[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]]

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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.
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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. 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.
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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.
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    \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).
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    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\
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    \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.
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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\
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    \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.
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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.
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    \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).
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    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\
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    \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.
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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.
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    \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.
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    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).
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    \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.
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    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.
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    \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).
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    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\
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    \20\ See Nasdaq Rule 5745(g).
    \21\ See Nasdaq Rule 5745(b)(6).
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    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.
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    \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.
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    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.
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    \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).
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    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.
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    \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.
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    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\
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    \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.
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    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.
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    \29\ The Exchange represents that the website containing this 
information will be www.brandesfunds.com.
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    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.
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    \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.
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    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.
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    \31\ 15 U.S.C. 78f(b)(5).
    \32\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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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.
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    \33\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-01207 Filed 1-23-18; 8:45 am]
BILLING CODE 8011-01-P