Federal Register, Volume 83 Issue 16 (Wednesday, January 24, 2018)

[Federal Register Volume 83, Number 16 (Wednesday, January 24, 2018)]
[Notices]
[Pages 3377-3380]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-01207]

[[Page 3377]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82530; File No. SR-NASDAQ-2017-124]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Granting Approval of a Proposed Rule Change, as Modified by Amendments
No. 1 and 2, To List and Trade Shares of Brandes Value NextShares Under
Nasdaq Rule 5745

January 18, 2018.

I. Introduction

On November 24, 2017, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') 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 common shares (``Shares'') of
Brandes Value NextShares (``Fund'') under Nasdaq Rule 5745. The
proposed rule change was published for comment in the Federal Register
on December 5, 2017.\3\ On December 20, 2017, the Exchange filed
Amendment No. 1 to the proposed rule change.\4\ On January 5, 2018, the
Exchange filed Amendment No. 2 to the proposed rule change.\5\ The
Commission received no comment letters on the proposed rule change.
This order approves the proposed rule change, as modified by Amendments
No. 1 and 2.
---------------------------------------------------------------------------

\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 82167 (Nov. 29,
2017), 82 FR 57510.
\4\ Amendment No. 1 replaces and supersedes the original
proposed rule change in its entirety. In Amendment No. 1, the
Exchange: (i) Updates the proposed rule change to reflect that the
Commission granted Brandes Investment Trust exemptive relief under
the Investment Company Act of 1940; (ii) provides a representation
regarding transaction fees; (iii) represents that orders to trade
the Shares of the Fund are subject to the proxy price protection
threshold of plus/minus $1.00; and (iv) deletes redundant text and
makes other technical and clarifying changes. Amendment No. 1 is
available at: https://www.sec.gov/comments/sr-nasdaq-2017-124/nasdaq2017124-2833043-161706.pdf. Because Amendment No. 1 does not
materially alter the substance of the proposal or raise unique or
novel regulatory issues, Amendment No. 1 is not subject to notice
and comment.
\5\ Amendment No. 2 partially amends the proposed rule change as
modified by Amendment No. 1 to add back to the filing the following
representation, which is inadvertently deleted in Amendment 1:
``Personnel who make decisions on the Fund's portfolio composition
must be subject to procedures designed to prevent the use and
dissemination of material, non-public information regarding the
open-end fund's portfolio.'' Amendment No. 2 is available at:
https://www.sec.gov/comments/sr-nasdaq-2017-124/nasdaq2017124-2876297-161750.pdf. Because Amendment No. 2 does not materially
alter the substance of the proposal or raise unique or novel
regulatory issues, Amendment No. 2 is not subject to notice and
comment.
---------------------------------------------------------------------------

II. Exchange's Description of the Proposed Rule Change

The Exchange proposes to list and trade the Shares of the Fund
under Nasdaq Rule 5745, which governs the listing and trading of
Exchange-Traded Managed Fund Shares, as defined in Nasdaq Rule
5745(c)(1). The Fund is a series of Brandes Investment Trust
(``Trust'').\6\ The Exchange represents that the Trust is registered
with the Commission as an open-end investment company and has filed a
registration statement on Form N-1A (``Registration Statement'') with
the Commission with respect to the Fund.\7\ Brandes Investment Partners
L.P. will be the adviser to the Fund (``Adviser''). ALPS Distributors,
Inc. will be the principal underwriter and distributor of the Fund's
Shares. U.S. Bancorp Fund Services, LLC will act as the administrator,
accounting agent, transfer agent, and custodian to the Fund.
---------------------------------------------------------------------------

\6\ The Commission has issued an order granting the Trust and
certain of its affiliates exemptive relief under the Investment
Company Act of 1940. See Investment Company Act Release No. 32925
(November 28, 2017) (File No. 812-14809).
\7\ See Post-Effective Amendment No. 60 to Registration
Statement on Form N-1A for the Trust dated October 13, 2017 (File
Nos. 033-81396 and 811-08614).
---------------------------------------------------------------------------

The Exchange has made the following representations and statements
in describing the Fund.\8\ According to the Exchange, the Fund will be
actively managed and will pursue the principal investment strategies
described below.\9\
---------------------------------------------------------------------------

\8\ The Commission notes that additional information regarding
the Trust, the Fund, and the Shares, including investment
strategies, risks, creation and redemption procedures, calculation
of net asset value (``NAV''), fees, distributions, and taxes, among
other things, can be found in Amendments No.1 and 2, and the
Registration Statement, as applicable. See supra notes 4, 5, and 7,
respectively, and accompanying text.
\9\ According to the Exchange, additional information regarding
the Fund will be available on a free public website for the Fund
(www.brandesfunds.com, which may contain links for certain
information to www.nextshares.com) and in the Registration Statement
for the Fund.
---------------------------------------------------------------------------

A. Principal Investment Strategies

The Fund seeks long-term capital appreciation by investing
primarily in equity securities of U.S. companies. Equity securities
include common and preferred stocks, warrants, and rights. While the
Fund may purchase equity securities issued by companies of any size, it
typically focuses its investments on large-capitalization equity
securities.

B. Portfolio Disclosure and Composition File

Consistent with the disclosure requirements that apply to
traditional open-end investment companies, a complete list of current
Fund portfolio positions will be made available at least once each
calendar quarter, with a reporting lag of not more than 60 days. The
Fund may provide more frequent disclosures of portfolio positions at
its discretion.
As defined in Nasdaq Rule 5745(c)(3), the ``Composition File'' is
the specified portfolio of securities and/or cash that the Fund will
accept as a deposit in issuing a creation unit of the Shares, and the
specified portfolio of securities and/or cash that the Fund will
deliver in a redemption of a creation unit of the Shares. The
Composition File will be disseminated through the National Securities
Clearing Corporation once each business day before the open of trading
in the Shares on such day and also will be made available to the public
each day on a free public website.\10\ Because the Fund seeks to
preserve the confidentiality of its current portfolio trading program,
the Fund's Composition File generally will not be a pro rata reflection
of the Fund's investment positions. Each security included in the
Composition File will be a current holding of the Fund, but the
Composition File generally will not include all of the securities in
the Fund's portfolio or match the weightings of the included securities
in the portfolio. Securities that the Adviser is in the process of
acquiring for the Fund generally will not be represented in the Fund's
Composition File until the purchase has been completed. Similarly,
securities that are held in the Fund's portfolio but are in the process
of being sold may not be removed from its Composition File until the
sale is substantially completed. To the extent that the Fund creates or
redeems the Shares in-kind, it will use cash amounts to supplement the
in-kind transactions to the extent necessary to ensure that creation
units are purchased and redeemed at NAV. The Composition File also may
consist entirely of cash, in which case it will not include any of the
securities in the Fund's portfolio.\11\
---------------------------------------------------------------------------

\10\ The Exchange represents that the free public website
containing the Composition File will be www.nextshares.com.
\11\ In determining whether the Fund will issue or redeem
creation units entirely on a cash basis, the key consideration will
be the benefit that would accrue to the Fund and its investors.
---------------------------------------------------------------------------

C. Intraday Indicative Value

An estimated value of an individual Share, defined in Nasdaq Rule
5745(c)(2) as the Intraday Indicative Value (``IIV'') will be
calculated and disseminated at intervals of not more than 15 minutes
throughout the Regular

[[Page 3378]]

Market Session \12\ when the Shares trade on the Exchange. The Exchange
will obtain a representation from the issuer of the Shares that the IIV
will be calculated on an intraday basis and provided to Nasdaq for
dissemination via the Nasdaq Global Index Service.
---------------------------------------------------------------------------

\12\ See Nasdaq Rule 4120(b)(4) (describing the three trading
sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30
a.m. Eastern Time; (2) Regular Market Session from 9:30 a.m. to 4
p.m. or 4:15 p.m. Eastern Time; and (3) Post-Market Session from 4
p.m. or 4:15 p.m. to 8 p.m. Eastern Time).
---------------------------------------------------------------------------

The IIV will be based on current information regarding the value of
the securities and other assets held by the Fund.\13\ The purpose of
the IIV is to enable investors to estimate the next-determined NAV so
they can determine the number of Shares to buy or sell if they want to
transact in an approximate dollar amount.\14\
---------------------------------------------------------------------------

\13\ The IIV disseminated throughout each trading day would be
based on the same portfolio as used to calculate that day's NAV. The
Fund will reflect purchases and sales of portfolio positions in its
NAV the next business day after trades are executed.
\14\ In NAV-Based Trading (as referenced herein), prices of
executed trades are not determined until the reference NAV is
calculated, so buyers and sellers of the Shares during the trading
day will not know the final value of their purchases and sales until
the end of the trading day. The Exchange represents that the Fund's
Registration Statement, website and any advertising or marketing
materials will include prominent disclosure of this fact. The
Exchange states that although the IIV may provide useful estimates
of the value of intraday trades, it cannot be used to calculate with
precision the dollar value of the Shares to be bought or sold.
---------------------------------------------------------------------------

D. NAV-Based Trading

Because the Shares will be listed and traded on the Exchange, the
Shares will be available for purchase and sale on an intraday basis.
The Shares will be purchased and sold in the secondary market at prices
directly linked to the Fund's next-determined NAV using a trading
protocol called ``NAV-Based Trading.'' All bids, offers, and execution
prices of the Shares will be expressed as a premium/discount (which may
be zero) to the Fund's next-determined NAV (e.g., NAV-$0.01,
NAV+$0.01).\15\ The Fund's NAV will be determined each business day, as
of 4:00 p.m. Eastern Time. Trade executions will be binding at the time
orders are matched on Nasdaq's facilities, with the transaction prices
contingent upon the determination of NAV. Nasdaq represents that the
Shares listed on the Exchange will have a unique identifier associated
with their ticker symbols, which will indicate that the Shares are
traded using NAV-Based Trading.
---------------------------------------------------------------------------

\15\ According to the Exchange, the premium or discount to NAV
at which Share prices are quoted and transactions are executed will
vary depending on market factors, including the balance of supply
and demand for the Shares among investors, transaction fees and
other costs in connection with creating and redeeming creation units
of the Shares, the cost and availability of borrowing the Shares,
competition among market makers, the Share inventory positions and
inventory strategies of market makers, the profitability
requirements and business objectives of market makers, and the
volume of Share trading.
---------------------------------------------------------------------------

According to the Exchange, member firms will utilize certain
existing order types and interfaces to transmit Share bids and offers
to Nasdaq, which will process Share trades like trades in shares of
other listed securities.\16\ In the systems used to transmit and
process transactions in the Shares, the Fund's next-determined NAV will
be represented by a proxy price (e.g., 100.00) and a premium/discount
of a stated amount to the next-determined NAV to be represented by the
same increment/decrement from the proxy price used to denote NAV (e.g.,
NAV - $0.01 would be represented as 99.99; NAV + $0.01 as 100.01).
---------------------------------------------------------------------------

\16\ According to the Exchange, all orders to buy or sell the
Shares that are not executed on the day the order is submitted will
be automatically cancelled as of the close of trading on such day.
Prior to the commencement of trading in the Fund, the Exchange will
inform its members in an Information Circular of the effect of this
characteristic on existing order types.
---------------------------------------------------------------------------

To avoid potential investor confusion, Nasdaq represents that it
will work with member firms and providers of market data services to
seek to ensure that representations of intraday bids, offers, and
execution prices of the Shares that are made available to the investing
public follow the ``NAV - $0.01/NAV + $0.01'' (or similar) display
format. Specifically, the Exchange will use the NASDAQ Basic and NASDAQ
Last Sale data feeds to disseminate intraday price and quote data for
the Shares in real time in the ``NAV - $0.01/NAV + $0.01'' (or similar)
display format. Member firms may use the Nasdaq Basic and Nasdaq Last
Sale data feeds to source intraday Share prices for presentation to the
investing public in the ``NAV - $0.01/NAV + $0.01'' (or similar)
display format.
Alternatively, member firms could source intraday Share prices in
proxy price format from the Consolidated Tape and other Nasdaq data
feeds (e.g., Nasdaq TotalView and Nasdaq Level 2) and use a simple
algorithm to convert prices into the ``NAV - $0.01/NAV + $0.01'' (or
similar) display format. Prior to the commencement of trading in the
Fund, the Exchange will inform its members in an Information Circular
of the identities of the specific Nasdaq data feeds from which intraday
Share prices in proxy price format may be obtained.

III. Discussion and Commission Findings

After careful review, the Commission finds that the Exchange's
proposal to list and trade the Shares is consistent with the Act \17\
and the rules and regulations thereunder applicable to a national
securities exchange.\18\ In particular, the Commission finds that the
proposed rule change is consistent with Section 6(b)(5) of the Act,\19\
which requires, among other things, that the Exchange's rules 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.
---------------------------------------------------------------------------

\17\ 15 U.S.C. 78f.
\18\ 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).
\19\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

The Shares will be subject to Nasdaq Rule 5745, which sets forth
the initial and continued listing criteria applicable to Exchange-
Traded Managed Fund Shares. A minimum of 50,000 Shares and no less than
two creation units of the Fund will be outstanding at the commencement
of trading on the Exchange.
Nasdaq deems the Shares to be equity securities, thus rendering
trading in the Shares subject to Nasdaq's existing rules governing the
trading of equity securities. Every order to trade the Shares is
subject to the proxy price protection threshold of plus/minus $1.00,
which determines the lower and upper thresholds for the life of the
order and provides that the order will be cancelled at any point if it
exceeds $101.00 or falls below $99.00, the established thresholds.\20\
With certain exceptions, each order also must contain the applicable
order attributes, including routing instructions and time-in-force
information, as described in Nasdaq Rule 4703.\21\
---------------------------------------------------------------------------

\20\ See Nasdaq Rule 5745(g).
\21\ See Nasdaq Rule 5745(b)(6).
---------------------------------------------------------------------------

Nasdaq also represents that trading in the Shares will be subject
to the existing trading surveillances, administered by both Nasdaq and
FINRA on behalf of the Exchange, which are designed to detect
violations of Exchange rules and applicable federal securities
laws.\22\ The

[[Page 3379]]

Exchange represents that these surveillance procedures are adequate to
properly monitor trading of the Shares on the Exchange and to deter and
detect violations of Exchange rules and applicable federal securities
laws. FINRA, on behalf of the Exchange, will communicate as needed
with, and may obtain information from, other markets and other entities
that are members of the Intermarket Surveillance Group (``ISG'') \23\
regarding trading in the Shares and in exchange-traded securities held
by the Fund (to the extent such exchange-traded securities are known
through the publication of the Composition File and periodic public
disclosures of the Fund's portfolio holdings). In addition, the
Exchange may obtain information regarding trading in the Shares, and in
exchange-traded securities held by the Fund (to the extent such
exchange-traded securities are known through the publication of the
Composition File and periodic public disclosures of the Fund's
portfolio holdings), from markets and other entities that are members
of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
---------------------------------------------------------------------------

\22\ The Exchange states that FINRA provides surveillance of
trading on the Exchange pursuant to a regulatory services agreement
and that the Exchange is responsible for FINRA's performance under
this regulatory services agreement.
\23\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all components of the
Fund's portfolio may trade on markets that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement.
---------------------------------------------------------------------------

Prior to the commencement of trading in the Fund, the Exchange will
inform its members in an Information Circular of the special
characteristics and risks associated with trading the Shares.
Specifically, the Information Circular will discuss the following: (a)
The procedures for purchases and redemptions of the Shares in creation
units (and that the Shares are not individually redeemable); (b) Nasdaq
Rule 2111A, which imposes suitability obligations on Nasdaq members
with respect to recommending transactions in the Shares to customers;
(c) how information regarding the IIV and Composition File is
disseminated; (d) the requirement that members deliver a prospectus to
investors purchasing the Shares prior to or concurrently with the
confirmation of a transaction; and (e) information regarding NAV-Based
Trading protocols.
The Information Circular also will identify the specific Nasdaq
data feeds from which intraday Share prices in proxy price format may
be obtained. As noted above, all orders to buy or sell the Shares that
are not executed on the day the order is submitted will be
automatically cancelled as of the close of trading on such day, and the
Information Circular will discuss the effect of this characteristic on
existing order types. In addition, Nasdaq intends to provide its
members with a detailed explanation of NAV-Based Trading through a
Trading Alert issued prior to the commencement of trading in the Shares
on the Exchange.
Nasdaq states that the Adviser is not a registered broker-dealer,
and is not affiliated with a broker-dealer. The Exchange represents the
Adviser will implement and will maintain a fire wall with respect to
any future affiliated broker-dealer regarding access to information
concerning the composition of, and/or changes to, the Fund's
portfolio.\24\ In addition, personnel who make decisions on the Fund's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material, non-public information regarding
the open-end fund's portfolio. The Exchange represents that the
Reporting Authority \25\ that provides the Composition File will
implement and maintain, or be subject to, procedures designed to
prevent the use and dissemination of material non-public information
regarding the Fund's portfolio positions and changes in the positions.
In the event that (a) the Adviser registers as a broker-dealer or
becomes newly affiliated with a broker-dealer, or (b) any new adviser
or sub-adviser to the Fund is a registered broker-dealer or becomes
affiliated with a broker-dealer, it will implement and will maintain a
fire wall with respect to its relevant personnel and/or such broker-
dealer affiliate, if applicable, regarding access to information
concerning the composition and/or changes to the Fund's portfolio and
will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio.
---------------------------------------------------------------------------

\24\ The Exchange further represents that an investment adviser
to an open-end fund is required to be registered under the
Investment Advisers Act of 1940 (``Advisers Act''). As a result, the
Adviser and its related personnel are subject to the provisions of
Rule 204A-1 under the Advisers Act relating to codes of ethics. This
Rule requires investment advisers to adopt a code of ethics that
reflects the fiduciary nature of the relationship to clients as well
as compliance with other applicable securities laws. Accordingly,
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under
the Advisers Act makes it unlawful for an investment adviser to
provide investment advice to clients unless such investment adviser
has (i) adopted and implemented written policies and procedures
reasonably designed to prevent violation, by the investment adviser
and its supervised persons, of the Advisers Act and the Commission
rules adopted thereunder; (ii) implemented, at a minimum, an annual
review regarding the adequacy of the policies and procedures
established pursuant to subparagraph (i) above and the effectiveness
of their implementation; and (iii) designated an individual (who is
a supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above.
\25\ See Nasdaq Rule 5745(c)(4).
---------------------------------------------------------------------------

The Commission 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,\26\ 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. Information regarding
NAV-based trading prices, best bids and offers for the Shares, and
volume of the Shares traded will be continuously available on a real-
time basis throughout each trading day on brokers' computer screens and
other electronic services. All bids and offers for the Shares and all
Share trade executions will be reported intraday in real time by the
Exchange to the Consolidated Tape \27\ and separately disseminated to
member firms and market data services through the Exchange data feeds.
---------------------------------------------------------------------------

\26\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
\27\ Due to systems limitations, the Consolidated Tape will
report intraday execution prices and quotes for the Shares using a
proxy price format. Nasdaq has represented that it will separately
report real-time execution prices and quotes to member firms and
providers of market data services in the ``NAV-$0.01/NAV+$0.01'' (or
similar) display format, and otherwise seek to ensure that
representations of intraday bids, offers and execution prices for
the Shares that are made available to the investing public follow
the same display format.
---------------------------------------------------------------------------

The Commission notes that once a Fund's daily NAV is calculated and
provided to the Exchange, Nasdaq will price each Share trade entered
into during the day at the Fund's NAV plus/minus the trade's executed
premium/discount. Using the final trade price, each executed Share
trade will then be disseminated to member firms and market data
services via a File Transfer Protocol (``FTP'') file to be created for
exchange-traded managed funds and confirmed to the member firms
participating in the trade to supplement the previously provided
information to include final pricing.\28\
---------------------------------------------------------------------------

\28\ According to Nasdaq, FTP is a standard network protocol
used to transfer computer files on the internet. Nasdaq will arrange
for the daily dissemination of an FTP file with executed Share
trades to member firms and market data services.
---------------------------------------------------------------------------

The Exchange will obtain a representation from the issuer of the
Shares that the NAV per Share will be

[[Page 3380]]

calculated daily (on each business day the New York Stock Exchange is
open for trading) and provided to Nasdaq via the Mutual Fund Quotation
Service (``MFQS'') by the fund accounting agent. As soon as the NAV is
entered into the MFQS, Nasdaq will disseminate the NAV to market
participants and market data vendors via the Mutual Fund Dissemination
Service so all firms will receive the NAV per Share at the same time.
The Exchange further represents that it may consider all relevant
factors in exercising its discretion to halt or suspend trading in the
Shares. The Exchange will halt trading in the Shares under the
conditions specified in Nasdaq Rule 4120 and in Nasdaq Rule
5745(d)(2)(D). Additionally, the Exchange may cease trading the Shares
if other unusual conditions or circumstances exist that, in the opinion
of the Exchange, make further dealings on the Exchange detrimental to
the maintenance of a fair and orderly market. To manage the risk of a
non-regulatory Share trading halt, Nasdaq has in place back-up
processes and procedures to ensure orderly trading. Prior to the
commencement of market trading in the Shares, the Fund will be required
to establish and maintain a free public website through which its
current prospectus may be downloaded.\29\ The website will include
additional information concerning the Fund updated on a daily basis,
including the prior business day's NAV, and the following trading
information for the business day expressed as premiums/discounts to
NAV: (a) Intraday high, low, average and closing prices of the Shares
in Exchange trading; (b) the midpoint of the highest bid and lowest
offer prices as of the close of Exchange trading, expressed as a
premium/discount to NAV (``Closing Bid/Ask Midpoint''); and (c) the
spread between highest bid and lowest offer prices as of the close of
Exchange trading (``Closing Bid/Ask Spread''). The website will also
contain charts showing the frequency distribution and range of values
of trading prices, Closing Bid/Ask Midpoints and Closing Bid/Ask
Spreads over time.
---------------------------------------------------------------------------

\29\ The Exchange represents that the website containing this
information will be www.brandesfunds.com.
---------------------------------------------------------------------------

The Exchange represents that all statements and representations
made in this filing regarding: (a) The description of the portfolio or
reference assets, (b) limitations on portfolio holdings or reference
assets, (c) dissemination and availability of the reference asset or
IIV, or (d) the applicability of Exchange listing rules shall
constitute continued listing requirements for listing the Shares on the
Exchange. The issuer has represented to the Exchange that it will
advise the Exchange of any failure by the Fund to comply with the
continued listing requirements, and, pursuant to its obligations under
Section 19(g)(1) of the Act, the Exchange will monitor for compliance
with the continued listing requirements.\30\ If the Fund is not in
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under the Nasdaq 5800 Series.
---------------------------------------------------------------------------

\30\ The Commission notes that certain other proposals for the
listing and trading of Managed Fund Shares include a representation
that the exchange will ``surveil'' for compliance with the continued
listing requirements. See, e.g., Securities Exchange Act Release No.
78005 (Jun. 7, 2016), 81 FR 38247 (Jun. 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.
---------------------------------------------------------------------------

The approval order is based on all of the Exchange's
representations, including those set forth above and in Amendments No.
1 and 2. In particular, the Commission notes that, although the Shares
will be available for purchase and sale on an intraday basis, the
Shares will be purchased and sold at prices directly linked to the
Fund's next-determined NAV. Further, the Commission notes that the Fund
and the Shares must comply with the requirements of Nasdaq Rule 5745
and the conditions set forth in this proposed rule change to be listed
and traded on the Exchange on an initial and continuing basis.
For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendments No. 1 and 2, is consistent with
Section 6(b)(5) \31\ and Section 11A(a)(1)(C)(iii) of the Act,\32\ and
the rules and regulations thereunder applicable to a national
securities exchange.
---------------------------------------------------------------------------

\31\ 15 U.S.C. 78f(b)(5).
\32\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

IV. Conclusion

It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\33\ that the proposed rule change (SR-NASDAQ-2017-124), as
modified by Amendments No. 1 and 2, be, and hereby is, approved.
---------------------------------------------------------------------------

\33\ 15 U.S.C. 78s(b)(2).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
---------------------------------------------------------------------------

\34\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-01207 Filed 1-23-18; 8:45 am]
BILLING CODE 8011-01-P