[Federal Register Volume 84, Number 189 (Monday, September 30, 2019)]
[Notices]
[Pages 51649-51654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-21094]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-87095; File No. SR-CboeBZX-2019-083]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change Regarding Certain Changes to
Investments of the Aptus Collared Income Opportunity ETF, a Series of
ETF Series Solutions
September 24, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on September 16, 2019, Cboe BZX Exchange, Inc. (the ``Exchange''
or ``BZX'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I and II
below, which Items have been prepared by the Exchange. The Exchange
filed the proposal as a ``non-controversial'' proposed rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-
4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes a rule change to allow the Aptus Collared
Income Opportunity ETF (the ``Fund''), a series of ETF Series Solutions
(the ``Trust''), to hold certain instruments in a manner that does not
necessarily comply with Rule 14.11(i) (``Managed Fund Shares''). The
shares of the Fund are referred to herein as the ``Shares.''
The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, 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 aspects 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 are currently listed on the Exchange pursuant to the
generic listing standards applicable to Managed Fund Shares under Rule
14.11(i) \5\ (the ``Generic Listing Standards'') and began trading on
July 10, 2019. While the Fund currently meets all of the Generic
Listing Standards, the Adviser would like to increase the flexibility
of the Fund's holdings in a way that might not meet such requirements.
As such, the Exchange submits this proposal in order
[[Page 51650]]
to allow the Shares to continue listing and trading on the Exchange
while holding certain listed derivatives in a manner that may not
comply with Rule 14.11(i)(4)(C)(iv)(b).\6\ Specifically, the Exchange
is proposing to allow the Fund to hold options on the S&P 500 Index
(``SPX Options'') and/or options on the SPDR S&P 500 ETF Trust
(``SPY'') (``SPY Options'' and, collectively with SPX Options, ``S&P
500 Options'') in a manner that exceeds both the 30% Limit and the 65%
Limit. Otherwise, the Fund will continue to comply with all other
listing standards on an initial and continued listing basis under Rule
14.11(i). As noted above, the Fund currently meets the Generic Listing
Standards and will continue to meet the Generic Listing Standards until
and unless this proposal becomes operative.
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\5\ The Commission approved Rule 14.11(i) in Securities Exchange
Act Release No. 65225 (August 30, 2011), 76 FR 55148 (September 6,
2011) (SR-BATS-2011-018).
\6\ Rule 14.11(i)(4)(C)(iv)(b) provides that ``the aggregate
gross notional value of listed derivatives based on any five or
fewer underlying reference assets shall not exceed 65% of the weight
of the portfolio (including gross notional exposures) (the ``65%
Limit''), and the aggregate gross notional value of listed
derivatives based on any single underlying reference asset shall not
exceed 30% of the weight of the portfolio (including gross notional
exposures) (the ``30% Limit'').''
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The Exchange notes that the proposed exceptions to the Generic
Listing Standards included in this proposal are substantively identical
to exceptions previously approved by the Commission and do not raise
any new issues that the Commission has not previously contemplated.\7\
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\7\ The Exchange notes that this proposal is very similar to
several previously submitted proposals to list and trade a series of
Index Fund Shares (which are referred to as Investment Company Units
under the rules of NYSE Arca, Inc.) and Managed Fund Shares with
exposures to a single underlying reference asset that were either
approved by the Commission or effective upon filing. See Securities
Exchange Act Release Nos. 83146 (May 1, 2018), 83 FR 20103 (May 7,
2018) (SR-CboeBZX-2018-029); 83679 (July 20, 2018), 83 FR 35505
(July 26, 2018); 77045 (February 3, 2016), 81 FR 6916 (February 9,
2016) (SR-NYSEArca-2015-113) (the ``Amendment''); and 74675 (April
8, 2015), 80 FR 20038 (April 14, 2015) (SR-NYSEArca-2015-05)
(collectively, with the Amendment, the ``Arca Filing'').
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The Shares are offered by the Trust, which was established as a
Delaware statutory trust on February 9, 2012.\8\ The Trust is
registered with the Commission as an open-end investment company and
has filed a registration statement on behalf of the Fund on Form N-1A
(``Registration Statement'') with the Commission.\9\ Aptus Capital
Advisors, LLC (the ``Adviser'') serves as investment adviser to the
Fund. Rule 14.11(i)(7) provides that, if the investment adviser to the
investment company issuing Managed Fund Shares is affiliated with a
broker-dealer, such investment adviser shall erect a ``fire wall''
between the investment adviser and the broker-dealer with respect to
access to information concerning the composition and/or changes to such
investment company portfolio.\10\ In addition, Rule 14.11(i)(7) further
requires that personnel who make decisions on the investment company's
portfolio composition must be subject to procedures designed to prevent
the use and dissemination of material nonpublic information regarding
the applicable investment company portfolio. The Adviser is not a
broker-dealer and is not affiliated with a broker-dealer. In addition,
Adviser personnel who make decisions regarding the Fund's portfolio are
subject to procedures designed to prevent the use and dissemination of
material nonpublic information regarding the Fund's portfolio. In the
event that (a) the Adviser becomes registered as a broker-dealer or
newly affiliated with a broker-dealer, or (b) any new adviser or sub-
adviser is a registered broker-dealer or becomes affiliated with a
broker-dealer, it will implement and maintain a fire wall with respect
to its relevant personnel or such broker-dealer affiliate, as
applicable, regarding access to information concerning the composition
and/or changes to the 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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\8\ The Commission has issued an order, upon which the Trust may
rely, granting certain exemptive relief under the 1940 Act. See
Investment Company Act Release No. 32110 (May 10, 2016) (File No.
812-14604).
\9\ See Registration Statement on Form N-1A for the Trust, dated
April 26, 2019 (File Nos. 333-179562 and 811-22668). The
descriptions of the Fund and the Shares contained herein are based,
in part, on information in the Registration Statement.
\10\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and its related personnel are
subject to the provisions of Rule 204A-1 under the Advisers Act
relating to codes of ethics. This Rule requires investment advisers
to adopt a code of ethics that reflects the fiduciary nature of the
relationship to clients as well as compliance with 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.
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Aptus Collared Income Opportunity ETF
According to the Registration Statement, the Fund seeks current
income and capital appreciation. The Fund is an actively-managed
exchange-traded fund (``ETF'') that seeks to achieve its investment
objective principally by investing in a portfolio of large
capitalization U.S.-listed equity securities and an options collar
(i.e., a mix of written (sold) call options and long (bought) put
options) on the same underlying equity securities. The equity
securities and options held by the Fund must be listed on a U.S.-
exchange.
The Adviser selects the Fund's equity securities based on the
Adviser's assessment of the likelihood that the dividends paid by the
issuer will increase or remain stable and based on the liquidity of the
options available for such security. The Adviser considers factors
primarily related to yield, earnings growth, revenue growth, and
distribution history in assessing the likelihood that the dividends
paid by an issuer will increase or remain stable. The Fund's portfolio
will typically consist of approximately 30 equity securities across a
variety of industries, with generally no more than 30% of the Fund's
net assets invested in companies in a single sector. The Fund's options
collar strategy typically consists of two components: (i) Selling
covered call options on up to 100% of the equity securities held by the
Fund to generate premium from such options, while (ii) simultaneously
reinvesting a portion of such premium to buy put options on all or a
significant portion of an equity position held by the Fund to ``hedge''
or mitigate the downside risk associated with owning equity securities.
The Fund seeks to generate income from the combination of dividends
received from the equity securities held by the Fund and premiums
received from the sale of options.
The equity securities held by the Fund will meet the requirements
of Rule 14.11(i)(4)(C)(i)(a) and the single equity options contracts
will meet the requirements of Rule 14.11(i)(4)(C)(iv)(a) and (b).
In addition to the above described principal investment strategy,
the Fund may also invest in a ``bull call spread'' options strategy as
a non-principal investment strategy. The Fund's bull call spread
strategy entails (i) the purchase of at-the-money call S&P 500 Options
(i.e., call options with a strike price roughly equal to the current
price
[[Page 51651]]
of the underlying asset); and (ii) writing (selling) out-of-the-money
call S&P 500 Options (i.e., call options with a strike price higher
than the current price of the underlying asset). The Adviser expects to
generally invest less than 5% of the Fund's net assets in the bull call
spread options strategy, however, the gross notional value of such
positions may exceed the 30% Limit and the 65% Limit.
S&P 500 Options
The market for options contracts on the S&P 500 Index traded on
Cboe Exchange, Inc. (``Cboe Options'') is among the most liquid markets
in the world. In August 2019, approximately 1.488 million options
contracts on the S&P 500 Index were traded per day, which is more than
$430 billion in notional volume traded on a daily basis. Similarly,
more than 75 million options contracts referencing SPY were traded in
August 2019, representing more than $105 billion in notional volume on
a daily basis. The Exchange believes that sufficient protections are in
place to protect against market manipulation of the Fund's Shares and
S&P 500 Options for several reasons: (i) The diversity, liquidity, and
market cap of the securities underlying the S&P 500 Index; (ii) the
significant liquidity in the market for SPX Options and SPY Options;
and (iii) surveillance by the Exchange, Cboe Options, other U.S.
options exchanges, and the Financial Industry Regulatory Authority
(``FINRA'') designed to detect violations of the federal securities
laws and self-regulatory organization (``SRO'') rules. The Exchange has
in place a surveillance program for transactions in ETFs to ensure the
availability of information necessary to detect and deter potential
manipulations and other trading abuses, thereby making the Shares less
readily susceptible to manipulation. Further, the Exchange believes
that because the S&P 500 Options in the Fund's portfolio will be
acquired in extremely liquid and highly regulated markets,\11\ the
Shares are less readily susceptible to manipulation.
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\11\ All exchange-listed securities that the Fund may hold will
trade on a market that is a member of the Intermarket Surveillance
Group (``ISG'') and the Fund will not hold any non-exchange-listed
equities or options, however, not all of the components of the
portfolio for the Fund may trade on exchanges that are members of
the ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement. For a list of the current members of
ISG, see www.isgportal.org.
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The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. Trading of the Shares
through the Exchange will be subject to the Exchange's surveillance
procedures for derivative products, including Managed Fund Shares. All
statements and representations made in this filing regarding (a) the
description of the portfolio and reference assets, (b) limitations on
portfolio holdings or reference assets, or (c) the applicability of
Exchange 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 or
the Shares to comply with the continued listing requirements, and,
pursuant to its obligations under Section 19(g)(1) of the Act, the
Exchange will surveil for compliance with the continued listing
requirements. If the Fund or the Shares are not in compliance with the
applicable listing requirements, then the Exchange will commence
delisting procedures under Exchange Rule 14.12. FINRA conducts certain
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. If the Fund is
not in compliance with the applicable listing requirements, the
Exchange will commence delisting procedures for the Fund under Exchange
Rule 14.12.
The Exchange or FINRA, on behalf of the Exchange, will communicate
as needed regarding trading in the Shares and exchange-traded options
contracts with other markets and other entities that are members of the
ISG and may obtain trading information regarding trading in the Shares
as well as the equities and exchange-traded options contracts held by
the Fund from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares,
equities, and exchange-traded options contracts 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, the
Exchange also has a general policy prohibiting the distribution of
material, non-public information by its employees.
As noted above, SPX Options and SPY Options are among the most
liquid options in the world and derive their value from the actively
traded S&P 500 Index components. The contracts trade in competitive
auction markets with price and quote transparency. The Exchange
believes the highly regulated options markets and the broad base and
scope of the S&P 500 Index make securities that derive their value from
that index less susceptible to market manipulation in view of market
capitalization and liquidity of the S&P 500 Index components, the
market cap and liquidity of SPY, price and quote transparency, and
arbitrage opportunities.
The Exchange believes that the liquidity of the markets for SPY,
S&P 500 Index securities, SPX Options, and SPY Options, and other
related derivatives is sufficiently great to deter fraudulent or
manipulative acts associated with the price of the Shares. The Exchange
also believes that such liquidity is sufficient to support the creation
and redemption mechanism. Coupled with the extensive surveillance
programs of the SROs described above, the Exchange does not believe
that trading in the Shares would present manipulation concerns.
The Exchange represents that, except for the limitations on listed
derivatives in BZX Rule 14.11(i)(4)(C)(iv)(b), the Fund's proposed
investments will satisfy, on an initial and continued listing basis,
all of the generic listing standards under BZX Rule 14.11(i)(4)(C) and
all other applicable requirements for Managed Fund Shares under Rule
14.11(i). The Trust is required to comply with Rule 10A-3 under the Act
for the initial and continued listing of the Shares of the Fund. In
addition, the Exchange represents that the Shares of the Fund will
continue to comply with all other requirements applicable to Managed
Fund Shares, which includes the dissemination of key information such
as the Disclosed Portfolio,\12\ Net Asset Value,\13\ and the Intraday
Indicative Value,\14\ suspension of trading or removal,\15\ trading
halts,\16\ surveillance,\17\ minimum price variation for quoting and
order entry,\18\ and the information circular,\19\ as set forth in
Exchange rules applicable to Managed Fund Shares. Further, all
statements or representations regarding the description of the
portfolio or reference assets, limitations on portfolio holdings or
reference assets, dissemination and availability of index, reference
asset, and intraday indicative values, or the applicability of Exchange
listing rules shall constitute continued listing
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requirements for the Fund. Moreover, all of the options contracts held
by the Fund will trade on markets that are a member of ISG or
affiliated with a member of ISG or with which the Exchange has in place
a comprehensive surveillance sharing agreement. Quotation and last sale
information for U.S. exchange-listed options contracts cleared by The
Options Clearing Corporation will be available via the Options Price
Reporting Authority. The intra-day, closing and settlement prices of
exchange-traded options will be readily available from the options
exchanges, automated quotation systems, published or other public
sources, or online information services such as Bloomberg or Reuters.
Price information on cash equivalents is available from major broker-
dealer firms or market data vendors, as well as from automated
quotation systems, published or other public sources, or online
information services.
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\12\ See Rule 14.11(i)(4)(A)(ii) and 14.11(i)(4)(B)(ii).
\13\ See Rule 14.11(i)(4)(A)(ii).
\14\ See Rule 14.11(i)(4)(B)(i).
\15\ See Rule 14.11(i)(4)(B)(iii).
\16\ See Rule 14.11(i)(4)(B)(iv).
\17\ See Rule 14.11(i)(2)(C).
\18\ See Rule 14.11(i)(2)(B).
\19\ See Rule 14.11(i)(6).
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2. Statutory Basis
The Exchange believes that the proposal is consistent with Section
6(b) of the Act \20\ in general and Section 6(b)(5) of the Act \21\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest, because, as noted above, the Shares will meet each of
the initial and continued listing criteria in BZX Rule 14.11(i) with
the exception of Rule 14.11(i)(4)(C)(iv)(b), which requires that the
aggregate gross notional value of listed derivatives based on any five
or fewer underlying reference assets shall not exceed 65% of the weight
of the portfolio (including gross notional exposures), and the
aggregate gross notional value of listed derivatives based on any
single underlying reference asset shall not exceed 30% of the weight of
the portfolio (including gross notional exposures).\22\ Rule
14.11(i)(4)(C)(iv)(b) is intended to ensure that the Fund is not
subject to manipulation by virtue of significant exposure to a
manipulable underlying reference asset by establishing concentration
limits among the underlying reference assets for listed derivatives
held by a particular fund.
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\20\ 15 U.S.C. 78f.
\21\ 15 U.S.C. 78f(b)(5).
\22\ As noted above, the Exchange is submitting this proposal
because the Fund would not meet the requirements of Rule
14.11(i)(4)(C)(iv)(b) which prevents the aggregate gross notional
value of listed derivatives based on any single underlying reference
asset from exceeding 30% of the weight of the portfolio (including
gross notional exposures) and the aggregate gross notional value of
listed derivatives based on any five or fewer underlying reference
assets from exceeding 65% of the weight of the portfolio (including
gross notional exposures).
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The Exchange believes that sufficient protections are in place to
protect against market manipulation of the Fund's Shares and S&P 500
Options for several reasons: (i) The diversity, liquidity, and market
cap of the securities underlying the S&P 500 Index; (ii) the
significant liquidity in the market for SPX Options and SPY Options;
and (iii) surveillance by the Exchange, Cboe Options, other U.S.
options exchanges, and FINRA designed to detect violations of the
federal securities laws and SRO rules. The Exchange has in place a
surveillance program for transactions in ETFs to ensure the
availability of information necessary to detect and deter potential
manipulations and other trading abuses, thereby making the Shares less
readily susceptible to manipulation. Further, the Exchange believes
that because the assets in the Fund's portfolio, which are comprised
primarily of S&P 500 Options, will be acquired in extremely liquid and
highly regulated markets, the Shares are less readily susceptible to
manipulation.
The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. Trading of the Shares
through the Exchange will be subject to the Exchange's surveillance
procedures for derivative products, including Managed Fund Shares. All
statements and representations made in this filing regarding (a) the
description of the portfolio and reference assets, (b) limitations on
portfolio holdings or reference assets, or (c) the applicability of
Exchange 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 or
the Shares to comply with the continued listing requirements, and,
pursuant to its obligations under Section 19(g)(1) of the Act, the
Exchange will surveil for compliance with the continued listing
requirements. If the Fund or the Shares are not in compliance with the
applicable listing requirements, then the Exchange will commence
delisting procedures under Exchange Rule 14.12. FINRA conducts certain
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. If the Fund is
not in compliance with the applicable listing requirements, the
Exchange will commence delisting procedures for the Fund under Exchange
Rule 14.12.
The Exchange or FINRA, on behalf of the Exchange, will communicate
as needed regarding trading in the Shares and exchange-traded options
contracts with other markets and other entities that are members of the
ISG and may obtain trading information regarding trading in the Shares
and exchange-traded options contracts from such markets and other
entities. In addition, the Exchange may obtain information regarding
trading in the Shares and exchange-traded options contracts 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, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees. As
noted above, SPX Options and SPY Options are among the most liquid
options in the world and derive their value from the actively traded
S&P 500 Index components. The Exchange believes the highly regulated
options markets and the broad base and scope of the S&P 500 Index make
securities that derive their value from that index less susceptible to
market manipulation in view of market capitalization and liquidity of
the S&P 500 Index components, the market cap and liquidity of SPY,
price and quote transparency, and arbitrage opportunities.
The Exchange believes that the liquidity of the markets for S&P 500
Index securities, SPY, SPX Options and SPY Options, and other related
derivatives is sufficiently great to deter fraudulent or manipulative
acts associated with the Fund's Shares price. The Exchange also
believes that such liquidity is sufficient to support the creation and
redemption mechanism. Coupled with the extensive surveillance programs
of the SROs described above, the Exchange does not believe that trading
in the Fund's Shares would present manipulation concerns.
The Exchange represents that, except as described above, the Fund
will meet and be subject to all other requirements of the Generic
Listing Standards and
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other applicable continued listing requirements for Managed Fund Shares
under Rule 14.11(i), including those requirements regarding the
Disclosed Portfolio,\23\ Intraday Indicative Value,\24\ suspension of
trading or removal,\25\ trading halts,\26\ disclosure,\27\ and
firewalls.\28\ The Trust is required to comply with Rule 10A-3 under
the Act for the initial and continued listing of the Shares of the
Fund. Moreover, all of the options contracts held by the Fund will
trade on markets that are a member of ISG or affiliated with a member
of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.
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\23\ See Rule 14.11(i)(4)(B)(ii).
\24\ See Rule 14.11(i)(4)(B)(i).
\25\ See Rule 14.11(i)(4)(B)(iii).
\26\ See Rule 14.11(i)(4)(B)(iv).
\27\ See Rule 14.11(i)(6).
\28\ See Rule 14.11(i)(7).
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Finally, this proposal would allow the Fund to hold S&P 500 Options
in a manner that is generally consistent with other series of Index
Fund Shares and Managed Fund Shares based on filings that were either
effective upon filing or that the Commission has approved for listing
and trading that also did not satisfy the applicable generic listing
standards. Specifically, the proposal is seeking similar exposure as
was approved by the Commission in the Arca Filing, which allowed the
listing of a fund based on an index with significant exposure to SPX
Options. As such, the Exchange believes the proposed rule change will
not significantly affect the protection of investors or the public
interest because the proposal contains no new issues that the
Commission has not previously contemplated.
For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will allow the Fund to fully implement its options
strategy, which 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
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 \29\ and Rule 19b-
4(f)(6) thereunder.\30\
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\29\ 15 U.S.C. 78s(b)(3)(A).
\30\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and 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.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \31\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \32\ 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 requested that the Commission waive the 30-day operative delay so
that the proposed rule change may become operative upon filing. The
Exchange believes that the proposal will enhance competition among both
market participants and listing venues to the benefit of investors and
the marketplace by providing additional flexibility for the options
strategy of the Fund. Further, the Exchange believes that the proposed
rule change will not significantly affect the protection of investors
or the public interest because the proposal does not raise any new
issues that the Commission has not previously contemplated. The
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 operative delay and
designates the proposed rule change operative upon filing.\33\
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\31\ 17 CFR 240.19b-4(f)(6).
\32\ 17 CFR 240.19b-4(f)(6)(iii).
\33\ For purposes only of waiving the 30-day operative delay,
the Commission also has 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 SR-CboeBZX-2019-083 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-CboeBZX-2019-083. 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
[[Page 51654]]
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-CboeBZX-2019-083, and should
be submitted on or before October 21, 2019.
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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-21094 Filed 9-27-19; 8:45 am]
BILLING CODE 8011-01-P