[Federal Register Volume 83, Number 93 (Monday, May 14, 2018)]
[Notices]
[Pages 22303-22305]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-10140]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83187; File No. SR-CboeBZX-2018-032]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To 
Continue Listing and Trading Shares of the Cambria Sovereign Bond ETF

May 8, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on May 1, 2018, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend a representation made in a 
proposed rule change previously filed with the Commission pursuant to 
Rule 19b-4 relating to the Cambria Sovereign Bond ETF (the ``Fund'') 
(f/k/a Cambria Sovereign High Yield Bond ETF).
    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

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

1. Purpose
    The shares of the Fund (the ``Shares'') are listed and traded on 
the Exchange under Rule 14.11(i), which governs the listing and trading 
of Managed Fund Shares, pursuant to an immediately effective rule 
filing.\3\ The Fund is a series of the Cambria ETF Trust (the 
``Trust''), which is organized as a Delaware statutory trust and is 
registered with the Commission as an open-end management investment 
company.\4\
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    \3\ See Securities Exchange Act Release No. 79618 (December 20, 
2016), 81 FR 95252 (December 27, 2016) (SR-BatsBZX-2016-88) (the 
``Prior Notice''). The Exchange notes that the Commission previously 
approved a proposal to list and trade the Shares on NYSE Arca, Inc. 
See Securities Exchange Act Release No. 75540 (July 28, 2015), 80 FR 
46359 (August 4, 2015) (SR-NYSEArca-2015-50) (the ``Arca Approval 
Order'').
    \4\ See Registration Statement on Form N-1A for the Trust, dated 
September 30, 2015 (File Nos. 333-180879 and 811-22704) (the 
``Registration Statement''). The Commission has issued an order 
granting certain exemptive relief to the Trust under the Investment 
Company Act of 1940 (15 U.S.C 80a-1) (``1940 Act'') (the ``Exemptive 
Order''). See Investment Company Act Release No. 30340 (January 4, 
2013) (File No. 812-13959). The Trust also submitted to the 
Commission a ``Supplement dated January 20, 2017 to the Summary 
Prospectus, Statutory Prospectus (collectively, the 
``Prospectuses'') and Statement of Additional Information (``SAI'') 
dated September 1, 2016, as each may be amended or supplemented'' 
(the ``January 20 Supplement'') outlining the proposed change to the 
investment strategy as well as a ``Supplement dated August 24, 2017 
to the Summary Prospectus, Statutory Prospectus (collectively, the 
``Prospectuses'') and Statement of Additional Information (``SAI'') 
dated September 1, 2016, as each may be amended or supplemented'' in 
order to provide notice that the investment strategy change had been 
replaced as described in the January 20 Supplement. See https://www.sec.gov/Archives/edgar/data/1529390/000139834417000671/fp0023454_497.htm and https://www.sec.gov/Archives/edgar/data/1529390/000139834417010795/fp0027628_497.htm, respectively.
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    In this proposed rule change, the Exchange proposes to amend a 
representation made in the Prior Notice relating to changes to the 
investment strategy of the Fund, as described below.\5\ The Prior 
Notice (and the Arca Approval Order) contains the following 
representation regarding the holdings of the Fund: ``under normal 
market

[[Page 22304]]

conditions,\6\ at least 80% of the value of the Fund's net assets (plus 
borrowings for investment purposes) will be invested in sovereign and 
quasi-sovereign high yield bonds (commonly known as ``junk 
bonds'').\7\'' Based on the changes to the Fund's investment strategy 
outlined in the January 20 Supplement, the Exchange is proposing to 
change this representation such that it is consistent with the new 
investment strategy. The Exchange proposes that the sentence would 
instead read ``under normal market conditions,\8\ at least 80% of the 
value of the Fund's net assets (plus borrowings for investment 
purposes) will be invested in sovereign and quasi-sovereign bonds.''
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    \5\ The Exchange notes that while a change was made to the 
principal investment strategy, there were no changes to the Fund's 
investment objective, the method or methods used to select the 
Fund's portfolio investments, or the Fund's fees and expenses.
    \6\ The term ``under normal market conditions'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the equity markets or the financial markets generally; 
operational issues causing dissemination of inaccurate market 
information; or force majeure type events such as systems failure, 
natural or man- made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption or any similar intervening 
circumstance.
    \7\ Sovereign and quasi-sovereign bonds include securities 
issued or guaranteed by foreign governments (including political 
subdivisions) or their authorities, agencies, or instrumentalities 
or by supra-national agencies. Supra-national agencies are agencies 
whose member nations make capital contributions to support the 
agencies' activities. Examples include the International Bank for 
Reconstruction and Development (the World Bank), the Asian 
Development Bank, the European Coal and Steel Community, and the 
Inter-American Development Bank.
    \8\ The term ``under normal market conditions'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the equity markets or the financial markets generally; 
operational issues causing dissemination of inaccurate market 
information; or force majeure type events such as systems failure, 
natural or man- made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption or any similar intervening 
circumstance.
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    Practically speaking, while the Fund is currently required to hold 
at least 80% of its net assets in high yield (i.e. lower credit 
quality) sovereign and quasi-sovereign bonds, this proposed change will 
additionally allow the Fund to hold investment grade (i.e. higher 
credit quality) sovereign and quasi-sovereign bonds, thereby increasing 
the credit quality of the Fund's holdings in sovereign and quasi-
sovereign bonds. As noted above, the investment objective of the Fund 
will remain unchanged. All other statements and representations made in 
the Prior Notice regarding the description of the portfolio or 
reference assets, limitations on portfolio holdings or reference 
assets, dissemination and availability of reference assets and intraday 
indicative values, and the applicability of Exchange listing rules 
specified in the Prior Notice remain true and shall continue to 
constitute continued listing requirements for the Fund. Additionally, 
the change proposed above will constitute a continued listing 
requirement for the Fund.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \9\ in general and Section 6(b)(5) of the Act \10\ in 
particular in that it is 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. Specifically, the Exchange believes 
that the proposal is 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.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
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    As described above, all of the representations from the Prior 
Notice which formed the basis for the Prior Notice becoming immediately 
effective remain true and will continue to constitute continued listing 
requirements for the Fund with the exception of the single 
representation that the Exchange is proposing to amend. This proposed 
change will not make any changes to the types of instruments that the 
Fund can hold, but will allow the Fund to hold those instruments when 
they are issued by more creditworthy issuers. As such, the Exchange 
believes that the proposal does not raise any substantive issues that 
were not previously addressed in the Prior Notice and Arca Approval 
Order. As proposed, the Fund would be able to continue to hold the same 
lower credit quality sovereign and quasi-sovereign bonds and the only 
additional investments that would become available to the Fund would be 
investment grade sovereign and quasi-sovereign bonds.
    As such, the Exchange believes that the proposal is 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 a national market system, 
and, in general, to protect investors and the public interest because 
there are no substantive issues raised by this proposal that were not 
otherwise addressed by the Prior Notice and the Arca Approval Order.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange believes that 
the proposal to allow the Fund to amend its investment strategy will 
enhance competition among both market participants and listing venues, 
to the benefit of investors and the marketplace.

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

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

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \13\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \14\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay to allow 
the Fund to immediately improve the credit quality of its bond 
portfolio while complying with the applicable continued listing 
representations. The Exchange does not believe that there is any reason 
for delay when the change is only designed to allow the Fund to hold 
higher credit quality versions of instruments that it is already 
allowed to hold. The

[[Page 22305]]

Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposed rule change operative upon filing.\15\
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    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number CboeBZX-2018-032 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 CboeBZX-2018-032. 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 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 CboeBZX-2018-032 and should be submitted on 
or before June 4, 2018.
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    \16\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10140 Filed 5-11-18; 8:45 am]
 BILLING CODE 8011-01-P