commencement of trading on the 
Exchange. The Exchange will obtain a representation from the issuer of 
the Shares that the NAV per Share for each Fund will be calculated 
daily and will be made available to all market participants at the same 
time.
---------------------------------------------------------------------------

    \34\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of the Funds. The Exchange will halt trading in 
the Shares under the conditions specified in BZX Rule 11.18. Trading 
may be halted because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the Shares inadvisable. These may 
include: (1) The extent to which trading is not occurring in the 
securities and/or the financial instruments composing the daily 
disclosed portfolio of the Funds; or (2) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present. Trading in the Shares also will be 
subject to Rule 14.11(c)(1)(B)(iv), which sets forth circumstances 
under which Shares of a Fund may be halted.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. The Exchange will 
allow trading in the Shares from 8:00 a.m. until 5:00 p.m. Eastern Time 
and has the appropriate rules to facilitate transactions in the Shares 
during all trading sessions. As provided in BZX Rule 11.11(a), the 
minimum price variation for quoting and entry of orders in securities 
traded on the Exchange is $0.01, with the exception of securities that 
are priced less than $1.00, for which the minimum price variation for 
order entry is $0.0001.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of the Shares on the Exchange during 
all trading sessions and to deter and detect violations of Exchange 
rules and the applicable federal securities laws. Trading of the Shares 
through the Exchange will be subject to the Exchange's surveillance 
procedures for derivative products, including Index Fund Shares. The 
Exchange may obtain information regarding trading in the Shares and the 
underlying shares in exchange traded equity securities via the ISG, 
from other exchanges that are members or affiliates of the ISG, or with 
which the Exchange has entered into a comprehensive surveillance 
sharing

[[Page 22689]]

agreement.\35\ 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 (``TRACE''). FINRA also 
can access data obtained from the Municipal Securities Rulemaking Board 
(``MSRB'') relating to municipal bond trading activity for surveillance 
purposes in connection with trading in the Shares. In addition, the 
Exchange may obtain information regarding trading in the Shares and the 
underlying shares in exchange-traded investment companies, futures, 
options, and warrants from markets or other entities that are members 
of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement. The Exchange prohibits the distribution 
of material non-public information by its employees.
---------------------------------------------------------------------------

    \35\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for the Fund may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

Information Circular
    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: (1) The procedures for purchases 
and redemptions of Shares in Creation Units (and that Shares are not 
individually redeemable); (2) BZX Rule 3.7, which imposes suitability 
obligations on Exchange members with respect to recommending 
transactions in the Shares to customers; (3) how information regarding 
the Intraday Indicative Value is disseminated; (4) the risks involved 
in trading the Shares during the Pre-Opening \36\ and After Hours 
Trading Sessions \37\ when an updated Intraday Indicative Value will 
not be calculated or publicly disseminated; (5) the requirement that 
members deliver a prospectus to investors purchasing newly issued 
Shares prior to or concurrently with the confirmation of a transaction; 
and (6) trading information.
---------------------------------------------------------------------------

    \36\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m. 
Eastern Time.
    \37\ The After Hours Trading Session is from 4:00 p.m. to 5:00 
p.m. Eastern Time.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Funds. Members purchasing Shares from the Funds for 
resale to investors will deliver a prospectus to such investors. The 
Information Circular will also discuss any exemptive, no-action, and 
interpretive relief granted by the Commission from any rules under the 
Act.
    In addition, the Information Circular will reference that each Fund 
is subject to various fees and expenses described in the Registration 
Statement. The Information Circular will also disclose the trading 
hours of the Shares of the Funds and the applicable NAV calculation 
time for the Shares. The Information Circular will disclose that 
information about the Shares of the Funds will be publicly available on 
the Funds' Web site. In addition, the Information Circular will 
reference that the Trust is subject to various fees and expenses 
described in each Fund's Registration Statement.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \38\ in general and Section 6(b)(5) of the Act \39\ in 
particular in that it is 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 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.
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    \38\ 15 U.S.C. 78f.
    \39\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
listing criteria in BZX Rule 14.11(c). The Exchange believes that its 
surveillances, which generally focus on detecting securities trading 
outside of their normal patterns which could be indicative of 
manipulative or other violative activity, and associated 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. The Exchange will communicate as needed regarding trading in the 
Shares with other markets or other entities that are members of the 
Intermarket Surveillance Group (``ISG''), and may obtain trading 
information regarding trading in the Shares from such markets or 
entities. The Exchange can also access data obtained from the Municipal 
Securities Rulemaking Board relating to municipal bond trading activity 
for surveillance purposes in connection with trading in the Shares. The 
Exchange is able to access, as needed, trade information for certain 
fixed income securities held by a Fund reported to FINRA's TRACE. FINRA 
also can access data obtained from the Municipal Securities Rulemaking 
Board (``MSRB'') relating to municipal bond trading activity for 
surveillance purposes in connection with trading in the Shares. In 
addition, the Exchange may obtain information regarding trading in the 
Shares and the underlying shares in exchange-traded investment 
companies, futures, options, and warrants from markets or other 
entities that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
    The Index Provider is not a broker-dealer, but is affiliated with a 
broker-dealer and has implemented a ``fire wall'' with respect to such 
broker-dealer regarding access to information concerning the 
composition and/or changes to the Indices. The Index Provider has also 
implemented procedures designed to prevent the use and dissemination of 
material, non-public information regarding the Indices.
    As of December 31, 2015, the 6-8 Year Index had the following 
characteristics: There were 2,894 issues; 9.8% of the weight of 
components had a minimum original principal amount outstanding of $100 
million or more; 95.1% of the weight of components was comprised of 
individual maturities that were part of an entire municipal bond 
offering with a minimum original principal amount outstanding of $100 
million or more for all maturities of the offering; the total dollar 
amount outstanding of all issues was approximately $57.4 billion and 
the average dollar amount outstanding per issue was approximately $19.8 
million; the most heavily weighted component represented 1.07% of the 
6-8 Year Index and the five most heavily weighted components 
represented 3.0% of the 6-8 Year Index. Therefore, the Exchange 
believes that, notwithstanding that the 6-8 Year Index does not satisfy 
the criterion in BZX Rule 14.11(c)(4)(B)(i), the 6-8 Year Index is 
sufficiently broad-based to deter potential manipulation in that a 
substantial portion (95.1%) of the 6-8 Year Index weight is comprised 
of maturities that are part of a minimum original principal amount 
outstanding of $100 million or more, and in view of the substantial 
total dollar amount

[[Page 22690]]

outstanding and the average dollar amount outstanding of index issues.
    As of December 31, 2015, the 8-12 Year Index had the following 
characteristics: There were 5,662 issues; 5.7% of the weight of 
components had a minimum original principal amount outstanding of $100 
million or more; 95.1% of the weight of components was comprised of 
individual maturities that were part of an entire municipal bond 
offering with a minimum original principal amount outstanding of $100 
million or more for all maturities of the offering; the total dollar 
amount outstanding of all issues was approximately $108.6 billion and 
the average dollar amount outstanding per issue was approximately $19.2 
million; the most heavily weighted component represented 0.26% of the 
8-12 Year Index and the five most heavily weighted components 
represented 1.04% of the 8-12 Year Index. Therefore, the Exchange 
believes that, notwithstanding that the 8-12 Year Index does not 
satisfy the criterion in BZX Rule 14.11(c)(4)(B)(i), the 8-12 Year 
Index is sufficiently broad-based to deter potential manipulation in 
that a substantial portion (95.1%) of the 8-12 Year Index weight is 
comprised of maturities that are part of a minimum original principal 
amount outstanding of $100 million or more, and in view of the 
substantial total dollar amount outstanding and the average dollar 
amount outstanding of index issues.
    As of December 31, 2015, the 12-17 Year Index had the following 
characteristics: There were 6,171 issues; 8.3% of the weight of 
components had a minimum original principal amount outstanding of $100 
million or more; 95.3% of the weight of components was comprised of 
individual maturities that were part of an entire municipal bond 
offering with a minimum original principal amount outstanding of $100 
million or more for all maturities of the offering; the total dollar 
amount outstanding of all issues was approximately $123.5 billion and 
the average dollar amount outstanding per issue was approximately $20 
million; the most heavily weighted component represented 0.29% of the 
12-17 Year Index and the five most heavily weighted components 
represented 1.11% of the 12-17 Year Index. Therefore, the Exchange 
believes that, notwithstanding that the 12-17 Year Index does not 
satisfy the criterion in BZX Rule 14.11(c)(4)(B)(i), the 12-17 Year 
Index is sufficiently broad-based to deter potential manipulation in 
that a substantial portion (95.3%) of the 12-17 Year Index weight is 
comprised of maturities that are part of a minimum original principal 
amount outstanding of $100 million or more, and in view of the 
substantial total dollar amount outstanding and the average dollar 
amount outstanding of index issues.
    The value, components, and percentage weightings of each of the 
Indices will be calculated and disseminated at least once daily and 
will be available from major market data vendors. In addition, the 
portfolio of securities held by the Funds will be disclosed on the 
Funds' Web site at www.vaneck.com/etfs. The intraday indicative value 
for Shares of the Funds will be disseminated by one or more major 
market data vendors, updated at least every 15 seconds during Regular 
Trading Hours. The Adviser represents that bonds that share similar 
characteristics, as described above, tend to trade similarly to one 
another; therefore, within these categories, the issues may be 
considered fungible from a portfolio management perspective. Within a 
single municipal bond issuer, Adviser represents that separate issues 
by the same issuer are also likely to trade similarly to one another.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that a large amount of information will be publicly available regarding 
the Funds and the Shares, thereby promoting market transparency. The 
Funds' portfolio holdings will be disclosed on the Funds' Web site 
daily after the close of trading on the Exchange and prior to the 
opening of trading on the Exchange the following day. Moreover, the IIV 
will be widely disseminated by one or more major market data vendors at 
least every 15 seconds during Regular Trading Hours. The current value 
of each of the Indices will be disseminated by one or more major market 
data vendors at least once per day. Information regarding market price 
and trading volume of the Shares will be continually available on a 
real-time basis throughout the day on brokers' computer screens and 
other electronic services, and quotation and last sale information will 
be available via the CTA high-speed line. The Web site for the Funds 
will include the prospectus for the Funds and additional data relating 
to NAV and other applicable quantitative information. Moreover, 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. If the Exchange becomes aware that 
the NAV is not being disseminated to all market participants at the 
same time, it will halt trading in the Shares until such time as the 
NAV is available to all market participants. With respect to trading 
halts, the Exchange may consider all relevant factors in exercising its 
discretion to halt or suspend trading in the Shares of the Funds. 
Trading also may be halted because of market conditions or for reasons 
that, in the view of the Exchange, make trading in the Shares 
inadvisable. These may include: (1) The extent to which trading is not 
occurring in the securities and/or the financial instruments composing 
the daily disclosed portfolio of each Fund; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present. Trading in the Shares also will be 
subject to Rule 14.11(c)(1)(B)(iv), which sets forth circumstances 
under which Shares of a Fund may be halted. If the IIV of any of the 
Funds or value of the Indices are not being disseminated as required, 
the Exchange may halt trading during the day in which the interruption 
to the dissemination of the IIV or index value occurs.
    The proposed rule change is designed to perfect the mechanism of a 
free and open market and, in general, to protect investors and the 
public interest in that it will facilitate the listing and trading of 
additional types of exchange-traded funds that holds municipal bonds 
and that will enhance competition among market participants, to the 
benefit of investors and the marketplace. As noted above, the Exchange 
has in place surveillance procedures relating to trading in the Shares 
and may obtain information in the Shares and the underlying shares in 
exchange-traded investment companies, futures, options, and warrants 
via ISG from other exchanges that are members of ISG or with which the 
Exchange has entered into a comprehensive surveillance sharing 
agreement. In addition, investors will have ready access to information 
regarding the IIV and quotation and last sale information for the 
Shares.
    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change will facilitate the listing and trading of 
additional exchange-traded products that will enhance competition among

[[Page 22691]]

market participants, to the benefit of investors and the marketplace.

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

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

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization 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 proposal 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-BatsBZX-2016-01 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-BatsBZX-2016-01. 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 will also 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-BatsBZX-2016-01 and should be 
submitted on or before May 9, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\40\
Robert W. Errett,
Deputy Secretary.
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    \40\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-08825 Filed 4-15-16; 8:45 am]
 BILLING CODE 8011-01-P