[Federal Register Volume 82, Number 241 (Monday, December 18, 2017)]
[Notices]
[Pages 60056-60070]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27143]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82295; File No. SR-NYSEArca-2017-56]


Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Amendment No. 3 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 3, To List and Trade 
Shares of Twelve Series of Investment Company Units Pursuant to NYSE 
Arca Rule 5.2-E(j)(3)

December 12, 2017.

I. Introduction

    On June 19, 2017, NYSE Arca, Inc. (``Exchange'' or ``NYSE Arca'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
list and trade, pursuant to NYSE Arca Rule 5.2-E(j)(3), shares of 12 
index-based funds (``Shares''). The proposed rule change was published 
for comment in the Federal Register on July 7, 2017.\3\ On August 7, 
2017, the Exchange filed Amendment No. 1 to the proposed rule change, 
which amended and superseded the proposed rule change as originally 
filed.\4\ On August 15, 2017, 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\ On October 2, 2017, the Commission instituted 
proceedings under Section 19(b)(2)(B) of the Act \7\ to determine 
whether to approve or disapprove the proposed rule change, as modified 
by Amendment No. 1.\8\ The Commission received seven comments letters 
on the proposed rule change, including one from the Exchange.\9\ On 
November 3,

[[Page 60057]]

2017, the Exchange filed Amendment No. 2 to the proposed rule change, 
which amended and superseded the proposed rule change, as modified by 
Amendment No. 1.\10\ On November 22, 2017, the Exchange filed Amendment 
No. 3 to the proposed rule change, which amended and superseded the 
proposed rule change, as modified by Amendment No. 2.\11\ The 
Commission is publishing this notice to solicit comment on Amendment 
No. 3 to the proposed rule change from interested persons and is 
approving the proposed rule change, as modified by Amendment No. 3, 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. 81062 (June 30, 
2017), 82 FR 31651.
    \4\ Amendment No. 1 to the proposed rule change is available at: 
https://www.sec.gov/comments/sr-nysearca-2017-56/nysearca201756-2199657-160352.pdf.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 81400, 82 FR 39643 
(August 21, 2017). The Commission designated October 5, 2017, as the 
date by which the Commission shall either approve, disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 81794, 82 FR 46870 
(October 6, 2017).
    \9\ See letters from: (1) Douglas M. Yones, Head of Exchange 
Traded Products, New York Stock Exchange, to Brent J. Fields, 
Secretary, Commission, dated October 6, 2017 (``Exchange Letter''); 
(2) Samara Cohen, Managing Director, U.S. Head of iShares Capital 
Markets, Joanne Medero, Managing Director, Government Relations & 
Public Policy, and Deepa Damre, Managing Director, Legal & 
Compliance, BlackRock, Inc., to Brent J. Fields, Secretary, 
Commission, dated October 18, 2017 (``BlackRock Letter''); (3) Anna 
Paglia, Head of Legal, Invesco PowerShares Capital Management LLC, 
to Brent J. Fields, Secretary, Commission, dated October 18, 2017 
(``Invesco Letter''); (4) Dorothy Donohue, Acting General Counsel, 
Investment Company Institute, to Brent J. Fields, Secretary, 
Commission, dated October 18, 2017 (``ICI Letter''); (5) Jonathan R. 
Simon, Senior Vice President and General Counsel, Van Eck Associates 
Corporation, to Brent J. Fields, Secretary, Commission, dated 
October 18, 2017 (``VanEck Letter''); (6) Noel Archard, Senior Vice 
President and Global SPDR Head of Product, State Street Global 
Advisors, to Brent J. Fields, Secretary, Commission, dated October 
18, 2017 (``State Street Letter''); and (7) Timothy W. Cameron, 
Head, and Lindsey W. Keljo, Managing Director and Associate General 
Counsel, Asset Management Group of the Securities Industry and 
Financial Markets Association, to Brent J. Fields, Secretary, 
Commission, dated October 20, 2017 (``SIFMA Letter''). All of the 
comment letters are available at: https://www.sec.gov/comments/sr-nysearca-2017-56/nysearca201756.htm.
    \10\ Amendment No. 2 to the proposed rule change is available 
at: https://www.sec.gov/comments/sr-nysearca-2017-56/nysearca201756-2669251-161439.pdf.
    \11\ In Amendment No. 3, the Exchange: (1) Described the 
investment objective of each fund; (2) modified and supplemented its 
descriptions of the indexes underlying each fund; (3) identified the 
permitted investments of each fund; (3) represented that all futures 
contracts and exchange-traded options held by the funds would be 
listed on an exchange that is a member of the Intermarket 
Surveillance Group or with which the Exchange has in place a 
comprehensive surveillance sharing agreement; (4) added continued 
listing requirements for the Shares applicable to the underlying 
indexes; (5) disclosed information regarding the Shares that will be 
published on the websites of the funds; (6) discussed the 
availability of price information for all permitted investments of 
the funds; (7) added representations regarding the Exchange's 
surveillance of trading in the Shares and its ability to obtain 
trading information regarding certain permitted investments of the 
funds; and (8) made technical changes. Amendment No. 3 is as 
provided below and is also available at: https://www.sec.gov/comments/sr-nysearca-2017-56/nysearca201756-2714674-161523.pdf.
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II. Description of the Proposed Rule Change, as Modified by Amendment 
No. 3

    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 those statements may be examined at the places specified in 
Item V 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
    Pursuant to NYSE Arca Rule 5.2-E(j)(3), the Exchange proposes to 
facilitate the listing and trading of certain series of Investment 
Company Units that do not otherwise meet the standards set forth in 
Commentary .02 to Rule 5.2-E(j)(3). Specifically, the Exchange proposes 
to facilitate the listing and trading of the following series of 
Investment Company Units based on a multistate index of fixed income 
municipal bond securities: iShares National Muni Bond ETF, iShares 
Short-Term National Muni Bond ETF, VanEck Vectors AMT-Free Intermediate 
Municipal Index ETF, VanEck Vectors AMT-Free Long Municipal Index ETF, 
VanEck Vectors AMT-Free Short Municipal Index ETF, VanEck Vectors High-
Yield Municipal Index ETF, VanEck Vectors Pre-Refunded Municipal Index 
ETF, PowerShares VRDO Tax-Free Weekly Portfolio, SPDR Nuveen Bloomberg 
Barclays Short Term Municipal Bond ETF and SPDR Nuveen Bloomberg 
Barclays Municipal Bond ETF (collectively, the ``Multistate Municipal 
Bond Funds'').
    In addition, the Exchange proposes to facilitate the listing and 
trading of the following series of Investment Company Units based on a 
single-state index of fixed income municipal bond securities: iShares 
California Muni Bond ETF and the iShares New York Muni Bond ETF 
(collectively, the ``Single-state Municipal Bond Funds'' and, together 
with the Multistate Municipal Bond Funds, the ``Municipal Bond 
Funds'').\12\
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    \12\ The Exchange has previously filed a proposed rule change to 
facilitate the listing and trading of the Municipal Bond Funds. See 
Securities Exchange Act Release No. 81062 (June 30, 2017), 82 FR 
31651 (July 7, 2017) (SR-NYSEArca-2017-56). On August 7, 2017, the 
Exchange filed Amendment No. 1 to SR-NYSEArca-2017-56 which replaced 
and superseded such filing in its entirety. On November 3, 2017, the 
Exchange filed Amendment No. 2 to SR-NYSEArca-2017-56 which replaced 
and superseded such filing as amended by Amendment No. 1 thereto. 
This Amendment No. 3 to SR-NYSE Arca-2017-56 replaces SR-NYSE Arca-
2017-56 as amended by Amendments No. 1 and No. 2 thereto, and 
supersedes such filing in its entirety.
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    Each of the Municipal Bond Funds listed on the Exchange prior to 
2010 and is based on an index of fixed-income municipal bond 
securities. Commentary .02 to Rule 5.2-E(j)(3) sets forth the generic 
listing requirements for an index of fixed income securities underlying 
a series of Investment Company Units. One of the enumerated listing 
requirements is that component fixed income securities that, in the 
aggregate, account for at least 75% of the weight of the index each 
shall have a minimum principal amount outstanding of $100 million or 
more.\13\ The Exchange proposes to facilitate the listing and trading 
of the Municipal Bond Funds notwithstanding the fact that the indices 
on which they are based do not meet the requirements of Commentary 
.02(a)(2) to Rule 5.2-E(j)(3). Each of the indices on which the 
Municipal Bond Funds are based meet all of the other requirements of 
such rule.\14\
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    \13\ See Commentary .02(a)(2) to NYSE Arca Rule 5.2-E(j)(3).
    \14\ The Commission previously has approved proposed rule 
changes relating to listing and trading on the Exchange of Units 
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 Rule 5.2-E(j)(3), Commentary .02); 67729 (August 24, 2012), 77 
FR 52776 (August 30, 2012) (SR-NYSEArca-2012-92) (notice of 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 Rule 5.2-E(j)(3), Commentary .02) (``iShares 
2018 Notice''); 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-E(j)(3), Commentary .02); 72172 (May 
15, 2014), 79 FR 29241 (May 21, 2014) (SR-NYSEArca-2014-37) (notice 
of proposed rule change relating to the listing and trading of 
iShares 2020 S&P AMT-Free Municipal Series under NYSE Arca Rule 5.2-
E(j)(3), Commentary .02) (``iShares 2020 Notice''); 72464 (June 25, 
2014), 79 FR 37373 (July 1, 2014) (File No. SR-NYSEArca-2014-45) 
(order approving proposed rule change governing the continued 
listing and trading of shares of the PowerShares Insured California 
Municipal Bond Portfolio, PowerShares Insured National Municipal 
Bond Portfolio, and PowerShares Insured New York Municipal Bond 
Portfolio) (``PowerShares Order''); 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 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-E(j)(3)) (``iShares 
2021/2022 Order''); 74730 (April 15, 2015), 76 FR 22234 (April 21, 
2015) (notice of proposed rule change relating to the listing and 
trading of 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-E(j)(3), Commentary .02) (``iShares 2021/2022 Notice''); 74730 
75376 (July 7, 2015), 80 FR 40113 (July 13, 2015) (SR-NYSEArca-2015-
18) (order approving proposed rule change relating to the listing 
and trading of Vanguard Tax-Exempt Bond Index Fund under NYSE Arca 
Rule 5.2-E(j)(3)). 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 shares 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 for Exchange listing and 
trading of shares of actively managed funds of that principally hold 
municipal bonds. See, e.g., Securities Exchange Act Release Nos. 
60981 (November 10, 2009), 74 FR 59594 (November 18, 2009) (SR-
NYSEArca-2009-79) (order approving listing and trading of shares of 
the PIMCO Short-Term Municipal Bond Strategy Fund and PIMCO 
Intermediate Municipal Bond Strategy Fund); 79293 (November 10, 
2016), 81 FR 81189 (November 17, 2016) (SR-NYSEArca-2016-107) (order 
approving listing and trading of shares of Cumberland Municipal Bond 
ETF). The Commission also has approved listing and trading on the 
Exchange of shares of the SPDR Nuveen S&P High Yield Municipal Bond 
Fund under Commentary .02 of NYSE Arca Rule 5.2-E(j)(3). See 
Securities Exchange Act Release No. 63881 (February 9, 2011), 76 FR 
9065 (February 16, 2011) (SR-NYSEArca-2010-120).

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[[Page 60058]]

    The Exchange believes it is appropriate to facilitate the listing 
and trading of the Municipal Bond Funds because, as described below, 
each such fund is based on a broad-based index of fixed income 
municipal bond securities that is not readily susceptible to 
manipulation:
    1. According to its prospectus, the iShares National Muni Bond ETF 
seeks to track the investment results of the S&P National AMT-Free 
Municipal Bond Index, which measures the performance of the investment 
grade segment of the U.S. municipal bond market. The S&P National AMT-
Free Municipal Bond Index primarily includes municipal bonds from 
issuers that are state or local governments or agencies such that the 
interest on each such bond is exempt from U.S. federal income taxes and 
the federal alternative minimum tax.
    As of April 1, 2017, the S&P National AMT-Free Municipal Bond Index 
included 11,333 component fixed income municipal bond securities from 
issuers in 47 different states or U.S. territories. The most heavily 
weighted security in the index represented approximately 0.25% of the 
total weight of the index and the aggregate weight of the top five most 
heavily weighted securities in the index represented less than 1% of 
the total weight of the index. Approximately 31.79% of the weight of 
the components in the index had a minimum original principal amount 
outstanding of $100 million or more. In addition, the total dollar 
amount outstanding of issues in the index was approximately 
$628,460,731,594 and the average dollar amount outstanding of issues in 
the index was approximately $55,454,048.
    Under normal market conditions,\15\ the iShares National Muni Bond 
ETF will invest at least 90% of its assets in the component securities 
of the S&P National AMT-Free Municipal Bond Index. With respect to the 
remaining 10% of its assets, the iShares National Muni Bond ETF may 
invest in short-term debt instruments issued by state governments, 
municipalities or local authorities, cash, exchange-traded U.S. 
Treasury futures and municipal money market funds, as well as in 
municipal bond securities not included in the S&P National AMT-Free 
Municipal Bond Index, but which the fund's investment advisor believes 
will help the fund track the S&P National AMT-Free Municipal Bond 
Index.
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    \15\ The term ``normal market conditions'' includes, but is not 
limited to, the absence of trading halts in the applicable financial 
markets generally; operational issues (e.g., systems failure) 
causing dissemination of inaccurate market information; or force 
majeure type events such as natural or manmade disaster, act of God, 
armed conflict, act of terrorism, riot or labor disruption or any 
similar intervening circumstance.
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Requirement for Index Constituents
    At least 90% of the weight of the S&P National AMT-Free Municipal 
Bond Index will be comprised of securities that have a minimum par 
amount of $25 million and were a constituent of an offering where the 
original offering amount was at least $100 million.
    2. According to its prospectus, the iShares Short Term National 
Muni Bond ETF seeks to track the investment results of the S&P Short 
Term National AMT-Free Municipal Bond Index, which measures the 
performance of the short-term investment grade segment of the U.S. 
municipal bond market. The S&P Short Term National AMT-Free Municipal 
Bond Index primarily includes municipal bonds from issuers that are 
state or local governments or agencies such that the interest on each 
such bond is exempt from U.S. federal income taxes and the federal 
alternative minimum tax (``AMT'').
    As of April 1, 2017, the S&P Short Term National AMT-Free Municipal 
Bond Index included 3,309 component fixed income municipal bond 
securities from issuers in 44 different states or U.S. territories. The 
most heavily weighted security in the index represented approximately 
1% of the total weight of the index and the aggregate weight of the top 
five most heavily weighted securities in the index represented 
approximately 2% of the total weight of the index. Approximately 27.63% 
of the weight of the components in the index had a minimum original 
principal amount outstanding of $100 million or more. In addition, the 
total dollar amount outstanding of issues in the index was 
approximately $166,147,941,156 and the average dollar amount 
outstanding of issues in the index was approximately $50,210,922.
    Under normal market conditions, the iShares National Muni Bond ETF 
will invest at least 90% of its assets in the component securities of 
the S&P Short Term National AMT-Free Municipal Bond Index. With respect 
to the remaining 10% of its assets, the iShares National Muni Bond ETF 
may invest in short-term debt instruments issued by state governments, 
municipalities or local authorities, cash, exchange-traded U.S. 
Treasury futures and municipal money market funds, as well as in 
municipal bond securities not included in the S&P Short Term National 
AMT-Free Municipal Bond Index, but which the fund's investment advisor 
believes will help the fund track the S&P Short Term National AMT-Free 
Municipal Bond Index.
Requirement for Index Constituents
    At least 90% of the weight of the S&P Short Term National AMT-Free 
Municipal Bond Index will be comprised of securities that have a 
minimum par amount of $25 million and were a constituent of an offering 
where the original offering amount was at least $100 million.
    3. According to its prospectus, the VanEck Vectors AMT-Free 
Intermediate Municipal Index ETF seeks to replicate as closely as 
possible, before fees and expenses, the price and yield performance of 
the Bloomberg Barclays AMT-Free Intermediate Continuous Municipal 
Index. The Bloomberg Barclays AMT-Free Intermediate Continuous 
Municipal Index is a market size weighted index comprised of publicly 
traded municipal bonds that cover the U.S. dollar denominated 
intermediate term tax-exempt bond market.
    As of April 1, 2017, the Bloomberg Barclays AMT-Free Intermediate 
Continuous Municipal Index included 17,272 component fixed income 
municipal bond securities from issuers in 50 different states or U.S. 
territories. The most heavily weighted security in the index 
represented less than 0.25% of the total weight of the index and the 
aggregate weight of the top five most heavily weighted securities in 
the index represented approximately 0.50% of the total weight of the 
index. Approximately 7.75% of the weight of the components in the index 
had a minimum original principal amount outstanding of $100 million or 
more. In addition, the total dollar amount outstanding of issues in the 
index was approximately $340,102,539,050 and the average dollar amount 
outstanding of issues in the index was approximately $19,690,976.
    Under normal market conditions, the VanEck Vectors AMT-Free 
Intermediate Municipal Index ETF will invest at least 80% of its total 
assets in fixed income securities that comprise the Bloomberg Barclays 
AMT-Free Intermediate Continuous Municipal Index. With respect to the 
remaining 20% of its assets, the VanEck Vectors AMT-Free Intermediate 
Municipal Index ETF may invest in municipal bonds not included in the 
Bloomberg Barclays AMT-Free Intermediate Continuous Municipal

[[Page 60059]]

Index, money market instruments (including repurchase agreements or 
other funds which invest exclusively in money market instruments), 
convertible securities, exchange-traded warrants, participation notes, 
structured notes, cleared or non-cleared index, interest rate or credit 
default swap agreements, 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. 
In addition, the VanEck Vectors AMT-Free Intermediate Municipal Index 
ETF may invest up to 20% of its assets in when-issued securities in 
order to manage cash flows as well as exchange-traded futures contracts 
and exchange-traded options thereon (all such exchange-traded futures 
contracts and exchange-traded options thereon will be traded on an 
exchange that is a member of the Intermarket Surveillance Group 
(``ISG'') or with which the Exchange has in place a comprehensive 
surveillance sharing agreement), together with positions in cash and 
money market instruments, to simulate full investment in the Bloomberg 
Barclays AMT-Free Intermediate Continuous Municipal Index.
Requirement for Index Constituents
    At least 90% of the weight of the Bloomberg Barclays AMT-Free 
Intermediate Continuous Municipal Index will be comprised of securities 
that that have an outstanding par value of at least $7 million and were 
issued as part of a transaction of at least $75 million.
    4. According to its prospectus, the VanEck Vectors AMT-Free Long 
Municipal Index ETF seeks to replicate as closely as possible, before 
fees and expenses, the price and yield performance of the Bloomberg 
Barclays AMT-Free Long Continuous Municipal Index. The Bloomberg 
Barclays AMT-Free Long Continuous Municipal Index is a market size 
weighted index comprised of publicly traded municipal bonds that cover 
the U.S. dollar denominated long-term tax-exempt bond market.
    As of April 1, 2017, the Bloomberg Barclays AMT-Free Long 
Continuous Municipal Index included 7,657 component fixed income 
municipal bond securities from issuers in 50 different states or U.S. 
territories. The most heavily weighted security in the index 
represented less than 0.50% of the total weight of the index and the 
aggregate weight of the top five most heavily weighted securities in 
the index represented approximately 1.25% of the total weight of the 
index. Approximately 32.34% of the weight of the components in the 
index had a minimum original principal amount outstanding of $100 
million or more. In addition, the total dollar amount outstanding of 
issues in the index was approximately $279,575,285,082 and the average 
dollar amount outstanding of issues in the index was approximately 
$36,512,379.
    Under normal market conditions, the VanEck Vectors AMT-Free Long 
Municipal Index ETF will invest at least 80% of its total assets in 
fixed income securities that comprise the Bloomberg Barclays AMT-Free 
Long Continuous Municipal Index. With respect to the remaining 20% of 
its assets, the VanEck Vectors AMT-Free Long Municipal Index ETF may 
invest in municipal bonds not included in the Bloomberg Barclays AMT-
Free Long Continuous Municipal Index, money market instruments 
(including repurchase agreements or other funds which invest 
exclusively in money market instruments), convertible securities, 
exchange-traded warrants, participation notes, structured notes, 
cleared or non-cleared index, interest rate or credit default swap 
agreements, 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. In 
addition, the VanEck Vectors AMT-Free Long Municipal Index ETF may 
invest up to 20% of its assets in when-issued securities in order to 
manage cash flows as well as exchange-traded futures contracts and 
exchange-traded options thereon (all such exchange-traded futures 
contracts and exchange-traded options thereon will be traded on an 
exchange that is a member of the ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement), together with 
positions in cash and money market instruments, to simulate full 
investment in the Bloomberg Barclays AMT-Free Long Continuous Municipal 
Index.
Requirement for Index Constituents
    At least 90% of the weight of the Bloomberg Barclays AMT-Free Long 
Continuous Municipal Index will be comprised of securities that have an 
outstanding par value of at least $7 million and were issued as part of 
a transaction of at least $75 million.
    5. According to its prospectus, the VanEck Vectors AMT-Free Short 
Municipal Index ETF seeks to replicate as closely as possible, before 
fees and expenses, the price and yield performance of the Bloomberg 
Barclays AMT-Free Short Continuous Municipal Index. The Bloomberg 
Barclays AMT-Free Short Continuous Municipal Index is a market size 
weighted index comprised of publicly traded municipal bonds that cover 
the U.S. dollar denominated short-term tax-exempt bond market.
    As of April 1, 2017, the Bloomberg Barclays AMT-Free Short 
Continuous Municipal Index included 7,229 component fixed income 
municipal bond securities from issuers in 48 different states or U.S. 
territories. The most heavily weighted security in the index 
represented approximately 1% of the total weight of the index and the 
aggregate weight of the top five most heavily weighted securities in 
the index represented approximately 2.25% of the total weight of the 
index. Approximately 13.60% of the weight of the components in the 
index had a minimum original principal amount outstanding of $100 
million or more. In addition, the total dollar amount outstanding of 
issues in the index was approximately $152,020,140,995 and the average 
dollar amount outstanding of issues in the index was approximately 
$21,026,299.
    Under normal market conditions, the VanEck Vectors AMT-Free Short 
Municipal Index ETF will invest at least 80% of its total assets in 
fixed income securities that comprise the Bloomberg Barclays AMT-Free 
Short Continuous Municipal Index. With respect to the remaining 20% of 
its assets, the VanEck Vectors AMT-Free Short Municipal Index ETF may 
invest in municipal bonds not included in the Bloomberg Barclays AMT-
Free Short Continuous Municipal Index, money market instruments 
(including repurchase agreements or other funds which invest 
exclusively in money market instruments), convertible securities, 
exchange-traded warrants, participation notes, structured notes, 
cleared or non-cleared index, interest rate or credit default swap 
agreements, 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. In 
addition, the VanEck Vectors AMT-Free Short Municipal Index ETF may 
invest up to 20% of its assets in when-issued securities in order to 
manage cash flows as well as exchange-traded futures contracts and 
exchange-traded options thereon (all such exchange-traded futures 
contracts and exchange-traded options thereon will be traded on an 
exchange that is a member of the ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement), together with 
positions in

[[Page 60060]]

cash and money market instruments, to simulate full investment in the 
Bloomberg Barclays AMT-Free Short Continuous Municipal Index.
Requirement for Index Constituents
    At least 90% of the weight of the Bloomberg Barclays AMT-Free Short 
Continuous Municipal Index will be comprised of securities that have an 
outstanding par value of at least $7 million and were issued as part of 
a transaction of at least $75 million.
    6. According to its prospectus, the VanEck Vectors High-Yield 
Municipal Index ETF seeks to replicate as closely as possible, before 
fees and expenses, the price and yield performance of the Bloomberg 
Barclays Municipal Custom High Yield Composite Index. The Bloomberg 
Barclays Municipal Custom High Yield Composite Index is a market size 
weighted index composed of publicly traded municipal bonds that cover 
the U.S. dollar denominated high yield long-term tax-exempt bond 
market. The Bloomberg Barclays Municipal Custom High Yield Composite 
Index is calculated using a market value weighting methodology, 
provided that the total allocation to issuers from each individual 
territory of the United States (including Puerto Rico, Guam, the U.S. 
Virgin Islands, American Samoa and the Northern Mariana Islands) does 
not exceed 4%. The Bloomberg Barclays Municipal Custom High Yield 
Composite Index tracks the high yield municipal bond market with a 75% 
weight in non-investment grade municipal bonds and a targeted 25% 
weight in Baa/BBB rated investment grade municipal bonds.
    As of April 1, 2017, the Bloomberg Barclays Municipal Custom High 
Yield Composite Index included 4,702 component fixed income municipal 
bond securities from issuers in 50 different states or U.S. 
territories. The most heavily weighted security in the index 
represented approximately 1.25% of the total weight of the index and 
the aggregate weight of the top five most heavily weighted securities 
in the index represented approximately 6% of the total weight of the 
index. Approximately 43.26% of the weight of the components in the 
index had a minimum original principal amount outstanding of $100 
million or more. In addition, the total dollar amount outstanding of 
issues in the index was approximately $224,318,153,150 and the average 
dollar amount outstanding of issues in the index was approximately 
$47,706,966.
    Under normal market conditions, the VanEck Vectors High-Yield 
Municipal Index ETF will invest at least 80% of its total assets in 
securities that comprise the Bloomberg Barclays Municipal Custom High 
Yield Composite Index. With respect to the remaining 20% of its assets, 
the VanEck Vectors High-Yield Municipal Index ETF may invest in 
municipal bonds not included in the Bloomberg Barclays Municipal Custom 
High Yield Composite Index, money market instruments (including 
repurchase agreements or other funds which invest exclusively in money 
market instruments), convertible securities, exchange-traded warrants, 
participation notes, structured notes, cleared or non-cleared index, 
interest rate or credit default swap agreements, 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. In addition, the VanEck Vectors High-Yield 
Municipal Index ETF may invest up to 20% of its assets in when-issued 
securities in order to manage cash flows as well as exchange-traded 
futures contracts and exchange-traded options thereon (all such 
exchange-traded futures contracts and exchange-traded options thereon 
will be traded on an exchange that is a member of the ISG or with which 
the Exchange has in place a comprehensive surveillance sharing 
agreement), together with positions in cash and money market 
instruments, to simulate full investment in the Bloomberg Barclays 
Municipal Custom High Yield Composite Index.
Requirement for Index Constituents
    The Bloomberg Barclays Municipal Custom High Yield Composite Index 
is comprised of three total return, market size weighted benchmark 
indices with weights as follows: (i) 50% Weight in Muni High Yield/$100 
Million Deal Size Index, (ii) 25% weight in Muni High Yield/Under $100 
Million Deal Size Index, and (iii) 25% weight in Muni Baa Rated/$100 
Million Deal Size Index. At least 90% of the weight of the Muni High 
Yield/$100 Million Deal Size Index will be comprised of securities that 
have an outstanding par value of at least $3 million and were issued as 
part of a transaction of at least $100 million. At least 90% of the 
weight of the Muni High Yield/Under $100 Million Deal Size Index will 
be comprised of securities that have an outstanding par value of at 
least $3 million and were issued as part of a transaction of under $100 
million but over $20 million. At least 90% of the weight of the Muni 
Baa Rated/$100 Million Deal Size Index will be comprised of securities 
that have an outstanding par value of at least $7 million and were 
issued as part of a transaction of at least $100 million.
    7. According to its prospectus, the VanEck Vectors Pre-Refunded 
Municipal Index ETF seeks to replicate as closely as possible, before 
fees and expenses, the price and yield performance of the Bloomberg 
Barclays Municipal Pre-Refunded--Treasury-Escrowed Index. The Bloomberg 
Barclays Municipal Pre-Refunded--Treasury-Escrowed Index is a market 
size weighted index comprised of publicly traded municipal bonds that 
cover the U.S. dollar denominated tax-exempt bond market. The Bloomberg 
Barclays Municipal Pre-Refunded--Treasury-Escrowed Index is comprised 
of pre-refunded and/or escrowed-to-maturity municipal bonds. As of 
April 1, 2017, the Bloomberg Barclays Municipal Pre-Refunded-Treasury-
Escrowed Index included 3,691 component fixed income municipal bond 
securities from issuers in 50 different states or U.S. territories. The 
most heavily weighted security in the index represented approximately 
0.50% of the total weight of the index and the aggregate weight of the 
top five most heavily weighted securities in the index represented 
approximately 2.25% of the total weight of the index. Approximately 
19.23% of the weight of the components in the index had a minimum 
original principal amount outstanding of $100 million or more. In 
addition, the total dollar amount outstanding of issues in the index 
was approximately $94,289,476,486 and the average dollar amount 
outstanding of issues in the index was approximately $25,545,780.
    Under normal market conditions, the VanEck Vectors Pre-Refunded 
Municipal Index ETF will invest at least 80% of its total assets in 
securities that comprise the Bloomberg Barclays Municipal Pre-
Refunded--Treasury-Escrowed Index. With respect to the remaining 20% of 
its assets, the VanEck Vectors Pre-Refunded Municipal Index ETF may 
invest in municipal bonds not included in the Bloomberg Barclays 
Municipal Pre-Refunded--Treasury-Escrowed Index, money market 
instruments (including repurchase agreements or other funds which 
invest exclusively in money market instruments), convertible 
securities, exchange-traded warrants, participation notes, structured 
notes, cleared or non-cleared index, interest rate or credit default 
swap agreements, 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. 
In addition, the

[[Page 60061]]

VanEck Vectors Pre-Refunded Municipal Index ETF may invest up to 20% of 
its assets in when-issued securities in order to manage cash flows as 
well as exchange-traded futures contracts and exchange-traded options 
thereon (all such exchange-traded futures contracts and exchange-traded 
options thereon will be traded on an exchange that is a member of the 
ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement), together with positions in cash and 
money market instruments, to simulate full investment in the Bloomberg 
Barclays Municipal Pre-Refunded--Treasury-Escrowed Index.
Requirement for Index Constituents
    At least 90% of the weight of the Bloomberg Barclays Municipal Pre-
Refunded--Treasury-Escrowed Index will be comprised of securities that 
have an outstanding par value of at least $7 million and were issued as 
part of a transaction of at least $75 million.
    8. According to its prospectus, the PowerShares VRDO Tax-Free 
Weekly Portfolio seeks investment results that generally correspond 
(before fees and expenses) to the price and yield of the Bloomberg U.S. 
Municipal AMT-Free Weekly VRDO Index. The Bloomberg U.S. Municipal AMT-
Free Weekly VRDO Index is comprised of municipal securities issued in 
the primary market as variable rate demand obligation (``VRDO'') bonds.
    As of April 1, 2017, the Bloomberg US Municipal AMT-Free Weekly 
VRDO Index included 1,494 component fixed income municipal bond 
securities from issuers in 49 different states or U.S. territories. The 
most heavily weighted security in the index represented approximately 
0.75% of the total weight of the index and the aggregate weight of the 
top five most heavily weighted securities in the index represented 
approximately 2.75% of the total weight of the index. Approximately 
34.88% of the weight of the components in the index had a minimum 
original principal amount outstanding of $100 million or more. In 
addition, the total dollar amount outstanding of issues in the index 
was approximately $68,489,564,000 and the average dollar amount 
outstanding of issues in the index was approximately $45,843,082.
    Under normal market conditions, the PowerShares VRDO Tax-Free 
Weekly Portfolio will invest at least 80% of its total assets in VRDO 
bonds that are exempt from federal income tax with interest rates that 
reset weekly that comprise the Bloomberg U.S. Municipal AMT-Free Weekly 
VRDO Index. With respect to the remaining 20% of its assets, the 
PowerShares VRDO Tax-Free Weekly Portfolio may invest in money market 
instruments (including repurchase agreements or other funds that invest 
exclusively in money market instruments), U.S. treasury securities, 
convertible securities, exchange-traded funds and structured notes as 
well as well as in VRDO and municipal bond securities not included in 
the Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index, but which the 
fund's investment advisor believes will help the fund track the 
Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index.
Requirement for Index Constituents
    At least 90% of the weight of the Bloomberg U.S. Municipal AMT-Free 
Weekly VRDO Index will be comprised of securities that have a minimum 
amount outstanding of $10 million.
    9. According to its prospectus, the SPDR Nuveen Bloomberg Barclays 
Short Term Municipal Bond ETF seeks to provide investment results that, 
before fees and expenses, correspond generally to the price and yield 
performance of the Bloomberg Barclays Managed Money Municipal Short 
Term Index which tracks the short term tax exempt municipal bond 
market. The Bloomberg Barclays Managed Money Municipal Short Term Index 
is designed to track the publicly traded municipal bonds that cover the 
U.S. dollar denominated short term tax exempt bond market, including 
state and local general obligation bonds, revenue bonds, pre-refunded 
bonds, and insured bonds.
    As of April 1, 2017, the Bloomberg Barclays Managed Money Municipal 
Short Term Index included 4,263 component fixed income municipal bond 
securities from issuers in 44 different states or U.S. territories. The 
most heavily weighted security in the index represented approximately 
0.75% of the total weight of the index and the aggregate weight of the 
top five most heavily weighted securities in the index represented 
approximately 2% of the total weight of the index. Approximately 10.82% 
of the weight of the components in the index had a minimum original 
principal amount outstanding of $100 million or more. In addition, the 
total dollar amount outstanding of issues in the index was 
approximately $85,187,709,681 and the average dollar amount outstanding 
of issues in the index was approximately $19,983,042.
    Under normal market conditions, the SPDR Nuveen Bloomberg Barclays 
Short Term Municipal Bond ETF will invest substantially all, but at 
least 80%, of its total assets in the securities comprising the 
Bloomberg Barclays Managed Money Municipal Short Term Index or in 
securities that the fund's sub-adviser determines have economic 
characteristics that are substantially identical to the economic 
characteristics of the securities that comprise the Bloomberg Barclays 
Managed Money Municipal Short Term Index. With respect to the remaining 
20% of its assets, the SPDR Nuveen Bloomberg Barclays Short Term 
Municipal Bond ETF may invest in debt securities that are not included 
in the Bloomberg Barclays Managed Money Municipal Short Term Index, 
cash and cash equivalents or money market instruments, such as 
repurchase agreements and money market funds, commercial paper, foreign 
currency transactions, reverse repurchase agreements, securities of 
other investment companies, exchange-traded futures on Treasuries or 
Eurodollars (all such exchange-traded futures contracts will be traded 
on an exchange that is a member of the ISG or with which the Exchange 
has in place a comprehensive surveillance sharing agreement), U.S 
exchange-traded or OTC put and call options contracts and exchange-
traded or OTC swap agreements (including interest rate swaps, total 
return swaps, excess return swaps and credit default swaps) and 
treasury-inflation protected securities of the U.S. Treasury as well as 
major governments and emerging market countries.
Requirement for Index Constituents
    At least 90% of the weight of the Bloomberg Barclays Managed Money 
Municipal Short Term Index will be comprised of securities that have an 
outstanding par value of at least $7 million and were issued as part of 
a transaction of at least $75 million.
    10. According to its prospectus, the SPDR Nuveen Bloomberg Barclays 
Municipal Bond ETF seeks to provide investment results that, before 
fees and expenses, correspond generally to the price and yield 
performance of the Bloomberg Barclays Municipal Managed Money Index 
which tracks the U.S. municipal bond market. The Bloomberg Barclays 
Municipal Managed Money Index is designed to track the U.S. long term 
tax-exempt bond market, including state and local general obligation 
bonds, revenue bonds, pre-refunded bonds, and insured bonds. The 
Bloomberg Barclays Municipal Managed Money Index is comprised of tax-
exempt municipal securities issued by states, cities, counties, 
districts and their respective agencies. The Bloomberg Barclays 
Municipal Managed Money Index also includes municipal lease 
obligations,

[[Page 60062]]

which are securities issued by state and local governments and 
authorities to finance the acquisition of equipment and facilities.
    As of April 1, 2017, the Bloomberg Barclays Municipal Managed Money 
Index included 22,247 component fixed income municipal bond securities 
from issuers in 48 different states or U.S. territories. The most 
heavily weighted security in the index represented less than 0.25% of 
the total weight of the index and the aggregate weight of the top five 
most heavily weighted securities in the index represented approximately 
0.50% of the total weight of the index. Approximately 13.35% of the 
weight of the components in the index had a minimum original principal 
amount outstanding of $100 million or more. In addition, the total 
dollar amount outstanding of issues in the index was approximately 
$496,240,108,998 and the average dollar amount outstanding of issues in 
the index was approximately $22,305,934.
    Under normal market conditions, the SPDR Nuveen Bloomberg Barclays 
Municipal Bond ETF will invest substantially all, but at least 80%, of 
its total assets in the securities comprising the Bloomberg Barclays 
Municipal Managed Money Index or in securities that the fund's sub-
adviser determines have economic characteristics that are substantially 
identical to the economic characteristics of the securities that 
comprise the Bloomberg Barclays Municipal Managed Money Index. With 
respect to the remaining 20% of its assets, the SPDR Nuveen Bloomberg 
Barclays Municipal Bond ETF may invest in debt securities that are not 
included in the Bloomberg Barclays Municipal Managed Money Index, cash 
and cash equivalents or money market instruments, such as repurchase 
agreements and money market funds, commercial paper, foreign currency 
transactions, reverse repurchase agreements, securities of other 
investment companies, exchange-traded futures on Treasuries or 
Eurodollars (all such exchange-traded futures contracts will be traded 
on an exchange that is a member of the ISG or with which the Exchange 
has in place a comprehensive surveillance sharing agreement), U.S 
exchange-traded or OTC put and call options contracts and exchange-
traded or OTC swap agreements (including interest rate swaps, total 
return swaps, excess return swaps and credit default swaps) and 
treasury-inflation protected securities of the U.S. Treasury as well as 
major governments and emerging market countries.
Requirement for Index Constituents
    At least 90% of the weight of the Bloomberg Barclays Municipal 
Managed Money Index will be comprised of securities that have an 
outstanding par value of at least $7 million and were issued as part of 
a transaction of at least $75 million.
    11. According to its prospectus, the iShares California Muni Bond 
ETF seeks to track the investment results of the S&P California AMT-
Free Municipal Bond Index, which measures the performance of the 
investment grade segment of the California municipal bond market. The 
S&P California AMT-Free Municipal Bond Index is a subset of the S&P 
National AMT-Free Municipal Bond Index and is comprised of municipal 
bonds issued in the State of California. The S&P California AMT-Free 
Municipal Bond Index primarily includes municipal bonds from issuers in 
California that are California state or local governments or agencies 
whose interest payments are exempt from U.S. federal and California 
state income taxes and the federal alternative minimum tax.
    As of April 1, 2017, the S&P California AMT-Free Municipal Bond 
Index included 2,115 component fixed income municipal bond securities 
from more than 150 distinct municipal bond issuers in the State of 
California. The most heavily weighted security in the index represented 
approximately 0.50% of the total weight of the index and the aggregate 
weight of the top five most heavily weighted securities in the index 
represented approximately 2.75% of the total weight of the index. 
Approximately 38.89% of the weight of the components in the index had a 
minimum original principal amount outstanding of $100 million or more. 
In addition, the total dollar amount outstanding of issues in the index 
was approximately $137,796,471,640 and the average dollar amount 
outstanding of issues in the index was approximately $65,151,996.
    Under normal market conditions, the iShares California Muni Bond 
ETF will invest at least 90% of its assets in the component securities 
of the S&P California AMT-Free Municipal Bond Index. With respect to 
the remaining 10% of its assets, the iShares California Muni Bond ETF 
may invest in short-term debt instruments issued by state governments, 
municipalities or local authorities, cash, exchange-traded U.S. 
Treasury futures and municipal money market funds, as well as in 
municipal bond securities not included in the S&P California AMT-Free 
Municipal Bond Index, but which the fund's investment advisor believes 
will help the fund track the S&P California AMT-Free Municipal Bond 
Index.
Requirement for Index Constituents
    At least 90% of the weight of the S&P California AMT-Free Municipal 
Bond Index will be comprised of securities that have a minimum par 
amount of $25 million and were a constituent of an offering where the 
original offering amount was at least $100 million.
    12. According to its prospectus, the iShares New York Muni Bond ETF 
seeks to track the investment results of the S&P New York AMT-Free 
Municipal Bond Index, which measures the performance of the investment 
grade segment of the New York municipal bond market. The S&P New York 
AMT-Free Municipal Bond Index is a subset of the S&P National AMT-Free 
Municipal Bond Index and is comprised of municipal bonds issued in the 
State of New York. The S&P New York AMT-Free Municipal Bond Index 
primarily includes municipal bonds from issuers in New York that are 
New York state or local governments or agencies whose interest payments 
are exempt from U.S. federal and New York State personal income taxes 
and the federal alternative minimum tax.
    As of April 1, 2017, the S&P New York AMT-Free Municipal Bond Index 
included 2,191 component fixed income municipal bond securities from 
more than 20 distinct municipal bond issuers in the State of New York. 
The most heavily weighted security in the index represented 
approximately 1.50% of the total weight of the index and the aggregate 
weight of the top five most heavily weighted securities in the index 
represented approximately 4.25% of the total weight of the index. 
Approximately 34.50% of the weight of the components in the index had a 
minimum original principal amount outstanding of $100 million or more. 
In addition, the total dollar amount outstanding of issues in the index 
was approximately $124,381,556,872 and the average dollar amount 
outstanding of issues in the index was approximately $56,769,309.
    Under normal market conditions, the iShares New York Muni Bond ETF 
will invest at least 90% of its assets in the component securities of 
the S&P New York AMT-Free Municipal Bond Index. With respect to the 
remaining 10% of its assets, the iShares New York Muni Bond ETF may 
invest in short-term debt instruments issued by state governments, 
municipalities or local authorities, cash, exchange-traded U.S. 
Treasury futures and municipal money market funds, as well as in 
municipal

[[Page 60063]]

bond securities not included in the S&P New York AMT-Free Municipal 
Bond Index, but which the fund's investment advisor believes will help 
the fund track the S&P New York AMT-Free Municipal Bond Index.
Requirement for Index Constituents
    At least 90% of the weight of the S&P New York AMT-Free Municipal 
Bond Index will be comprised of securities that have a minimum par 
amount of $25 million and were a constituent of an offering where the 
original offering amount was at least $100 million.
    Based on the characteristics of each index as described above, the 
Exchange believes it is appropriate to facilitate the listing and 
trading of the Municipal Bond Funds. Each index underlying the 
Municipal Bond Funds satisfies all of the generic listing requirements 
for Investment Company Units based on a fixed income index, except for 
the minimum principal amount outstanding requirement of Commentary 
.02(a)(2) to Rule 5.2-E(j)(3). A fundamental purpose behind the minimum 
principal amount outstanding requirement is to ensure that component 
securities of an index are sufficiently liquid such that the potential 
for index manipulation is reduced.
    As described above, each index underlying the Multistate Municipal 
Bond Funds is broad-based and currently includes, on average, more than 
8,000 component securities. Whereas the generic listing rules permit a 
single component security to represent up to 30% of the weight of an 
index and the top five component securities to, in aggregate, represent 
up to 65% of the weight of an index,\16\ no single security currently 
represents more than approximately 1.5% of the weight of any index 
underlying the Multistate Municipal Bond Funds. Similarly, the 
aggregate weight of the five most heavily weighted securities in each 
index does not exceed approximately 6%. The Exchange believes that this 
significant diversification and the lack of concentration among 
constituent securities provides a strong degree of protection against 
index manipulation.
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    \16\ See Commentary .02(a)(4) to NYSE Arca Rule 5.2-E(j)(3).
---------------------------------------------------------------------------

    Each index on which the Single-state Municipal Bond Funds is based 
is similarly well diversified to protect against index manipulation. On 
average, the indices underlying the Single-state Municipal Bond Funds 
include more than 1,500 securities. Each index includes securities from 
at least 20 distinct municipal bond issuers and the most heavily 
weighted security in any of the indices underlying the Single-state 
Municipal Bond Funds represents approximately 2% and the aggregate 
weight of the five most heavily weighted securities in any of the 
indices represents approximately 6.25% of the total index weight.
    On a continuous basis, each index underlying a Municipal Bond Fund 
will (i) contain at least 500 component securities and (ii) comply with 
the parameters described under the heading ``Requirement for Index 
Constituents'' contained in the description of its related Municipal 
Bond Fund set forth above.\17\ In addition, the Exchange represents 
that: (1) Except for Commentary .02(a)(2) to Rule 5.2-E(j)(3), each 
index currently satisfies all of the generic listing standards under 
Rule 5.2-E(j)(3); (2) the continued listing standards under Rules 5.2-
E(j)(3) (except for Commentary .02(a)(2)) and 5.5-E(g)(2) applicable to 
Investment Company Units will apply to the shares of each Municipal 
Bond Fund; and (3) the issuer of each Municipal Bond Fund is required 
to comply with Rule 10A-3 \18\ under the Act for the initial and 
continued listing of the shares of each Municipal Bond Fund. In 
addition, the Exchange represents that the shares of each Municipal 
Bond Fund will comply with all other requirements applicable to 
Investment Company Units including, but not limited to, requirements 
relating to the dissemination of key information such as the value of 
the underlying index and the applicable Intraday Indicative Value 
(``IIV''),\19\ rules governing the trading of equity securities, 
trading hours, trading halts, surveillance, information barriers and 
the Information Bulletin to Equity Trading Permit Holders (``ETP 
Holders''), as set forth in Exchange rules applicable to Investment 
Company Units and prior Commission orders approving the generic listing 
rules applicable to the listing and trading of Investment Company 
Units.\20\
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    \17\ The Commission has previously approved a proposed rule 
change relating to the listing and trading on the Exchange of a 
series of Investment Company Units based on a municipal bond index 
that did not satisfy Commentary .02(a)(2) of Rule 5.2-E(j)(3) 
provided that such municipal bond index contained at least 500 
component securities on a continuous basis. See Securities Exchange 
Act Release No. 79767 (January 10, 2017), 82 FR 4950 (January 17, 
2017) (SR-NYSEArca-2016-62) (order approving proposed rule change 
relating to the listing and trading of the PowerShares Build America 
Bond Portfolio). The total dollar amount of issues in the index 
underlying the PowerShares Build America Bond Portfolio was 
approximately $281,589,346,769 and the average dollar amount 
outstanding of issues in the index was approximately $27,808,547. 
Those metrics are comparable to the metrics of the indices 
underlying the Municipal Bond Funds.
    \18\ 17 CFR 240.10A-3.
    \19\ The IIV will be widely disseminated by one or more major 
market data vendors at least every 15 seconds during the Exchange's 
Core Trading Session of 9:30 a.m. to 4:00 p.m., Eastern time. 
Currently, it is the Exchange's understanding that several major 
market data vendors display and/or make widely available IIVs taken 
from the Consolidated Tape Association (``CTA'') or other data 
feeds.
    \20\ See, e.g., Securities Exchange Act Release Nos. 55783 (May 
17, 2007), 72 FR 29194 (May 24, 2007) (SR-NYSEArca-2007-36) (order 
approving NYSE Arca generic listing standards for Units based on a 
fixed income index); 44551 (July 12, 2001), 66 FR 37716 (July 19, 
2001) (SR-PCX-2001-14) (order approving generic listing standards 
for Units and Portfolio Depositary Receipts); 41983 (October 6, 
1999), 64 FR 56008 (October 15, 1999) (SR-PCX-98-29) (order 
approving rules for listing and trading of Units).
---------------------------------------------------------------------------

    The current value of each index underlying the Municipal Bond Funds 
is widely disseminated by one or more major market data vendors at 
least once per day, as required by NYSE Arca Rule 5.2-E(j)(3), 
Commentary .02 (b)(ii). The IIV for shares of each Municipal Bond Fund 
is disseminated by one or more major market data vendors, updated at 
least every 15 seconds during the Exchange's Core Trading Session, as 
required by NYSE Arca Rule 5.2-E(j)(3), Commentary .02 (c). In 
addition, the portfolio of securities held by each Municipal Bond Fund 
is disclosed daily on each Municipal Bond Fund's website. Further, the 
website for each Municipal Bond Fund will contain the applicable fund's 
prospectus and additional data relating to net asset value (``NAV'') 
and other applicable quantitative information. The Exchange has 
obtained a representation from each Municipal Bond Fund issuer that the 
applicable NAV per share will be calculated daily will be made 
available to all market participants at the same time. None of the 
indices underlying the Municipal Bond Funds is maintained by a broker-
dealer.
    The Exchange notes that each of the Municipal Bond Funds has been 
listed on the Exchange for at least eight years \21\ and that, during 
such time, the Exchange has not become aware of any potential 
manipulation of the underlying indices. Further, the Exchange's 
existing rules require that the Municipal Bond Funds notify the 
Exchange of any material change to the methodology used to determine 
the composition of the index.\22\ Therefore, if the methodology of an 
index underlying the Municipal Bond Funds was changed in a manner that 
would materially alter its existing composition, the Exchange would 
have advance notice and would

[[Page 60064]]

evaluate the index, as modified, to determine whether it was 
sufficiently broad-based and well diversified.
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    \21\ The VanEck Vectors High-Yield Municipal Index ETF is the 
most recently listed of the Multistate Municipal Bond Funds and 
listed on the Exchange on February 5, 2009.
    \22\ See NYSE Arca Rule 5.3-E(i)(1)(i)(P).
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    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 when-issued 
securities 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.
Surveillance
    The Exchange represents that trading in the shares of each 
Municipal Bond Fund will be subject to the existing trading 
surveillances, administered by the Financial Industry Regulatory 
Authority (``FINRA'') on behalf of the Exchange, or by regulatory staff 
of the Exchange, which are designed to detect violations of Exchange 
rules and applicable federal securities laws. The Exchange represents 
that these procedures are adequate to properly monitor Exchange trading 
of the shares of each Municipal Bond Fund in all trading sessions and 
to deter and detect violations of Exchange rules and federal securities 
laws applicable to trading on the Exchange.\23\
---------------------------------------------------------------------------

    \23\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed regarding trading in the Shares and ETFs with 
other markets and other entities that are members of the ISG, and the 
Exchange or FINRA, on behalf of the Exchange, or both, may obtain 
trading information regarding trading in the Shares and ETFs from such 
markets and other entities. In addition, the Exchange may obtain 
information regarding trading in the Shares and ETFs from markets and 
other entities that are members of ISG or with which the Exchange has 
in place a comprehensive surveillance sharing agreement. In addition, 
FINRA, on behalf of the Exchange, is able to access, as needed, trade 
information for certain fixed income securities held by a Fund 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.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \24\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
shares of each Municipal Bond Fund will be listed and traded on the 
Exchange pursuant to the initial and continued listing criteria in NYSE 
Arca Rule 5.2-E(j)(3) (except for Commentary .02(a)(2)). The Exchange 
represents that trading in the shares of each Municipal Bond Fund will 
be subject to the existing trading surveillances administered by the 
Exchange as well as cross-market surveillances administered by the 
Financial Industry Regulatory Authority (``FINRA'') on behalf of the 
Exchange, which are designed to detect violations of Exchange rules and 
federal securities laws applicable to trading on the Exchange.\25\ The 
Exchange represents that these procedures are adequate to properly 
monitor Exchange trading of the shares of each Municipal Bond Fund in 
all trading sessions and to deter and detect violations of Exchange 
rules and federal securities laws applicable to trading on the 
Exchange. The Exchange or FINRA, on behalf of the Exchange, or both, 
will communicate as needed regarding trading in the shares of each 
Municipal Bond Fund with other markets that are members of the ISG. In 
addition, the Exchange will communicate as needed regarding trading in 
the shares of each Municipal Bond Fund with other markets that are 
members of the ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement. FINRA also can 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 of each Municipal Bond Fund. 
FINRA, on behalf of the Exchange, is able to access, as needed, trade 
information for certain fixed income securities held by the Fund 
reported to FINRA's Trade Reporting and Compliance Engine (``TRACE'').
---------------------------------------------------------------------------

    \25\ FINRA conducts cross-market surveillances on behalf of the 
Exchange pursuant to a regulatory services agreement. The Exchange 
is responsible for FINRA's performance under this regulatory 
services agreement.
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    As discussed above, the Exchange believes that each index 
underlying the Municipal Bond Funds is sufficiently broad-based to 
deter potential manipulation. Each index underlying the Multistate 
Municipal Bond Funds currently includes, on average, more than 8,000 
component securities. Whereas the generic listing rules require that an 
index contain securities from a minimum of 13 non-affiliated 
issuers,\26\ each index underlying the Multistate Municipal Bond Funds 
currently includes securities issued by municipal entities in more than 
40 states or U.S. territories. Further, whereas the generic listing 
rules permit a single component security to represent up to 30% of the 
weight of an index and the top five component securities to, in 
aggregate, represent up to 65% of the weight of an index,\27\ no single 
security currently represents more than approximately 1.5% of the 
weight of any index underlying the Multistate Municipal Bond Funds. 
Similarly, the aggregate weight of the five most heavily weighted 
securities in each index does not exceed approximately 6%.
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    \26\ See Commentary .02(a)(5) to NYSE Arca Rule 5.2-E(j)(3).
    \27\ See Commentary .02(a)(4) to NYSE Arca Rule 5.2-E(j)(3).
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    Further, the indices underlying the Single-state Municipal Bond 
Funds include, on average, more than 1,500 securities. Each such index 
includes securities from at least 20 distinct municipal bond issuers 
and the most heavily weighted security in any of the indices underlying 
the Single-state Municipal Bond Funds represents approximately 2% and 
the aggregate weight of the five most heavily weighted securities in 
any of the indices represents approximately 6.25% of the total index 
weight.
    On a continuous basis, each index underlying a Municipal Bond Fund 
will (i) contain at least 500 component securities and (ii) comply with 
the parameters described under the heading ``Requirement for Index 
Constituents''

[[Page 60065]]

contained in the description of its related Municipal Bond Fund set 
forth above.
    In support of its proposed rule change, the Exchange notes that the 
Commission has previously approved a rule change to facilitate the 
listing and trading of series of Investment Company Units based on an 
index of municipal bond securities that did not otherwise meet the 
generic listing requirements of NYSE Arca Rule 5.2-E(j)(3). For 
example, the Commission previous approved the listing and trading of 
the PowerShares Insured California Municipal Bond Portfolio, 
PowerShares Insured National Municipal Bond Portfolio and the 
PowerShares Insured New York Municipal Bond Portfolio (the 
``PowerShares Municipal Bond Funds'') notwithstanding the fact that the 
index underlying each fund did not satisfy the criteria of Commentary 
.02(a)(2) to Rule 5.2-E(j)(3).\28\ In finding such proposal to be 
consistent with the Act and the rules regulations thereunder, the 
Commission noted that each underlying index was sufficiently broad-
based to deter potential manipulation. The Exchange believes that each 
of the indices underlying the Municipal Bond Funds shares comparable 
characteristics to the indices underlying the PowerShares Municipal 
Bond Funds.
---------------------------------------------------------------------------

    \28\ See Securities Exchange Act Release No. 72464 (June 25, 
2014), 79 FR 37373 (July 1, 2014) (File No. SR-NYSEArca-2014-45).
---------------------------------------------------------------------------

    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 is publicly available regarding the 
Municipal Bond Funds, thereby promoting market transparency. Each 
Municipal Bond Fund's portfolio holdings will be disclosed on such 
Municipal Bond Fund's website 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 for shares of each Municipal Bond Fund 
will be widely disseminated by one or more major market data vendors at 
least every 15 seconds during the Exchange's Core Trading Session. The 
current value of each index underlying the Municipal Bond Funds 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 of each Municipal Bond Fund 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 website for each 
Municipal Bond Fund will include the prospectus for such Municipal Bond 
Fund and additional data relating to NAV and other applicable 
quantitative information. If the Exchange becomes aware that a 
Municipal Bond Fund's NAV is not being disseminated to all market 
participants at the same time, it will halt trading in the shares of 
such Municipal Bond Fund 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 a Municipal Bond Fund. Trading also 
may be halted because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the shares of a particular 
Municipal Bond Fund inadvisable. If the IIV and index value are not 
being disseminated for a particular Municipal Bond Fund as required, 
the Corporation may halt trading during the day in which the 
interruption to the dissemination of the IIV or index value occurs. If 
the interruption to the dissemination of an IIV or index value persists 
past the trading day in which it occurred, the Corporation will halt 
trading. Trading in the shares of a Municipal Bond Fund will be halted 
if the circuit breaker parameters in NYSE Arca Rule 7.12-E have been 
reached or because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the shares of a particular 
Municipal Bond Fund inadvisable, and trading in the shares of each 
Municipal Bond Fund will be subject to NYSE Arca Rule 7.34-E, which 
sets forth circumstances under which such shares may be halted. In 
addition, investors will have ready access to information regarding the 
applicable IIV, and quotation and last sale information for the shares 
of each Municipal Bond Fund. Trade price and other information relating 
to municipal bonds is available through the Municipal Securities 
Rulemaking Board's Electronic Municipal Market Access (``EMMA'') 
system.
    All statements and representations made in this filing regarding 
(a) the description of each Municipal Bond Fund's index, portfolio or 
reference asset, (b) limitations on index or portfolio holdings or 
reference assets, or (c) the applicability of Exchange listing rules 
specified in this rule filing shall constitute continued listing 
requirements for listing the shares of each Municipal Bond Fund on the 
Exchange. Each issuer of the Municipal Bond Funds is required to advise 
the Exchange of any failure by its Municipal Bond Fund to comply with 
the continued listing requirements, and, pursuant to its obligations 
under Section 19(g)(1) of the Act, the Exchange will monitor for 
compliance with the continued listing requirements. If a Municipal Bond 
Fund is not in compliance with the applicable listing requirements, the 
Exchange will commence delisting procedures under NYSE Arca Rule 5.5-
E(m).
    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 
exchange-traded products that principally hold municipal bonds and that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace. The Exchange has in place surveillance 
procedures relating to trading in the shares of each Municipal Bond 
Fund and may obtain information 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 of each Municipal Bond Fund.

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 not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. The Exchange notes 
that the proposed rule change will facilitate the listing and trading 
of exchange-traded products that hold municipal securities and that 
will enhance competition among 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

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Summary of Comments

    The Commission received seven comment letters on the proposed rule 
change.\29\ All of the letters support the proposed rule change for 
similar reasons.
---------------------------------------------------------------------------

    \29\ See supra note 9.

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[[Page 60066]]

    All of the commenters \30\ assert that the approval of the proposed 
rule change would be consistent with the Commission's approval of a 
proposed rule change to list and trade shares of the PowerShares Build 
America Bond Portfolio.\31\ According to the Exchange, in approving the 
continued listing of the Build America Bond Fund based on a new index, 
the Commission relied upon the index's broad diversification; the 
Exchange's representation that the index would comply on a continuous 
basis with all the requirements of Commentary .02 to NYSE Arca Rule 
5.2-E(j)(3)--except for the requirement in Commentary .02(a)(2); and 
the Exchange's representation that in no event would the index contain 
fewer than 500 component securities.\32\ The Exchange notes that, like 
the PowerShares Build America Bond Portfolio, each of the Municipal 
Bond Funds is based on an index of municipal bond securities that meet 
all the applicable generic listing requirements, except for the 
requirement in Commentary .02(a)(2) to NYSE Arca Rule 5.2-E(j)(3).\33\ 
Further, the Exchange and other commenters argue that the Municipal 
Bond Funds are also diversified and/or broad-based.\34\
---------------------------------------------------------------------------

    \30\ See Exchange Letter, supra note 9, at 1-2; BlackRock 
Letter, supra note 9, at 2; Invesco Letter, supra note 9, at 2-3; 
VanEck Letter, supra note 9, at 2; State Street Letter, supra note 
9, at 2; ICI Letter, supra note 9, at 2; SIFMA Letter, supra note 9, 
at 2.
    \31\ See Securities Exchange Act Release No. 79767, 82 FR 4950 
(January 17, 2017) (SR-NYSEArca-2016-62).
    \32\ See Exchange Letter, supra note 9, at 2.
    \33\ See Exchange Letter, supra note 9, at 2.
    \34\ See Exchange Letter, supra note 9, at 2; BlackRock, supra 
note 9, at 2; Invesco Letter, supra note 9, at 3; VanEck Letter, 
supra note 9, at 2; State Street Letter, supra note 9, at 1.
---------------------------------------------------------------------------

    Additionally, three commenters \35\ assert that the approval of the 
proposed rule change would be consistent with the Commission's approval 
of a proposal to list and trade shares of the Vanguard Tax-Exempt Bond 
ETF.\36\ These commenters note that the Commission approved the shares 
even though the Vanguard Fund did not meet the minimum original 
principal amount outstanding requirement of Commentary .02(a)(2) to 
NYSE Arca Rule 5.2-E(j)(3).\37\
---------------------------------------------------------------------------

    \35\ See BlackRock Letter, supra note 9, at 2-3; Invesco Letter, 
supra note 9, at 3; VanEck Letter, supra note 9, at 2-3.
    \36\ See Securities Exchange Act Release No. 75376 (July 7, 
2015), 80 FR 40113 (July 13, 2015).
    \37\ See BlackRock Letter, supra note 9, at 2-3; Invesco Letter, 
supra note 9, at 3; VanEck Letter, supra note 9, at 2-3. One of 
these commenters also points out that the Commission also approved 
the continued listing and trading of shares of the PowerShares 
National AMT-Free Municipal Bond Portfolio, which, according to the 
commenter, overlie another index that similarly satisfies all the 
applicable generic listing criteria other than Commentary .02(a)(2) 
to NYSE Arca Rule 5.2-E(j)(3). See Invesco Letter, supra note 9, at 
2-3, citing Securities Exchange Act Release No. 72464 (June 25, 
2014), 79 FR 37373 (July 1, 2014) (SR-NYSEArca-2014-45).
---------------------------------------------------------------------------

    Most of the commenters point out that the continued listing 
standards applicable to the Municipal Bond Funds are scheduled to be 
implemented on January 1, 2018.\38\ NYSE Arca states that, if the 
Commission does not approve the proposed rule change by that date, the 
Exchange will be required to declare the Municipal Bond Funds to be 
below compliance with the continued listing standards and commence 
delisting proceedings.\39\ All of the commenters assert that delisting 
the Shares would be harmful to investors.\40\ In addition, one of the 
commenters notes that the Municipal Bond Funds collectively have 
approximately $22 billion in assets under management.\41\
---------------------------------------------------------------------------

    \38\ See Exchange Letter, supra note 9, at 1; BlackRock Letter, 
supra note 9, at 2; State Street Letter, supra note 9, at 1; VanEck 
Letter, supra note 9, at 2; ICI Letter, supra note 9, at 2; SIFMA 
Letter, supra note 9, at 2.
    \39\ See Exchange Letter, supra note 9, at 1.
    \40\ See Exchange Letter, supra note 9, at 1; BlackRock Letter, 
supra note 9, at 3; Invesco Letter, supra note 9, at 3; State Street 
Letter, supra note 9, at 2; VanEck Letter, supra note 9, at 3; ICI 
Letter, supra note 9, at 2 (also asserting that delisting of the 
Shares would be disruptive to the markets); SIFMA Letter, supra note 
9, at 2.
    \41\ See ICI Letter, supra note 9, at 2.
     In addition, one commenter references an analysis that it 
provided to Commission staff in support of a proposed rule change 
that the Commission approved. The commenter states that its 
analysis: (1) Addressed the possibility, which was raised in an 
academic paper, that a municipal bond index or ETF comprised of less 
liquid bonds could be manipulated by strategic trading in a few 
illiquid components; and (2) concluded that this form of 
manipulation may be uneconomical and that it is unsupported in 
practice. See BlackRock Letter, supra note 9, at 3, text 
accompanying n.11.
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 3, is consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\42\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\43\ which requires, among other things, 
that the rules of a national securities exchange be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to 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.
---------------------------------------------------------------------------

    \42\ 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).
    \43\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission also finds that the proposal to list and trade the 
Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of 
the Act,\44\ which sets forth Congress' 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. The current value of 
each index underlying the Municipal Bond Funds is widely disseminated 
by one or more major market data vendors at least once per day, as 
required by NYSE Arca Rule 5.2-E(j)(3), Commentary .02 (b)(ii). In 
addition, IIVs for the Shares are disseminated by one or more major 
market data vendors and is updated at least every 15 seconds during the 
Exchange's Core Trading Session, as required by NYSE Arca Rule 5.2-
E(j)(3), Commentary .02(c). The Exchange represents that 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. Trade price and other information relating to municipal bonds are 
available through the Municipal Securities Rulemaking Board's EMMA 
system. The website for the Municipal Bond Funds will include the 
prospectus for the Funds and additional data relating to NAV and other 
applicable quantitative information.
---------------------------------------------------------------------------

    \44\ 15 U.S.C. 78k 1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    The Commission 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. 
Prior to the commencement of trading, the Exchange will inform its ETP 
Holders in an Information Bulletin of the special characteristics and 
risks associated with trading Shares of a Municipal Bond Fund. If the 
Exchange becomes aware that a Municipal Bond Fund's NAV is not being 
disseminated to all market

[[Page 60067]]

participants at the same time, it will halt trading in those Shares 
until such time as the NAV is available to all market participants. If 
the IIV and index value are not being disseminated for a particular 
Municipal Bond Fund as required, the Exchange may halt trading during 
the day in which the interruption to the dissemination of the IIV or 
index value occurs; if the interruption to the dissemination of an IIV 
or index value persists past the trading day in which it occurred, the 
Exchange will halt trading. Trading in the Shares of a Municipal Bond 
Fund will be halted if the circuit breaker parameters in NYSE Arca 
Equities Rule 7.12-E have been reached or because of market conditions 
or for reasons that, in the view of the Exchange, make trading in 
Shares inadvisable. Further, trading in the Shares will be subject to 
NYSE Arca Equities Rule 7.34-E, which sets forth circumstances under 
which trading in the Shares of a Municipal Bond Fund may be halted.\45\ 
The Exchange states that trade price and other information relating to 
municipal bonds is available through the Municipal Securities 
Rulemaking Board's EMMA system.
---------------------------------------------------------------------------

    \45\ 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 a Municipal Bond Fund.
---------------------------------------------------------------------------

    Based on the Exchange's representations, the Commission believes 
that the indexes underlying the Municipal Bond Funds are sufficiently 
designed to deter potential manipulation. As of April 1, 2017:
     The S&P National AMT-Free Municipal Bond Index, which 
underlies the iShares National Muni Bond ETF, included 11,333 component 
fixed income municipal bond securities from issuers in 47 different 
states or U.S. territories. Additionally, (a) the most heavily weighted 
security in the index represented approximately 0.25% of the total 
weight of the index and the aggregate weight of the top five most 
heavily weighted securities in the index represented less than 1% of 
the total weight of the index, (b) the total dollar amount outstanding 
of issues in the index was approximately $628,460,731,594, and (c) the 
average dollar amount outstanding of issues in the index was 
approximately $55,454,048.
     The S&P Short Term National AMT-Free Municipal Bond Index, 
which underlies the iShares Short Term National Muni Bond ETF, included 
3,309 component fixed income municipal bond securities from issuers in 
44 different states or U.S. territories. Additionally, (a) the most 
heavily weighted security in the index represented approximately 1% of 
the total weight of the index and the aggregate weight of the top five 
most heavily weighted securities in the index represented approximately 
2% of the total weight of the index; (b) the total dollar amount 
outstanding of issues in the index was approximately $166,147,941,156, 
and (c) the average dollar amount outstanding of issues in the index 
was approximately $50,210,922.
     The Bloomberg Barclays AMT-Free Intermediate Continuous 
Municipal Index, which underlies the the VanEck Vectors AMT-Free 
Intermediate Municipal Index ETF, included 17,272 component fixed 
income municipal bond securities from issuers in 50 different states or 
U.S. territories. Additionally, (a) the most heavily weighted security 
in the index represented less than 0.25% of the total weight of the 
index and the aggregate weight of the top five most heavily weighted 
securities in the index represented approximately 0.50% of the total 
weight of the index, (b) the total dollar amount outstanding of issues 
in the index was approximately $340,102,539,050, and (c) the average 
dollar amount outstanding of issues in the index was approximately 
$19,690,976.
     The Bloomberg Barclays AMT-Free Long Continuous Municipal 
Index, which underlies the VanEck Vectors AMT-Free Long Municipal Index 
ETF, included 7,657 component fixed income municipal bond securities 
from issuers in 50 different states or U.S. territories. Additionally, 
(a) the most heavily weighted security in the index represented less 
than 0.50% of the total weight of the index and the aggregate weight of 
the top five most heavily weighted securities in the index represented 
approximately 1.25% of the total weight of the index, (b) the total 
dollar amount outstanding of issues in the index was approximately 
$279,575,285,082, and (c) the average dollar amount outstanding of 
issues in the index was approximately $36,512,379.
     The Bloomberg Barclays AMT-Free Short Continuous Municipal 
Index, which underlies the VanEck Vectors AMT-Free Short Municipal 
Index ETF, included 7,229 component fixed income municipal bond 
securities from issuers in 48 different states or U.S. territories. 
Additionally, (a) the most heavily weighted security in the index 
represented approximately 1% of the total weight of the index and the 
aggregate weight of the top five most heavily weighted securities in 
the index represented approximately 2.25% of the total weight of the 
index, (b) the total dollar amount outstanding of issues in the index 
was approximately $152,020,140,995, and (c) the average dollar amount 
outstanding of issues in the index was approximately $21,026,299.
     The Bloomberg Barclays Municipal Custom High Yield 
Composite Index, which underlies the VanEck Vectors High-Yield 
Municipal Index ETF, included 4,702 component fixed income municipal 
bond securities from issuers in 50 different states or U.S. 
territories. Additionally, the most heavily weighted security in the 
index represented approximately 1.25% of the total weight of the index 
and the aggregate weight of the top five most heavily weighted 
securities in the index represented approximately 6% of the total 
weight of the index, (b) the total dollar amount outstanding of issues 
in the index was approximately $224,318,153,150, and (c) the average 
dollar amount outstanding of issues in the index was approximately 
$47,706,966.
     The Bloomberg Barclays Municipal Pre-Refunded--Treasury-
Escrowed Index, which underlies the VanEck Vectors Pre-Refunded 
Municipal Index ETF, included 3,691 component fixed income municipal 
bond securities from issuers in 50 different states or U.S. 
territories. Additionally, (a) the most heavily weighted security in 
the index represented approximately 0.50% of the total weight of the 
index and the aggregate weight of the top five most heavily weighted 
securities in the index represented approximately 2.25% of the total 
weight of the index, (b) the total dollar amount outstanding of issues 
in the index was approximately $94,289,476,486, and (c) the average 
dollar amount outstanding of issues in the index was approximately 
$25,545,780.
     The Bloomberg U.S. Municipal AMT-Free Weekly VRDO Index, 
which underlies the PowerShares VRDO Tax-Free Weekly Portfolio, 
included 1,494 component fixed income municipal bond securities from 
issuers in 49 different states or U.S. territories. Additionally, (a) 
the most heavily weighted security in the index represented 
approximately 0.75% of the total weight of the index and the aggregate 
weight of the top five most heavily weighted securities in the index 
represented approximately 2.75% of the total weight of the index, (b) 
the total dollar amount outstanding of issues in the index was 
approximately $68,489,564,000, and (c) the average dollar amount 
outstanding of issues in

[[Page 60068]]

the index was approximately $45,843,082.
     The Bloomberg Barclays Managed Money Municipal Short Term 
Index, which underlies the SPDR Nuveen Bloomberg Barclays Short Term 
Municipal Bond ETF, included 4,263 component fixed income municipal 
bond securities from issuers in 44 different states or U.S. 
territories. Additionally, (a) the most heavily weighted security in 
the index represented approximately 0.75% of the total weight of the 
index and the aggregate weight of the top five most heavily weighted 
securities in the index represented approximately 2% of the total 
weight of the index, (b) the total dollar amount outstanding of issues 
in the index was approximately $85,187,709,681, and (c) the average 
dollar amount outstanding of issues in the index was approximately 
$19,983,042.
     The Bloomberg Barclays Municipal Managed Money Index, 
which underlies the SPDR Nuveen Bloomberg Barclays Municipal Bond ETF, 
included 22,247 component fixed income municipal bond securities from 
issuers in 48 different states or U.S. territories. Additionally, (a) 
the most heavily weighted security in the index represented less than 
0.25% of the total weight of the index and the aggregate weight of the 
top five most heavily weighted securities in the index represented 
approximately 0.50% of the total weight of the index, (b) the total 
dollar amount outstanding of issues in the index was approximately 
$496,240,108,998, and (c) the average dollar amount outstanding of 
issues in the index was approximately $22,305,934.
     The S&P California AMT-Free Municipal Bond Index, which 
underlies the iShares California Muni Bond ETF, included 2,115 
component fixed income municipal bond securities from more than 150 
distinct municipal bond issuers in the State of California. 
Additionally, (a) the most heavily weighted security in the index 
represented approximately 0.50% of the total weight of the index and 
the aggregate weight of the top five most heavily weighted securities 
in the index represented approximately 2.75% of the total weight of the 
index, (b) the total dollar amount outstanding of issues in the index 
was approximately $137,796,471,640, and (c) the average dollar amount 
outstanding of issues in the index was approximately $65,151,996.
     The S&P New York AMT-Free Municipal Bond Index, which 
underlies the iShares New York Muni Bond ETF, included 2,191 component 
fixed income municipal bond securities from more than 20 distinct 
municipal bond issuers in the State of New York. Additionally, (a) the 
most heavily weighted security in the index represented approximately 
1.50% of the total weight of the index and the aggregate weight of the 
top five most heavily weighted securities in the index represented 
approximately 4.25% of the total weight of the index, (b) the total 
dollar amount outstanding of issues in the index was approximately 
$124,381,556,872, and (c) the average dollar amount outstanding of 
issues in the index was approximately $56,769,309.
    With respect to trading the Shares, the Commission believes that 
the proposed continued listing requirements applicable to the Shares 
(discussed below) are also sufficiently designed to deter potential 
manipulation. The Exchange represents that, on a continuous basis, each 
index underlying a Municipal Bond Fund will contain at least 500 
component securities. The Exchange states that the continued listing of 
the Shares will be subject to the requirements of NYSE Arca Rule 5.2-
E(j)(3)--except for Commentary .02(a)(2)--and Rule 5.5-E(g)(2). 
Additionally, the Exchange represents to the following on a continuous 
basis:
     At least 90% of the weight of the S&P National AMT-Free 
Municipal Bond Index, which underlies the iShares National Muni Bond 
ETF, will be comprised of securities that have a minimum part amount of 
$25 million and were a constituent of an offering where the original 
offering amount was at least $100 million.
     At least 90% of the weight of the S&P Short Term National 
AMT-Free Municipal Bond Index, which underlies the iShares Short Term 
National Muni Bond ETF, will be comprised of securities that have a 
minimum par amount of $25 million and were a constituent of an offering 
where the original offering amount was at least $100 million.
     At least 90% of the weight of the Bloomberg Barclays AMT-
Free Intermediate Continuous Municipal Index, which underlies the 
VanEck Vectors AMT-Free Intermediate Municipal Index ETF, will be 
comprised of securities that that have an outstanding par value of at 
least $7 million and were issued as part of a transaction of at least 
$75 million.
     At least 90% of the weight of the Bloomberg Barclays AMT-
Free Long Continuous Municipal Index, which underlies the VanEck 
Vectors AMT-Free Long Municipal Index ETF, will be comprised of 
securities that have an outstanding par value of at least $7 million 
and were issued as part of a transaction of at least $75 million.
     At least 90% of the weight of the Bloomberg Barclays AMT-
Free Short Continuous Municipal Index, which underlies the VanEck 
Vectors AMT-Free Short Municipal Index ETF, will be comprised of 
securities that have an outstanding par value of at least $7 million 
and were issued as part of a transaction of at least $75 million.
     The Bloomberg Barclays Municipal Custom High Yield 
Composite Index, which underlies the VanEck Vectors High-Yield 
Municipal Index ETF, is comprised of three total return, market size 
weighted benchmark indices with weights as follows: (i) 50% weight in 
Muni High Yield/$100 Million Deal Size Index, (ii) 25% weight in Muni 
High Yield/Under $100 Million Deal Size Index, and (iii) 25% weight in 
Muni Baa Rated/$100 Million Deal Size Index. At least 90% of the weight 
of the Muni High Yield/$100 Million Deal Size Index will be comprised 
of securities that have an outstanding par value of at least $3 million 
and were issued as part of a transaction of at least $100 million. At 
least 90% of the weight of the Muni High Yield/Under $100 Million Deal 
Size Index will be comprised of securities that have an outstanding par 
value of at least $3 million and were issued as part of a transaction 
of under $100 million but over $20 million. At least 90% of the weight 
of the Muni Baa Rated/$100 Million Deal Size Index will be comprised of 
securities that have an outstanding par value of at least $7 million 
and were issued as part of a transaction of at least $100 million.
     At least 90% of the weight of the Bloomberg Barclays 
Municipal Pre-Refunded--Treasury-Escrowed Index, which underlies the 
VanEck Vectors Pre-Refunded Municipal Index ETF, will be comprised of 
securities that have an outstanding par value of at least $7 million 
and were issued as part of a transaction of at least $75 million.
     At least 90% of the weight of the Bloomberg U.S. Municipal 
AMT-Free Weekly VRDO Index, which underlies the the PowerShares VRDO 
Tax-Free Weekly Portfolio, will be comprised of securities that have a 
minimum amount outstanding of $10 million.
     At least 90% of the weight of the Bloomberg Barclays 
Managed Money Municipal Short Term Index, which underlies the SPDR 
Nuveen Bloomberg Barclays Short Term Municipal Bond ETF, will be 
comprised of securities that have an outstanding par value of at least 
$7 million and were issued as part of a transaction of at least $75 
million.

[[Page 60069]]

     At least 90% of the weight of the Bloomberg Barclays 
Municipal Managed Money Index, which underlies the SPDR Nuveen 
Bloomberg Barclays Municipal Bond ETF, will be comprised of securities 
that have an outstanding par value of at least $7 million and were 
issued as part of a transaction of at least $75 million.
     At least 90% of the weight of the S&P California AMT-Free 
Municipal Bond Index, which underlies the iShares California Muni Bond 
ETF, will be comprised of securities that have a minimum par amount of 
$25 million and were a constituent of an offering where the original 
offering amount was at least $100 million.
     At least 90% of the weight of the S&P New York AMT-Free 
Municipal Bond Index, which underlies the iShares New York Muni Bond 
ETF, will be comprised of securities that have a minimum par amount of 
$25 million and were a constituent of an offering where the original 
offering amount was at least $100 million.
    The Exchange also represents that all statements and 
representations made in the proposed rule change regarding (a) the 
description of each Municipal Bond Fund's index, portfolio, or 
reference asset, (b) limitations on index or portfolio holdings or 
reference assets, or (c) the applicability of Exchange listing rules 
specified in the proposal constitute continued listing requirements for 
listing the Shares of each Municipal Bond Fund on the Exchange. The 
Exchange also states that the issuer of each Municipal Bond Fund is 
required to comply with Rule 10A-3 under the Act \46\ for the initial 
and continued listing of the Shares. Further, the Exchange represents 
that the Shares will comply with all other requirements applicable to 
Investment Company Units including, but not limited to, requirements 
relating to the dissemination of key information such as the value of 
the underlying index and the applicable IIV, rules governing the 
trading of equity securities, trading hours, trading halts, 
surveillance, information barriers,\47\ and dissemination of an 
Information Bulletin to ETP Holders, as set forth in Exchange rules 
applicable to Investment Company Units and prior Commission orders 
approving the generic listing rules applicable to the listing and 
trading of Investment Company Units.
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    \46\ 17 CFR 240.10A-3.
    \47\ See Commentary .02(b) to NYSE Arca Rule 5.2-E(j)(3) 
(requiring a broker-dealer or fund adviser maintaining an underlying 
index to erect and maintain a firewall around certain personnel).
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    In support of this proposal, the Exchange has made representations, 
including the following:
    (1) That trading in the Shares will be subject to the existing 
trading surveillances administered by the Exchange, as well as cross-
market surveillances administered by FINRA on behalf of the Exchange, 
which are designed to detect violations of Exchange rules and federal 
securities laws applicable to trading on the Exchange. The Exchange 
represents that these procedures are adequate to properly monitor 
Exchange trading of the Shares in all trading sessions and to deter and 
detect violations of Exchange rules and federal securities laws 
applicable to trading on the Exchange.
    (2) That the Exchange, FINRA on behalf of the Exchange, or both, 
will communicate as needed regarding trading in the Shares with other 
markets that are members of ISG. In addition, the Exchange will 
communicate as needed regarding trading in the Shares with other 
markets that are members of the ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement. FINRA also can 
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.
    (3) That each issuer of the Municipal Bond Funds is required to 
advise the Exchange of any failure by its Municipal Bond Fund to comply 
with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Act, the Exchange will 
monitor for compliance with the continued listing requirements. If a 
Municipal Bond Fund is not in compliance with the applicable listing 
requirements, the Exchange will commence delisting procedures under 
NYSE Arca Rule 5.5-E(m).\48\
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    \48\ The Commission notes that certain other proposals include a 
representation that the exchange will ``surveil'' for compliance 
with the continued listing requirements. See, e.g., Securities 
Exchange Act Release No. 78005 (June 7, 2016), 81 FR 38247 (June 13, 
2016) (SR-BATS-2015-100). In the context of this representation, it 
is the Commission's view that ``monitor'' and ``surveil'' both mean 
ongoing oversight of a fund's compliance with the continued listing 
requirements. Therefore, the Commission does not view ``monitor'' as 
a more or less stringent obligation than ``surveil'' with respect to 
the continued listing requirements.
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    (4) That all statements and representations made in this proposal 
regarding (a) the description of each Municipal Bond Fund's index, 
portfolio, or reference asset, (b) limitations on index or portfolio 
holdings or reference assets, or (c) the applicability of Exchange 
listing rules specified in the proposed rule change shall constitute 
continued listing requirements for listing the Shares of each Municipal 
Bond Fund on the Exchange.

This approval order is based on the Exchange's description of each of 
the Municipal Bond Funds, and the Exchange's representations, including 
those set forth above and in Amendment No. 3.
    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 3 thereto, is consistent with 
Section 6(b)(5) of the Act \49\ and the rules and regulations 
thereunder applicable to a national securities exchange.
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    \49\ 15 U.S.C. 78f(b)(5).
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V. Solicitation of Comments on Amendment No. 3

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether Amendment No. 3 
to the proposed rule change are 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 Number SR-NYSEArca-2017-56 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSEArca-2017-56. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official

[[Page 60070]]

business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
the filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSEArca-2017-56 and should be submitted on or before January 8, 2018.

VI. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 3

    The Commission believes that Amendment No. 3 furthers the goals of 
the proposed rule change and does not raise any novel regulatory issue. 
In particular, by Amendment No. 3, the Exchange expanded the continued 
listing criteria applicable to the Municipal Bond Funds.\50\ Such 
changes assisted the Commission in determining that the proposed rule 
change is consistent with Section 6(b)(5) of the Act, which requires 
that the rules of a national securities exchange be designed to, among 
other things, prevent fraudulent and manipulative acts and practices. 
Accordingly, the Commission finds good cause, pursuant to Section 
19(b)(2) of the Act,\51\ to approve the proposed rule change, as 
modified by Amendment No. 3, on an accelerated basis.
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    \50\ See supra note 11.
    \51\ 15 U.S.C. 78s(b)(2).
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VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\52\ that the proposed rule change (SR-NYSEArca-2017-56), as 
modified by Amendment No. 3, be, and hereby is, approved on an 
accelerated basis.
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    \52\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\53\
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    \53\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-27143 Filed 12-15-17; 8:45 am]
 BILLING CODE 8011-01-P