[Federal Register Volume 85, Number 70 (Friday, April 10, 2020)]
[Notices]
[Pages 20312-20323]
[FR Doc No: 2020-07550]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88566; File No. SR-CboeBZX-2019-097]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of Amendment No. 2 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 2, To Adopt BZX Rule
14.11(l) Governing the Listing and Trading of Exchange-Traded Fund
Shares

April 6, 2020.
    On November 15, 2019, Cboe BZX Exchange, Inc. (``Exchange'' or
``BZX'') 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, among other things, adopt new BZX Rule
14.11(l) to list and trade Exchange-Traded Fund Shares. The proposed
rule change was published for comment in the Federal Register on
November 22, 2019.\3\
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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. 87560 (November 18,
2019), 84 FR 64607.
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    On December 17, 2019, pursuant to Section 19(b)(2) of the Act,\4\
the Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ On February 12, 2020, the Exchange filed Amendment No. 1 to
the proposed rule change, which amended and replaced the proposed rule
change in its entirety.\6\ On February 20, 2020, the Commission
published the proposed rule change, as modified by Amendment No. 1, for
notice and comment and instituted proceedings to determine whether to
approve or disapprove the proposed change, as modified by Amendment No.
1.\7\ On March 20, 2020, the Exchange

filed Amendment No. 2 to the proposed rule change, which amended and
replaced the proposed rule change, as modified by Amendment No. 1.\8\
The Commission has received no comments on the proposed rule change.
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    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 87777, 84 FR 70598
(December 23, 2019).
    \6\ See infra note 8.
    \7\ See Securities Exchange Act Release No. 88208 (February 13,
2020), 85 FR 9834.
    \8\ Amendments No. 1 and 2 to the proposed rule change is
available on the Commission's website at: https://www.sec.gov/comments/sr-cboebzx-2019-097/srcboebzx2019097.htm.
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    The Commission is publishing this notice to solicit comments on
Amendment No. 2 to the proposed rule change from interested persons,
and is approving the proposed rule change, as modified by Amendment No.
2, on an accelerated basis.

I. The Exchange's Description of the Proposal, as Modified by Amendment
No. 2

    The Exchange proposes a rule change to adopt BZX Rule 14.11(l) to
permit the listing and trading of Exchange-Traded Fund Shares that are
permitted to operate in reliance on Rule 6c-11 under the Investment
Company Act of 1940. The Exchange is also proposing to discontinue the
quarterly reports required with respect to Managed Fund Shares listed
on the Exchange pursuant to the generic listing standards under Rule
14.11(i).
    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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    This Amendment No. 2 to SR-CboeBZX-2019-097 amends and replaces in
its entirety the proposal as amended by Amendment No. 1, which was
submitted on February 12, 2020, and amended and replaced in its
entirety the proposal as originally submitted on November 15, 2019. The
Exchange submits this Amendment No. 1 in order to clarify certain
points and add additional details to the proposal.
    The Exchange proposes to add new Rule 14.11(l) \9\ for the purpose
of permitting the generic listing and trading, or trading pursuant to
unlisted trading privileges, of Exchange-Traded Fund Shares \10\ that
are permitted to operate in reliance on Rule 6c-11 (``Rule 6c-11'')
under the Investment Company Act of 1940 (the ``1940 Act'').\11\ The
Exchange is also proposing to make conforming changes to the Exchange's
corporate governance requirements under Rule 14.10(e) in order to
accommodate the proposed listing of Exchange-Traded Fund Shares.
Finally, the Exchange is proposing to discontinue the quarterly reports
required with respect to Managed Fund Shares listed on the Exchange
pursuant to the generic listing standards under Rule 14.11(i). The
Exchange notes that it plans to submit a separate filing related to
fees applicable to ETF Shares listed on the Exchange.
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    \9\ The Exchange notes that it is proposing new Rule 14.11(l)
because it has also proposed a new Rule 14.11(k) as part of another
proposal. See Securities Exchange Act Release No. 87062 (September
23, 2019), 84 FR 51193 (September 27, 2019) (SR-CboeBZX-2019-047).
    \10\ As provided below, proposed Rule 14.11(l)(3)(A) provides
that the term ``ETF Shares'' shall mean the shares issued by a
registered open-end management investment company that: (i) Is
eligible to operate in reliance on Rule 6c-11 under the Investment
Company Act of 1940; (ii) issues (and redeems) creation units to
(and from) authorized participants in exchange for a basket and a
cash balancing amount (if any); and (iii) issues shares that it
intends to list or are listed on a national securities exchange and
traded at market-determined prices.
    \11\ 15 U.S.C. 80a-1.
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    The Commission recently adopted Rule 6c-11 to permit exchange-
traded funds (``ETFs'') that satisfy certain conditions to operate
without obtaining an exemptive order from the Commission under the 1940
Act.\12\ Since the first ETF was approved by the Commission in 1992,
the Commission has routinely granted exemptive orders permitting ETFs
to operate under the 1940 Act because there was no ETF specific rule in
place and they have characteristics that distinguish them from the
types of structures contemplated and included in the 1940 Act. After
such an extended period operating without a specific rule set and only
under exemptive relief, Rule 6c-11 is designed to provide a consistent,
transparent, and efficient regulatory framework for ETFs.\13\ Exchange
listing standards applicable to ETFs have been similarly adopted and
tweaked over the years and the Exchange believes that, just as the
Commission has undertaken a review of the 1940 Act as it is applicable
to ETFs, it is appropriate to perform a similar holistic review and
overhaul of Exchange listing rules. With this in mind, the Exchange
submits this proposal to add new Rule 14.11(l) and certain
corresponding rule changes because it believes that this proposal
similarly promotes consistency, transparency, and efficiency
surrounding the exchange listing process for ETF Shares in a manner
that is consistent with the Act, as further described below.\14\ Except
as otherwise provided, the Exchange would continue to enforce all
governance, disclosure, and trading rules for ETF Shares, as defined
below, listed on the Exchange.
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    \12\ See Release Nos. 33-10695; IC-33646; File No. S7-15-18
(Exchange-Traded Funds) (September 25, 2019), 84 FR 57162 (October
24, 2019) (the ``Rule 6c-11 Release'').
    \13\ In approving the rule, the Commission stated that the
``rule will modernize the regulatory framework for ETFs to reflect
our more than two decades of experience with these investment
products. The rule is designed to further important Commission
objectives, including establishing a consistent, transparent, and
efficient regulatory framework for ETFs and facilitating greater
competition and innovation among ETFs.'' Rule 6c-11 Release, at
57163. The Commission also stated the following regarding the rule's
impact: ``We believe rule 6c-11 will establish a regulatory
framework that: (1) Reduces the expense and delay currently
associated with forming and operating certain ETFs unable to rely on
existing orders; and (2) creates a level playing field for ETFs that
can rely on the rule. As such, the rule will enable increased
product competition among certain ETF providers, which can lead to
lower fees for investors, encourage financial innovation, and
increase investor choice in the ETF market.'' Rule 6c-11 Release, at
57204
    \14\ The Exchange deems ETF Shares to be equity securities, thus
rendering trading in any series of ETF Shares subject to the
Exchange's existing rules governing the trading of equity
securities. With respect to trading in ETF Shares, all of the BZX
Member obligations relating to product description and prospectus
delivery requirements will continue to apply in accordance with
Exchange rules and federal securities laws, and the Exchange will
continue to monitor its Members for compliance with such
requirements, which are not changing as a result of Rule 6c-11 under
the 1940 Act.
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    Consistent with Index Fund Shares and Managed Fund Shares listed
under the generic listing standards in Rules 14.11(c) and 14.11(i),
respectively, series of Exchange-Traded Fund Shares that are permitted
to operate in reliance on Rule 6c-11 would be permitted to be listed
and traded on the Exchange without a prior Commission approval order or
notice of effectiveness pursuant to Section 19(b) of the Act.\15\
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    \15\ Rule 19b-4(e)(1) provides that the listing and trading of a
new derivative securities product by a self-regulatory organization
(``SRO'') is not deemed a proposed rule change, pursuant to
paragraph (c)(1) of Rule 19b-4, if the Commission has approved,
pursuant to Section 19(b) of the Act, the SRO's trading rules,
procedures and listing standards for the product class that would
include the new derivative securities product and the SRO has a
surveillance program for the product class. As contemplated by this
Rule 14.11(l), the Exchange proposes new Rule 14.11(l) to establish
generic listing standards for ETFs that are permitted to operate in
reliance on Rule 6c-11. An ETF listed under proposed Rule 14.11(l)
would therefore not need a separate proposed rule change pursuant to
Rule 19b-4 before it can be listed and traded on the Exchange.

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Proposed Listing Rules
    Proposed Rule 14.11(l)(1) provides that the Exchange will consider
for trading, whether by listing or pursuant to unlisted trading
privileges, the shares of Exchange-Traded Funds (``ETF Shares'') that
meet the criteria of this Rule 14.11(l).\16\
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    \16\ To the extent that a series of ETF Shares does not satisfy
one or more of the criteria in proposed Rule 14.11(l), the Exchange
may file a separate proposal under Section 19(b) of the Act in order
to list such series on the Exchange. Consistent with Rule 14.11(a),
any of the statements or representations in that proposal regarding
the index composition, 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 (as applicable), or the applicability of
Exchange listing rules specified in any filing to list such series
of ETF Shares shall constitute continued listing requirements for
the series of ETF Shares. Further, in the event that a series of ETF
Shares becomes listed under proposed Rule 14.11(l) and subsequently
can no longer rely on Rule 6c-11, so long as the series of ETF
Shares may otherwise rely on exemptive relief issued by the
Commission, such series of ETF Shares may be listed as a series of
Index Fund Shares under Rule 14.11(c) or Managed Fund Shares under
Rule 14.11(i), as applicable, as long as the series of ETF Shares
meets all listing requirements applicable under the applicable rule.
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    Proposed Rule 14.11(l)(2) provides that the proposed rule would be
applicable only to ETF Shares. Except to the extent inconsistent with
this Rule 14.11(l), or unless the context otherwise requires, the rules
and procedures of the Board of Directors shall be applicable to the
trading on the Exchange of such securities. ETF Shares are included
within the definition of ``security'' or ``securities'' as such terms
are used in the Rules of the Exchange.
    Proposed Rule 14.11(l)(2) further provides that: (A) Transactions
in ETF Shares will occur throughout the Exchange's trading hours; (B)
the minimum price variation for quoting and entry of orders in ETF
Shares is $0.01; \17\ and (C) the Exchange will implement and maintain
written surveillance procedures for ETF Shares.
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    \17\ Consistent with Exchange Rules 11.11(a)(1) and
14.11(i)(2)(B), the Exchange notes that the proposed minimum price
variation is identical to the minimum price variation for Index Fund
Shares and Managed Fund Shares.
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    Proposed Rule 14.11(l)(3)(A) provides that the term ``ETF Shares''
shall mean shares of stock issued by an Exchange-Traded Fund.
    Proposed Rule 14.11(l)(3)(B) provides that the term ``Exchange-
Traded Fund'' has the same meaning as the term ``exchange-traded fund''
as defined in Rule 6c-11 under the Investment Company Act of 1940.
    Proposed Rule 14.11(l)(3)(C) provides that the term ``Reporting
Authority'' in respect of a particular series of ETF Shares means the
Exchange, an institution, or a reporting service designated by the
Exchange or by the exchange that lists a particular series of ETF
Shares (if the Exchange is trading such series pursuant to unlisted
trading privileges) as the official source for calculating and
reporting information relating to such series, including, but not
limited to, the amount of any dividend equivalent payment or cash
distribution to holders of ETF Shares, net asset value, index or
portfolio value, the current value of the portfolio of securities
required in connection with issuance of ETF Shares, or other
information relating to the issuance, redemption or trading of ETF
Shares. A series of ETF Shares may have more than one Reporting
Authority, each having different functions.\18\
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    \18\ The Exchange notes that the definition of Reporting
Authority is based on the definitions provided under Rule
14.11(c)(1)(C) and 14.11(i)(3)(D) related to Index Fund Shares and
Managed Fund Shares, respectively.
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    Proposed Rule 14.11(l)(4) provides that the Exchange may approve a
series of ETF Shares for listing and/or trading (including pursuant to
unlisted trading privileges) on the Exchange pursuant to Rule 19b-4(e)
under the Act, provided such series of ETF Shares is eligible to
operate in reliance on Rule 6c-11 under the Investment Company Act of
1940 and must satisfy the requirements of this Rule 14.11(l) on an
initial and continued listing basis.
    Proposed Rule 14.11(l)(4)(A) provides that the requirements of Rule
6c-11 must be satisfied by a series of ETF Shares on an initial and
continued listing basis. Such securities must also satisfy the
following criteria on an initial and, except for paragraph (i) below,
continued, listing basis. Further, proposed Rule 14.11(l)(4)(A)
provides that: (i) For each series, the Exchange will establish a
minimum number of ETF Shares required to be outstanding at the time of
commencement of trading on the Exchange; (ii) if an index underlying a
series of ETF Shares is maintained by a broker-dealer or fund adviser,
the broker-dealer or fund adviser shall erect and maintain a ``fire
wall'' around the personnel who have access to information concerning
changes and adjustments to the index and the index shall be calculated
by a third party who is not a broker-dealer or fund adviser. If the
investment adviser to the investment company issuing an actively
managed series of ETF Shares is affiliated with a broker-dealer, such
investment adviser shall erect and maintain 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 Exchange-
Traded Fund's portfolio; and (iii) any advisory committee, supervisory
board, or similar entity that advises a Reporting Authority or that
makes decisions on the composition, methodology, and related matters of
an index underlying a series of ETF Shares, must implement and
maintain, or be subject to, procedures designed to prevent the use and
dissemination of material non-public information regarding the
applicable index. For actively managed Exchange-Traded Funds, personnel
who make decisions on the portfolio composition must be subject to
procedures designed to prevent the use and dissemination of material
nonpublic information regarding the applicable portfolio.\19\
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    \19\ The proposed requirements under proposed Rule
14.11(l)(4)(A) are substantively identical to the equivalent
provisions for Index Fund Shares and Managed Fund Shares under Rules
14.11(c)(3)(B)(i) and (iii), 14.11(c)(4)(C)(i) and (iii),
14.11(c)(5)(A)(i) and (iii), and 14.11(i)(7).
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    Proposed Rule 14.11(l)(4)(B) provides that each series of ETF
Shares will be listed and traded on the Exchange subject to application
of Proposed Rule 14.11(l)(4)(B)(i) and (ii). Proposed Rule
14.11(l)(4)(B)(i) provides that the Exchange will consider the
suspension of trading in, and will commence delisting proceedings under
Rule 14.12 for, a series of ETF Shares under any of the following
circumstances: (a) If the Exchange becomes aware that the issuer of the
ETF Shares is no longer eligible to operate in reliance on Rule 6c-11
under the Investment Company Act of 1940; (b) if any of the other
listing requirements set forth in this Rule 14.11(l) are not
continuously maintained; (c) if, following the initial twelve month
period after commencement of trading on the Exchange of a series of ETF
Shares, there are fewer than 50 beneficial holders of the series of ETF
Shares for 30 or more consecutive trading days; or (d) if such other
event shall occur or condition exists which, in the opinion of the
Exchange, makes further dealings on the Exchange inadvisable. Proposed
Rule 14.11(l)(4)(B)(ii) provides that upon termination of an investment
company, the Exchange requires that ETF Shares issued in connection
with

such entity be removed from Exchange listing.
    Proposed Rule 14.11(l)(5) provides that neither the Exchange, the
Reporting Authority, nor any agent of the Exchange shall have any
liability for damages, claims, losses or expenses caused by any errors,
omissions, or delays in calculating or disseminating any current index
or portfolio value; the current value of the portfolio of securities
required to be deposited in connection with issuance of ETF Shares; the
amount of any dividend equivalent payment or cash distribution to
holders of ETF Shares; net asset value; or other information relating
to the purchase, redemption, or trading of ETF Shares, resulting from
any negligent act or omission by the Exchange, the Reporting Authority,
or any agent of the Exchange, or any act, condition, or cause beyond
the reasonable control of the Exchange, its agent, or the Reporting
Authority, including, but not limited to, an act of God; fire; flood;
extraordinary weather conditions; war; insurrection; riot; strike;
accident; action of government; communications or power failure;
equipment or software malfunction; or any error, omission, or delay in
the reports of transactions in one or more underlying securities.\20\
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    \20\ The Exchange notes that proposed Rule 14.11(l)(5) is
substantively identical to the equivalent Rules for Index Fund
Shares and Managed Fund Shares under Rule 14.11(c)(10) and
14.11(i)(5).
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    Proposed Rule 14.11(l)(6) provides that a security that has
previously been approved for listing on the Exchange pursuant to the
generic listing requirements specified in Rule 14.11(c) or Rule
14.11(i), or pursuant to the approval of a proposed rule change or
subject to a notice of effectiveness by the Commission, may be
considered for listing solely under this Rule 14.11(l) if such security
is eligible to operate in reliance on Rule 6c-11 under the 1940 Act. At
the time of listing of such security under this Rule 14.11(l), the
continued listing requirements applicable to such previously-listed
security will be those specified in paragraph (b) of this Rule
14.11(l). Any requirements for listing as specified in Rule 14.11(c) or
Rule 14.11(i), or an approval order or notice of effectiveness of a
separate proposed rule change, that differ from the requirements of
this Rule 14.11(l) will no longer be applicable to such security.
    The Exchange is also proposing to make two corresponding amendments
to include ETF Shares in other Exchange rules. Specifically, the
Exchange is also proposing: (i) To amend Rule 14.10(e)(1)(E) and
Interpretation and Policy .13 to Rule 14.10 in order to add ETF Shares
to a list of product types listed on the Exchange, including Index Fund
Shares, Managed Fund Shares, and Managed Portfolio Shares, that are
exempted from the Audit Committee requirements set forth in Rule
14.10(c)(3), except for the applicable requirements of SEC Rule 10A-3;
\21\ and (ii) to amend Rule 14.11(c)(3)(A)(i)(a) in order to include
ETF Shares in the definition of Derivative Securities Products.
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    \21\ The Exchange notes that these proposed changes would
subject ETF Shares to the same corporate governance requirements as
other open-end management investment companies listed on the
Exchange.
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Discussion
    Proposed Rule 14.11(l) is based in large part on Rules 14.11(c) and
(i) related to the listing and trading of Index Fund Shares and Managed
Fund Shares on the Exchange, respectively, both of which are issued
under the 1940 Act and would qualify as ETF Shares after Rule 6c-11 is
effective. Rule 14.11(c) and 14.11(i) are very similar, their primary
difference being that Index Fund Shares are designed to track an
underlying index and Managed Fund Shares are based on an actively
managed portfolio that is not designed to track an index. As such, the
Exchange believes that using Rules 14.11(c) and (i) (collectively, the
``Current ETF Standards'') as the basis for proposed Rule 14.11(l) is
appropriate because they are generally designed to address the issues
associated with ETF Shares. The only substantial differences between
proposed Rule 14.11(l) and the Current ETF Standards that are not
otherwise required under Rule 6c-11 are as follows: (i) Proposed Rule
14.11(l) does not include the quantitative standards applicable to a
fund or an index that are included in the Current ETF Standards; and
(ii) proposed Rule 14.11(l) does not include any requirements related
to the dissemination of a fund's Intraday Indicative Value.\22\ These
differences are discussed below.
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    \22\ For purposes of this filing, the term ``Intraday Indicative
Value'' or ``IIV'' shall mean an intraday estimate of the value of a
share of each series of either Index Fund Shares or Managed Fund
Shares.
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Quantitative Standards
    The Exchange believes that the proposal is designed to prevent
fraudulent and manipulative acts and practices because the Exchange
will perform ongoing surveillance of ETF Shares listed on the Exchange
in order to ensure compliance with Rule 6c-11 and the 1940 Act on an
ongoing basis. While proposed Rule 14.11(l) does not include the
quantitative requirements applicable to an ETF or an ETF's holdings or
underlying index that are included in Rules 14.(c) and 14.11(i),\23\
the Exchange believes that the manipulation concerns that such
standards are intended to address are otherwise mitigated by a
combination of the Exchange's surveillance procedures, the Exchange's
ability to halt trading under the proposed Rule 14.11(l)(4)(B)(ii), and
the Exchange's ability to suspend trading and commence delisting
proceedings under proposed Rule 14.11(l)(4)(B)(i). The Exchange will
also halt trading in ETF Shares under the conditions specified in Rule
11.18, ``Trading Halts Due to Extraordinary Market Volatility.'' The
Exchange also believes that such concerns are further mitigated by
enhancements to the arbitrage mechanism that will come from Rule 6c-11,
specifically the additional flexibility provided to issuers of ETF
Shares through the use of custom baskets for creations and redemptions
and the additional information made available to the public through the
additional daily website disclosure obligations applicable under Rule
6c-11.\24\ The Exchange believes that the combination of these factors
will act to keep ETF Shares trading near the value of their underlying
holdings and further mitigate concerns around manipulation of ETF
Shares on the Exchange without the inclusion of quantitative
standards.\25\ The Exchange will monitor for compliance with Rule 6c-11
in order to ensure that the continued listing standards are being
met.\26\ Specifically, the Exchange will review the website of each
series of ETF Shares listed on the Exchange in order to ensure that the

requirements of Rule 6c-11 are being met. The Exchange will also employ
numerous intraday alerts that will notify Exchange personnel of trading
activity throughout the day that is potentially indicative of certain
disclosures not being made accurately or the presence of other unusual
conditions or circumstances that could be detrimental to the
maintenance of a fair and orderly market. As a backstop to the
surveillances described above, the Exchange also notes that Rule
14.11(a) would require an issuer of ETF Shares to notify the Exchange
of any failure to comply with Rule 6c-11 or the 1940 Act.
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    \23\ The Exchange notes that Rules 14.11(c) and (i) include
certain quantitative standards related to the size, trading volume,
concentration, and diversity of the holdings of a series of Index
Fund Shares or Managed Fund Shares (the ``Holdings Standards'') as
well as related to the minimum number of beneficial holders of a
fund (the ``Distribution Standards''). The Exchange believes that to
the extent that manipulation concerns are mitigated based on the
factors described herein, such concerns are mitigated both as it
relates to the Holdings Standards and the Distribution Standards.
    \24\ The Exchange notes that the Commission came to a similar
conclusion in several places in the Rule 6c-11 Release. See Rule 6c-
11 Release at 15-18; 60-61; 69-70; 78-79; 82-84; and 95-96.
    \25\ The Exchange believes that this applies to all quantitative
standards, whether applicable to the portfolio holdings of a series
of ETF Shares or the distribution of the ETF Shares.
    \26\ As noted throughout, proposed Rule 14.11(l), unlike Rule
14.11(c) and 14.11(i), does not include Holdings Standards and, as
such, there will be no quantitative standards applicable by the
Exchange to the portfolio holdings of a series of ETF Shares on an
initial or continued listing basis.
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    The Exchange may suspend trading in and commence delisting
proceedings for a series of ETF Shares where such series is not in
compliance with the applicable listing standards or where the Exchange
believes that further dealings on the Exchange are inadvisable.\27\ The
Exchange also notes that Rule 14.11(a) requires any issuer to provide
the Exchange with prompt notification after it becomes aware of any
non-compliance with proposed Rule 14.11(l), which would include any
failure of the issuer to comply with Rule 6c-11 or the 1940 Act.\28\
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    \27\ Specifically, proposed Rule 14.11(l)(4)(B) provides that
each series of ETF Shares will be listed and traded on the Exchange
subject to application of Proposed Rule 14.11(l)(4)(B)(i) and (ii).
Proposed Rule 14.11(l)(4)(B)(i) provides that the Exchange will
consider the suspension of trading in, and will commence delisting
proceedings under Rule 14.12 for, a series of ETF Shares under any
of the following circumstances: (a) If the Exchange becomes aware
that the issuer of the ETF Shares is no longer eligible to operate
in reliance on Rule 6c-11 under the Investment Company Act of 1940;
(b) if any of the other listing requirements set forth in this Rule
14.11(l) are not continuously maintained; (c) if, following the
initial twelve month period after commencement of trading on the
Exchange of a series of ETF Shares, there are fewer than 50
beneficial holders of the series of ETF Shares for 30 or more
consecutive trading days; or (d) if such other event shall occur or
condition exists which, in the opinion of the Exchange, makes
further dealings on the Exchange inadvisable. Proposed Rule
14.11(l)(4)(B)(ii) provides that upon termination of an investment
company, the Exchange requires that ETF Shares issued in connection
with such entity be removed from Exchange listing.
    \28\ The Exchange notes that failure by an issuer to notify the
Exchange of non-compliance pursuant to Rule 14.11(a) would itself be
considered non-compliance with the requirements of Rule 14.11 and
would subject the series of ETF Shares to potential trading halts
and the delisting process under Rule 14.12.
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    Further, the Exchange also represents that its surveillance
procedures are adequate to properly monitor the trading of the ETF
Shares in all trading sessions and to deter and detect violations of
Exchange rules and applicable federal securities laws. Specifically,
the Exchange intends to utilize its existing surveillance procedures
applicable to derivative products, which are currently applicable to
Index Fund Shares and Managed Fund Shares, among other product types,
to monitor trading in ETF Shares. The Exchange or the Financial
Industry Regulatory Authority, Inc. (``FINRA''), on behalf of the
Exchange, will communicate as needed regarding trading in ETF Shares
and certain of their applicable underlying components with other
markets that are members of the Intermarket Surveillance Group
(``ISG'') or with which the Exchange has in place a comprehensive
surveillance sharing agreement. In addition, the Exchange may obtain
information regarding trading in ETF Shares and certain of their
applicable underlying components from markets and other entities that
are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement. Additionally, FINRA, on
behalf of the Exchange, is able to access, as needed, trade information
for certain fixed income securities that may be held by a series of ETF
Shares reported to FINRA's Trade Reporting and Compliance Engine
(``TRACE''). FINRA also can access data obtained from the Municipal
Securities Rulemaking Board's (``MSRB'') Electronic Municipal Market
Access (``EMMA'') system relating to municipal bond trading activity
for surveillance purposes in connection with trading in a series of ETF
Shares, to the extent that a series of ETF Shares holds municipal
securities. Finally, as noted above, the issuer of a series of ETF
Shares will be required to comply with Rule 10A-3 under the Act for the
initial and continued listing of Exchange-Traded Fund Shares, as
provided under Rule 14.10(e)(1)(E) and Interpretation and Policy .13 to
Rule 14.10.\29\
---------------------------------------------------------------------------

    \29\ The Exchange notes that these proposed changes would
subject ETF Shares to the same corporate governance requirements as
other open-end management investment companies listed on the
Exchange.
---------------------------------------------------------------------------

    The Exchange notes that it may consider all relevant factors in
exercising its discretion to halt or suspend trading in a series of ETF
Shares. Trading may be halted if the circuit breaker parameters in Rule
11.18 have been reached, because of other market conditions, or for
reasons that, in the view of the Exchange, make trading in the Shares
inadvisable. These may include: (1) The extent to which certain
information about the ETF Shares that is required to be disclosed under
Rule 6c-11 of the Investment Company Act of 1940 is not being made
available, including specifically where the Exchange becomes aware that
the net asset value with respect to a series of ETF Shares is not
disseminated to all market participants at the same time, it will halt
trading in such series until such time as the net asset value is
available to all market participants; \30\ (2) if an interruption to
the dissemination to the value of the index or reference asset on which
a series of ETF Shares is based persists past the trading day in which
it occurred or is no longer calculated or available; (3) trading in the
securities comprising the underlying index or portfolio has been halted
in the primary market(s); or (4) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present.
---------------------------------------------------------------------------

    \30\ The Exchange will obtain a representation from the issuer
of ETF Shares that the net asset value per share for the series will
be calculated daily and made available to all market participants at
the same time.
---------------------------------------------------------------------------

Intraday Indicative Value
    As described above, proposed Rule 14.11(l) does not include any
requirements related to the dissemination of an Intraday Indicative
Value. Both Rule 14.11(c) and Rule 14.11(i) include the requirement
that a series of Index Fund Shares and Managed Fund Shares,
respectively, disseminate and update an Intraday Indicative Value at
least every 15 seconds.\31\ The Exchange believes that it is consistent
with the Act to not require the calculation and dissemination of the
Intraday Indicative Value for the same reasons enumerated in the Rule
6c-11 Release, which specifically discusses and describes why Rule 6c-
11 does not require ETFs to publicly calculate and disseminate the
Intraday Indicative Value,\32\ and a separate Exchange proposal to
eliminate the requirement to calculate and disseminate the Intraday
Indicative Value for certain series of Index Fund Shares and Managed
Fund Shares.\33\
---------------------------------------------------------------------------

    \31\ See Rules 14.11(c)(3)(C), 14.11(c)(6)(A), and
14.11(c)(9)(B)(e) related to Index Fund Shares and Rules
14.11(i)(3)(C), 14.11(i)(4)(B)(i), 14.11(i)(4)(B)(iii)(b), and
14.11(i)(4)(B)(iv) related to Managed Fund Shares.
    \32\ See Rule 6c-11 Release at 61-66.
    \33\ See Securities Exchange Act Release No. 88259 (February 21,
2020), 85 FR 11419 (February 27, 2020) (SR-CboeBZX-2020-007).
---------------------------------------------------------------------------

    As such, the Exchange believes that it is appropriate and
consistent with the Act to not include a requirement for the
dissemination of an IIV for a series of ETF Shares to be listed on the
Exchange.

Discontinuing Quarterly Reporting for Managed Fund Shares
    Finally, the Exchange is proposing to eliminate certain quarterly
reporting obligations related to the listing and trading of Managed
Fund Shares on the Exchange. In the order approving the Exchange's
proposal to adopt generic listing standards for Managed Fund
Shares,\34\ the Commission noted that the Exchange had represented that
``on a quarterly basis, the Exchange will provide a report to the
Commission staff that contains, for each ETF whose shares are
generically listed and traded under BATS Rule 14.11(i): (a) Symbol and
date of listing; (b) the number of active authorized participants
(``APs'') and a description of any failure by either a fund or an AP to
deliver promised baskets of shares, cash, or cash and instruments in
connection with creation or redemption orders; and (c) a description of
any failure by an ETF to comply with BATS Rule 14.11(i).'' \35\ This
reporting requirement is not specifically enumerated in Rule 14.11(i).
---------------------------------------------------------------------------

    \34\ See Securities Exchange Act Release No. 78396 (July 22,
2016), 81 FR 49698 (July 28, 2016) (SR-BATS-2015-100) (the ``MFS
Approval Order'').
    \35\ See MFS Approval Order at footnote 14.
---------------------------------------------------------------------------

    The Exchange has provided such information to the Commission on a
quarterly basis since the MFS Approval Order was issued in 2016. The
type of information provided in the reports was created to provide a
window into the creation and redemption process for Managed Fund Shares
in order to ensure that the arbitrage mechanism would work as expected
for products that were listed pursuant to the newly approved generic
listing standards. The approval of the Rule 6c-11 collapses the
distinction between index funds and active funds, which the Exchange
believes represents that the Commission is generally comfortable with
actively managed funds, rendering the reports unnecessary. Further,
because the same general types of information provided in those reports
will be made available under Rule 6c-11 directly from the issuers of
such securities the Exchange also believes that it is consistent with
the Act to remove this reporting obligation because it will be
duplicative and no longer necessary.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section
6(b) of the Act \36\ in general and Section 6(b)(5) of the Act \37\ 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 a national market system, and, in
general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \36\ 15 U.S.C. 78f.
    \37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 14.11(l) is designed to
prevent fraudulent and manipulative acts and practices in that the
proposed rules relating to listing and trading ETF Shares on the
Exchange provide specific initial and continued listing criteria
required to be met by such securities. Proposed Rule 14.11(l)(4) sets
forth initial and continued listing criteria applicable to ETF Shares,
specifically providing that the Exchange may approve a series of ETF
Shares for listing and/or trading (including pursuant to unlisted
trading privileges) on the Exchange pursuant to Rule 19b-4(e) under the
Act, provided such series of ETF Shares is eligible to operate in
reliance on Rule 6c-11 under the Investment Company Act of 1940 and
must satisfy the requirements of this Rule 14.11(l) on an initial and
continued listing basis.\38\ The Exchange will submit a Form 19b-4(e)
for all series of ETF Shares upon being listed pursuant to Rule
14.11(l), including those series of ETF Shares that are listed under
Rule 14.11(l) pursuant to proposed Rule 14.11(l)(6) and such Form 19b-
4(e) will specifically note that such series of ETF Shares are being
listed on the Exchange pursuant to Rule 14.11(l).
---------------------------------------------------------------------------

    \38\ The Exchange notes that eligibility to operate in reliance
on Rule 6c-11 does not necessarily mean that an investment company
would be listed on the Exchange pursuant to proposed Rule 14.11(l).
To this point, an investment company that operates in reliance on
6c-11 could also be listed as a series of Index Fund Shares or
Managed Fund Shares pursuant to Rule 14.11(c) or 14.11(i),
respectively, and would be subject to all requirements under each of
those rules. Further to this point, in the event that a series of
ETF Shares listed on the Exchange preferred to be listed as a series
of Index Fund Shares or Managed Fund Shares (as applicable), nothing
would preclude such a series from changing to be listed as a series
of Index Fund Shares or Managed Fund Shares (as applicable), as long
as the series met each of the initial and continued listing
obligations under the applicable rules.
---------------------------------------------------------------------------

    Proposed Rule 14.11(l)(4)(B) provides that each series of ETF
Shares will be listed and traded on the Exchange subject to application
of Proposed Rule 14.11(l)(4)(B)(i) and (ii). Proposed Rule
14.11(l)(4)(B)(i) provides that the Exchange will consider the
suspension of trading in, and will commence delisting proceedings under
Rule 14.12 for, a series of ETF Shares under any of the following
circumstances: (a) If the Exchange becomes aware that the issuer of the
ETF Shares is no longer eligible to operate in reliance on Rule 6c-11
under the Investment Company Act of 1940; (b) if any of the other
listing requirements set forth in this Rule 14.11(l) are not
continuously maintained; (c) if, following the initial twelve month
period after commencement of trading on the Exchange of a series of ETF
Shares, there are fewer than 50 beneficial holders of the series of ETF
Shares for 30 or more consecutive trading days; or (d) if such other
event shall occur or condition exists which, in the opinion of the
Exchange, makes further dealings on the Exchange inadvisable. The
Exchange notes that it may become aware that the issuer is no longer
eligible to operate in reliance on Rule 6c-11, as described in proposed
Rule 14.11(l)(4)(B)(i)(a), as a result of either the Exchange
identifying non-compliance through its own monitoring process or
through notification by the issuer. Proposed Rule 14.11(l)(4)(B)(ii)
provides that upon termination of an investment company, the Exchange
requires that ETF Shares issued in connection with such entity be
removed from Exchange listing. The Exchange also notes that it will
obtain a representation from the issuer of each series of ETF Shares
stating that the requirements of Rule 6c-11 will be continuously
satisfied and that the issuer will notify the Exchange of any failure
to do so.
    The Exchange further believes that proposed Rule 14.11(l) is
designed to prevent fraudulent and manipulative acts and practices
because of the robust surveillances in place on the Exchange as
required under proposed Rule 14.11(l)(2)(C) along with the similarities
of proposed Rule 14.11(l) to the rules related to other securities that
are already listed and traded on the Exchange and which would qualify
as ETF Shares. Proposed Rule 14.11(l) is based in large part on Rules
14.11(c) and (i) related to the listing and trading of Index Fund
Shares and Managed Fund Shares on the Exchange, respectively, both of
which are issued under the 1940 Act and would qualify as ETF Shares
after Rule 6c-11 is effective. Rule 14.11(c) and 14.11(i) are very
similar, their primary difference being that Index Fund Shares are
designed to track an underlying index and Managed Fund Shares are based
on an actively managed portfolio that is not designed to track an
index. As such, the Exchange believes that using the Current ETF
Standards as the basis for proposed Rule 14.11(l) is appropriate
because they are generally designed to address the issues

associated with ETF Shares. The only substantial differences between
proposed Rule 14.11(l) and the Current ETF Standards that are not
otherwise required under Rule 6c-11 are as follows: (i) Proposed Rule
14.11(l) does not include the quantitative standards applicable to a
fund or an index that are included in the Current ETF Standards; and
(ii) proposed Rule 14.11(l) does not include any requirements related
to the dissemination of a fund's Intraday Indicative Value.
Quantitative Standards
    The Exchange believes that the proposal is consistent with Section
6(b)(1) of the Act \39\ in that, in addition to being designed to
prevent fraudulent and manipulative acts and practices, the Exchange
has the capacity to enforce proposed Rule 14.11(l) by performing
ongoing surveillance of ETF Shares listed on the Exchange in order to
ensure compliance with Rule 6c-11 and the 1940 Act on an ongoing basis.
While proposed Rule 14.11(l) does not include the quantitative
requirements applicable to a fund and a fund's holdings or underlying
index that are included in Rules 14.(c) and 14.11(i),\40\ the Exchange
believes that the manipulation concerns that such standards are
intended to address are otherwise mitigated by a combination of the
Exchange's surveillance procedures, the Exchange's ability to halt
trading under the proposed Rule 14.11(l)(4)(B)(ii), and the Exchange's
ability to suspend trading and commence delisting proceedings under
proposed Rule 14.11(l)(4)(B)(i). The Exchange also believes that such
concerns are further mitigated by enhancements to the arbitrage
mechanism that will come from compliance with Rule 6c-11, specifically
the additional flexibility provided to issuers of ETF Shares through
the use of custom baskets for creations and redemptions and the
additional information made available to the public through the
additional daily website disclosure obligations applicable under Rule
6c-11.\41\ The Exchange believes that the combination of these factors
will act to keep ETF Shares trading near the value of their underlying
holdings and further mitigate concerns around manipulation of ETF
Shares on the Exchange without the inclusion of quantitative
standards.\42\ The Exchange will monitor for compliance with Rule 6c-11
in order to ensure that the continued listing standards are being met.
Specifically, the Exchange plans to review the website of series of ETF
Shares in order to ensure that the requirements of Rule 6c-11 are being
met. The Exchange will also employ numerous intraday alerts that will
notify Exchange personnel of trading activity throughout the day that
is potentially indicative of certain disclosures not being made
accurately or the presence of other unusual conditions or circumstances
that could be detrimental to the maintenance of a fair and orderly
market. As a backstop to the surveillances described above, the
Exchange also notes that Rule 14.11(a) would require an issuer of ETF
Shares to notify the Exchange of any failure to comply with Rule 6c-11
or the 1940 Act.
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78f(b)(1).
    \40\ The Exchange notes that Rules 14.11(c) and (i) include
certain Holdings Standards and Distribution Standards. The Exchange
believes that to the extent that manipulation concerns are mitigated
based on the factors described herein, such concerns are mitigated
both as it relates to the Holdings Standards and the Distribution
Standards.
    \41\ The Exchange notes that the Commission came to a similar
conclusion in several places in the Rule 6c-11 Release. See Rule 6c-
11 Release at 15-18; 60-61; 69-70; 78-79; 82-84; and 95-96.
    \42\ The Exchange believes that this applies to all quantitative
standards, whether applicable to the portfolio holdings of a series
of ETF Shares or the distribution of the ETF Shares.
---------------------------------------------------------------------------

    To the extent that any of the requirements under Rule 6c-11 or the
1940 Act are not being met, the Exchange may halt trading in a series
of ETF Shares as provided in proposed Rule 14.11(l)(4)(B)(ii). Further,
the Exchange may also suspend trading in and commence delisting
proceedings for a series of ETF Shares where such series is not in
compliance with the applicable listing standards or where the Exchange
believes that further dealings on the Exchange are inadvisable.\43\ The
Exchange also notes that Rule 14.11(a) requires any issuer to provide
the Exchange with prompt notification after it becomes aware of any
non-compliance with proposed Rule 14.11(l), which would include any
failure of the issuer to comply with Rule 6c-11 or the 1940 Act.\44\
---------------------------------------------------------------------------

    \43\ Specifically, proposed Rule 14.11(l)(4)(B) provides that
each series of ETF Shares will be listed and traded on the Exchange
subject to application of Proposed Rule 14.11(l)(4)(B)(i) and (ii).
Proposed Rule 14.11(l)(4)(B)(i) provides that the Exchange will
consider the suspension of trading in, and will commence delisting
proceedings under Rule 14.12 for, a series of ETF Shares under any
of the following circumstances: (a) If the Exchange becomes aware
that the issuer of the ETF Shares is no longer eligible to operate
in reliance on Rule 6c-11 under the Investment Company Act of 1940;
(b) if any of the other listing requirements set forth in this Rule
14.11(l) are not continuously maintained; (c) if, following the
initial twelve month period after commencement of trading on the
Exchange of a series of ETF Shares, there are fewer than 50
beneficial holders of the series of ETF Shares for 30 or more
consecutive trading days; or (d) if such other event shall occur or
condition exists which, in the opinion of the Exchange, makes
further dealings on the Exchange inadvisable. Proposed Rule
14.11(l)(4)(B)(ii) provides that upon termination of an investment
company, the Exchange requires that ETF Shares issued in connection
with such entity be removed from Exchange listing.
    \44\ The Exchange notes that failure by an issuer to notify the
Exchange of non-compliance pursuant to Rule 14.11(a) would itself be
considered non-compliance with the requirements of Rule 14.11 and
would subject the series of ETF Shares to potential trading halts
and the delisting process under Rule 14.12.
---------------------------------------------------------------------------

    Further, the Exchange also represents that its surveillance
procedures are adequate to properly monitor the trading of the ETF
Shares in all trading sessions and to deter and detect violations of
Exchange rules. Specifically, the Exchange intends to utilize its
existing surveillance procedures applicable to derivative products,
which are currently applicable to Index Fund Shares and Managed Fund
Shares, among other product types, to monitor trading in ETF Shares.
The Exchange or FINRA, on behalf of the Exchange, will communicate as
needed regarding trading in ETF Shares and certain of their applicable
underlying components with other markets that are members of the ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. In addition, the Exchange may obtain information
regarding trading in ETF Shares and certain of their applicable
underlying components from markets and other entities that are members
of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement. Additionally, FINRA, on behalf of the
Exchange, is able to access, as needed, trade information for certain
fixed income securities that may be held by a series of ETF Shares
reported to FINRA's TRACE. FINRA also can access data obtained from the
MSRB's EMMA system relating to municipal bond trading activity for
surveillance purposes in connection with trading in a series of ETF
Shares, to the extent that a series of ETF Shares holds municipal
securities. Finally, as noted above, the issuer of a series of ETF
Shares will be required to comply with Rule 10A-3 under the Act for the
initial and continued listing of Exchange-Traded Fund Shares, as
provided under Rule 14.10(e)(1)(E) and Interpretation and Policy .13 to
Rule 14.10.\45\
---------------------------------------------------------------------------

    \45\ The Exchange notes that these proposed changes would
subject ETF Shares to the same corporate governance requirements as
other open-end management investment companies listed on the
Exchange.
---------------------------------------------------------------------------

Intraday Indicative Value
    As described above, proposed Rule 14.11(l) does not include any
requirements related to the

dissemination of an Intraday Indicative Value. Both Rule 14.11(c) and
Rule 14.11(i) include the requirement that a series of Index Fund
Shares and Managed Fund Shares, respectively, disseminate and update an
Intraday Indicative Value at least every 15 seconds.\46\ The Exchange
believes that it is consistent with the Act to not require the
calculation and dissemination of the Intraday Indicative Value for the
same reasons enumerated in the Rule 6c-11 Release, which specifically
discusses and describes why Rule 6c-11 does not require ETFs to
publicly calculate and disseminate the Intraday Indicative Value,\47\
and a separate Exchange proposal to eliminate the requirement to
calculate and disseminate the Intraday Indicative Value for certain
series of Index Fund Shares and Managed Fund Shares.\48\
---------------------------------------------------------------------------

    \46\ See Rules 14.11(c)(3)(C), 14.11(c)(6)(A), and
14.11(c)(9)(B)(e) related to Index Fund Shares and Rules
14.11(i)(3)(C), 14.11(i)(4)(B)(i), 14.11(i)(4)(B)(iii)(b), and
14.11(i)(4)(B)(iv) related to Managed Fund Shares.
    \47\ See Rule 6c-11 Release at 61-66.
    \48\ See Securities Exchange Act Release No. 88259 (February 21,
2020), 85 FR 11419 (February 27, 2020) (SR-CboeBZX-2020-007).
---------------------------------------------------------------------------

    As such, the Exchange believes that it is appropriate and
consistent with the Act to not include a requirement for the
dissemination of an IIV for a series of ETF Shares to be listed on the
Exchange.
    The Exchange also believes that the proposed rule change is
designed to promote just and equitable principles of trade and to
protect investors and the public interest in that a large amount of
information will be publicly available regarding the Funds and the
Shares, thereby promoting market transparency. Quotation and last sale
information for ETF Shares will be available via the CTA high-speed
line. The website for each series of ETF Shares will include a form of
the prospectus for the Fund that may be downloaded, and additional data
relating to NAV and other applicable quantitative information, updated
on a daily basis. Moreover, prior to the commencement of trading, the
Exchange will inform its members in a circular of the special
characteristics and risks associated with trading in the series of ETF
Shares. As noted above, series of ETF Shares will not be required to
publicly disseminate an IIV. The Exchange continues to believe that
this proposal is consistent with the Act and is designed to promote
just and equitable principles of trade and to protect investors and the
public interest because the transparency that comes from daily
portfolio holdings disclosure as required under Rule 6c-11 provides
market participants with sufficient information to facilitate the
intraday valuation of ETF Shares, rendering the dissemination of the
IIV unnecessary.
    The Exchange notes that it is not proposing to prohibit the
dissemination of an IIV for a series of ETF Shares and believes that
there could be certain instances in which the dissemination of an IIV
could provide valuable information to the investing public. The
Exchange proposes to leave that decision to an issuer of ETF Shares and
is simply not proposing to require the dissemination of an IIV.
    Based on the foregoing discussion regarding proposed Rule 14.11(l)
and its similarities to and differences between the Current ETF
Standards, the Exchange believes that the proposal is consistent with
the Act and is designed to prevent fraudulent and manipulative
transactions and that the manipulation concerns that the quantitative
standards and the IIV requirements are designed to address are
otherwise mitigated by the proposal and the new daily website
disclosure obligations and flexibility under Rule 6c-11.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
ETF Shares in a manner that will enhance competition among market
participants, to the benefit of investors and the marketplace. The
Exchange believes that approval of this proposal will streamline
current procedures, reduce the costs and timeline associated with
bringing ETFs to market, and provide significantly greater regulatory
certainty to potential issuers considering bringing ETF Shares to
market, thereby enhancing competition among ETF issuers and reducing
costs for investors.\49\
---------------------------------------------------------------------------

    \49\ In approving the rule, the Commission stated that the
``rule will modernize the regulatory framework for ETFs to reflect
our more than two decades of experience with these investment
products. The rule is designed to further important Commission
objectives, including establishing a consistent, transparent, and
efficient regulatory framework for ETFs and facilitating greater
competition and innovation among ETFs.'' Rule 6c-11 Release, at
57163. The Commission also stated the following regarding the rule's
impact: ``We believe rule 6c-11 will establish a regulatory
framework that: (1) Reduces the expense and delay currently
associated with forming and operating certain ETFs unable to rely on
existing orders; and (2) creates a level playing field for ETFs that
can rely on the rule. As such, the rule will enable increased
product competition among certain ETF providers, which can lead to
lower fees for investors, encourage financial innovation, and
increase investor choice in the ETF market.'' Rule 6c-11 Release, at
57204.
---------------------------------------------------------------------------

    The Exchange also believes that the corresponding change to amend
Rule 14.10(e)(1)(E) and Interpretation and Policy .13 to Rule 14.10 in
order to add ETF Shares to a list of product types listed on the
Exchange, including Index Fund Shares, Managed Fund Shares, and Managed
Portfolio Shares, that are exempted from the Audit Committee
requirements set forth in Rule 14.10(c)(3), except for the applicable
requirements of SEC Rule 10A-3 because it is a non-substantive change
meant only to subject ETF Shares to the same corporate governance
requirements currently applicable to Index Fund Shares and Managed Fund
Shares. All other corporate governance requirements that ETF Shares are
not specifically exempted from will otherwise apply. The Exchange also
believes that the non-substantive change to amend Rule
14.11(c)(3)(A)(i)(a) in order to include ETF Shares in the definition
of Derivative Securities Products is also a non-substantive change
because it is just intended to add ETF Shares to a definition that
includes Index Fund Shares and Managed Fund Shares in order to make
sure that ETF Shares are treated consistently with Index Fund Shares
and Managed Fund Shares throughout the Exchange's rules.
    Finally, the Exchange believes that eliminating the quarterly
reporting requirement for Managed Fund Shares is designed to prevent
fraudulent and manipulative acts and practices and, in general, to
protect investors and the public interest because the report no longer
serves the purpose for which it was originally intended. The type of
information provided in the reports was created to provide a window
into the creation and redemption process for Managed Fund Shares in
order to ensure that the arbitrage mechanism would work as expected for
products that were listed pursuant to the newly approved generic
listing standards. The Exchange and Commission have had several years
of this reporting process and no significant issues have arisen. The
Exchange believes that this speaks further to the maturity of the
marketplace for ETFs and, further, Rule 6c-11 collapsing the difference
between Index Fund Shares and Managed Fund Shares indicates a general
comfort with Managed Fund Shares that further justifies eliminating
this reporting obligation. In the Rule 6c-11 Release, the Commission
concluded that ``the arbitrage mechanism for existing actively managed
ETFs has worked effectively with small deviations between market price
and NAV per share.'' \50\ The Exchange generally agrees with this
conclusion and, while such quarterly reports were useful when

Managed Fund Shares were first able to be listed pursuant to generic
listing standards, the Exchange believes that such a window into the
creation and redemption process for Managed Fund Shares no longer
provides useful information related to the prevention of manipulation
or protection of investors which it was originally designed to provide.
Further, because the same general types of information provided in
those reports will be made available under Rule 6c-11 directly from the
issuers of such securities the Exchange also believes that it is
consistent with the Act to remove this reporting obligation because it
will be duplicative and no longer necessary.
---------------------------------------------------------------------------

    \50\ See Rule 6c-11 Release at 23.
---------------------------------------------------------------------------

    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. To the contrary, the Exchange
believes that the proposed rule change would enhance competition by
streamlining current procedures, reducing the costs and timeline
associated with bringing ETFs to market, and providing significantly
greater regulatory certainty to potential issuers considering bringing
ETF Shares to market, all of which the Exchange believes would enhance
competition among ETF issuers and reduce costs for investors. The
Exchange also believes that the proposed change would enhance
competition among ETF Shares by ensuring the application of uniform
listing standards.

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. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 2, is consistent with the Act and
rules and regulations thereunder applicable to a national securities
exchange.\51\ In particular, the Commission finds that the proposed
rule change, as modified by Amendment No. 2, is consistent with Section
6(b)(5) of the Act,\52\ 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 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.
---------------------------------------------------------------------------

    \51\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \52\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

A. Proposed BZX Rule 14.11(l)

    As an initial matter, the Commission notes that the Exchange
currently has generic listing standards for Index Fund Shares, Managed
Fund Shares, and Portfolio Depositary Receipts,\53\ and therefore
proposed Rule 14.11(l) would not permit the Exchange to generically
list any novel product types. The Commission also notes that a number
of the provisions of proposed Rule 14.11(l) are substantively identical
to provisions of other BZX listing rules.\54\
---------------------------------------------------------------------------

    \53\ See BZX Rules.
    \54\ See supra notes 17, 19, and 20 and accompanying text,
respectively. Additionally, the proposed definition of ``Reporting
Authority'' is based on the definitions in BZX Rules 14.11(c)(1)(C)
and 14.11(i)(3)(D). See supra note 18.
---------------------------------------------------------------------------

    The Commission believes that proposed BZX Rule 14.11(l) is
reasonably designed to help prevent fraudulent and manipulative acts
and practices. A central qualification for listing under the proposed
rule is ongoing compliance with Rule 6c-11 under the 1940 Act, which
requires, among other things, ETFs to prominently disclose the
portfolio holdings that will form the basis for each calculation of net
asset value per share.\55\ Because initial and ongoing compliance with
Rule 6c-11 of the 1940 Act is a condition for listing and trading on
the Exchange, the proposed rule would permit Nasdaq to list and trade
shares of an investment company with a fully transparent portfolio,\56\
and the Commission believes that portfolio transparency should help
prevent manipulation of the price of ETF Shares.\57\ Additionally,
proposed BZX Rule 14.11(l) includes requirements relating to fire walls
and procedures to prevent the use and dissemination of material, non-
public information regarding the applicable ETF index and
portfolio,\58\ all such requirements of which are designed to prevent
fraudulent and manipulative acts and practices.\59\ The Commission
specifically notes that certain of these requirements relating to such
fire walls and procedures, which are substantively identical to BZX's
rules governing the listing and trading of index-based and actively
managed ETFs, apply in addition to what is already required under the
Act and the 1940 Act and respective rules and regulations thereunder,
and the Commission believes that such requirements collectively provide
additional protections against the potential misuse of material, non-
public information. Therefore, the Commission concludes that the
proposed requirements relating to such fire walls and procedures,
combined with ETF portfolio transparency and the existing requirements
under the Act and 1940 Act, should help to protect against fraudulent
and manipulative acts and practices under Section 6(b)(5) of the Act.
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    \55\ See Rule 6c-11 Release, supra note 12, at 57180-81.
    \56\ See supra note 9. The Commission also noted that, with
respect to ETF portfolio transparency, the disclosures are designed
to promote an effective arbitrage mechanism and inform investors
about the risks of deviation between market price and net asset
value when deciding whether to invest in ETFs generally or in a
particular ETF. See Rule 6c-11 Release, supra note 12, at 57166.
    \57\ See id. at 57169 (concluding that portfolio transparency
combined with existing requirements should be sufficient to protect
against certain abuses).
    \58\ For example, proposed BZX Rule 14.11(l)(4)(A)(ii) provides
that if the index underlying a series of ETF Shares is maintained by
a broker-dealer or fund adviser, the broker-dealer or fund adviser
shall erect and maintain a ``fire wall'' around the personnel who
have access to information concerning changes and adjustments to the
index and the index will be calculated by a third party who is not a
broker-dealer or fund adviser. Proposed BZX Rule 14.11(l)(4)(A)(ii)
further states that if the investment adviser to an ETF is
affiliated with a broker-dealer, such investment adviser will erect
and maintain a ``fire wall'' between the investment adviser and the
broker-dealer with respect to access to information concerning the
composition and/or changes to the underlying portfolio. Proposed BZX
Rule 14.11(l)(4)(A)(iii) requires that any advisory committee,
supervisory board, or similar entity that advises a Reporting
Authority or that makes decisions on the composition, methodology
and related matters, of an index underlying a series of ETF Shares
must implement and maintain, or be subject to, procedures designed
to prevent the use and dissemination of material non-public
information regarding the applicable index. In addition, for
actively managed ETFs, personnel who make decisions on the portfolio
composition must be subject to procedures designed to prevent the
use and dissemination of material non-public information regarding
the applicable portfolio. See generally proposed BZX Rule
14.11(l)(4)(A).
    \59\ In adopting Rule 6c-11, the Commission determined that the
safeguards in the existing regulatory regime adequately address
``special concerns that self-indexed ETFs present, including the
potential ability of an affiliated index provider to manipulate an
underlying index to the benefit or detriment of a self-indexed
ETF.'' Rule 6c-11 Release, supra note 12, 84 FR at 57168.
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    Proposed BZX Rule 14.11(l)(2)(C) requires that the Exchange
implement and maintain written surveillance

procedures for ETF Shares. The Exchange will employ its existing
surveillance procedures applicable to derivative products, which are
currently applicable to Index Fund Shares and Managed Fund Shares, to
trading in ETF Shares, and represents that its surveillance procedures
are adequate to (a) properly monitor the trading of such securities
during all trading sessions and (b) deter and detect violations of
Exchange rules and the applicable federal securities laws. The Exchange
represents that, consistent with Section 6(b)(1) of the Act, it has the
capacity to enforce proposed BZX Rule 14.11(l) by performing ongoing
surveillance of ETF Shares listed on the Exchange in order to ensure
compliance with Rule 6c-11 and the 1940 Act on an ongoing basis.\60\
Further, the Exchange represents that it, or FINRA on behalf of the
Exchange, will communicate as needed regarding trading in ETF Shares
and certain of their applicable underlying components with other
markets that are members of the ISG or with which BZX has in place a
comprehensive surveillance sharing agreement. The Exchange represents
that it will perform ongoing surveillance of ETF Shares listed on the
Exchange in order to ensure compliance with Rule 6c-11 under the 1940
Act on an ongoing basis. The Exchange also notes that BZX Rule 14.11(a)
requires any issuer to provide the Exchange with prompt notification
after it becomes aware of any non-compliance with proposed Rule
14.11(l), which would include any failure of the issuer to comply with
Rule 6c-11 or the 1940 Act.\61\ Additionally, BZX plans to review the
website of series of ETF Shares in order to ensure that the
requirements of Rule 6c-11 are being met. Finally, proposed BZX Rule
14.11(l)(4)(B)(i)(c) requires that the Exchange commence delisting
proceedings for a series of ETF Shares if, following the initial 12-
month period after commencement of trading on the Exchange, there are
fewer than 50 beneficial holders of such series of ETF Shares for 30 or
more consecutive trading days.
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    \60\ The Commission also finds that the proposed rule change, as
modified by Amendment No. 2, is consistent with Section 6(b)(1) of
the Act (15 U.S.C. 78f(b)(1)), which requires (among other things)
that a national securities exchange be organized and have the
capacity to comply with its own rules. The Exchange represents that
it will: (1) Monitor for compliance with Rule 6c-11 under the 1940
Act to ensure that the continued listing standards are being met;
(2) review the website of series of ETF Shares to ensure that the
requirements of Rule 6c-11 under the 1940 Act are being met; and (3)
obtain a representation from the issuer of each series of ETF Shares
that the requirements of proposed BZX Rule 14.11(l) will be
satisfied and that the issuer will notify the Exchange of any
failure to do so.
    \61\ The Exchange further represents that failure by an issuer
to notify the Exchange of non-compliance pursuant to Rule 14.11(a)
would itself be considered non-compliance with the requirements of
BZX Rule 14.11 and would subject the series of ETF Shares to
potential trading halts and the delisting process under BZX Rule
14.12.
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    Consistent with the requirement of Section 6(b)(5) of the Act \62\
that the Exchange's rules be designed to remove impediments to and
perfect the mechanism of a free and open market, the Exchange's rules
regarding trading halts will help to ensure the maintenance of fair and
orderly markets for ETF Shares. Specifically, as discussed above, the
Exchange may consider all relevant factors in exercising its discretion
to halt or suspend trading in a series of ETF Shares. BZX states that
trading in ETF Shares will be halted if the circuit breaker parameters
in BZX Rule 11.18 have been reached or when the Exchange becomes aware
that the net asset value for a series of ETF Shares is not being
disseminated to all market participants at the same time.\63\
Additionally, trading may be halted because of market conditions or for
reasons that, in the view of the Exchange, make trading in ETF Shares
inadvisable. As BZX represents in the proposal, examples of such market
conditions or reasons may be: (1) The extent to which certain
information about the ETF Shares that is required to be disclosed under
Rule 6c-11 of the 1940 Act is not being made available; (2) if an
interruption to the dissemination to the value of the index or
reference asset on which a series of ETF Shares is based persists past
the trading day in which it occurred or is no longer calculated or
available; (3) trading in the securities comprising the underlying
index or portfolio has been halted in the primary market(s); or (4) in
the presence of other unusual conditions or circumstances detrimental
to the maintenance of a fair and orderly market. Further, BZX will
employ numerous intraday alerts that will notify Exchange personnel of
trading activity throughout the day that is potentially indicative of
certain disclosures not being made accurately or the presence of other
unusual conditions or circumstances that could be detrimental to the
maintenance of a fair and orderly market.\64\ The Exchange also may
suspend trading in and commence delisting proceedings for a series of
ETF Shares where such series is not in compliance with the applicable
listing standards or where the Exchange believes that further dealings
on the Exchange are inadvisable.
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    \62\ 15 U.S.C. 78f(b)(5).
    \63\ See supra note 30 and accompanying text.
    \64\ See Amendment No. 2, supra note 8, at 15.
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B. Discontinuance of Quarterly Reports of Generically Listed Managed
Fund Shares

    In support of its proposal to adopt generic listing standards for
Managed Fund Shares, the Exchange proposed to submit quarterly reports
to the Commission disclosing certain information.\65\ These reports
were designed to identify problems associated with generically listed
Managed Fund Shares. In adopting Rule 6c-11 under the 1940 Act, the
Commission largely eliminated prior distinctions between actively
managed and index-based ETFs, and BZX does not submit quarterly reports
regarding the shares of index-based ETFs that it generically lists. In
addition, the Commission recognizes that, since the adoption of the
Managed Fund Shares generic listing standards, the marketplace for ETFs
has matured and developed, an increased number of actively managed ETFs
have been listed and are trading on national securities exchanges, and
market participants have become more familiar with such securities.
Moreover, proposed BZX Rule 14.11(l)(2)(C) requires that the Exchange
implement and maintain written surveillance procedures for ETF
Shares.\66\ The Exchange represents that it intends to utilize its
existing surveillance procedures applicable to derivative products,
which will include ETF Shares, to monitor trading in the ETF Shares,
and will perform ongoing surveillance of ETF Shares listed on the
Exchange to ensure compliance with Rule 6c-11 and the 1940 Act on an
ongoing basis. The Commission notes that manipulation concerns are
mitigated by a combination of the Exchange's surveillance procedures,
BZX's ability to halt trading under proposed BZX Rule 14.11(l),\67\ and
the Exchange's ability to commence

delisting proceedings under proposed BZX Rule 14.11(l)(4)(i). In light
of these reasons, as well as the Commission's experience with the
quarterly reports, the Commission believes that this proposal is
consistent with Section 6(b)(5) of the Act, and it therefore finds that
it is no longer necessary for BZX to continue to submit such quarterly
reports.
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    \65\ The information included in these reports is summarized
above. See supra note 35 and accompanying text.
    \66\ Moreover, BZX Rule 14.11(i)(2)(C) requires that the
Exchange implement and maintain written surveillance procedures for
Managed Fund Shares.
    \67\ The Exchange states that it may consider all relevant
factors in exercising its discretion to halt or suspend trading in a
series of ETF Shares, and that it may halt trading due to market
conditions that make trading in the ETF Shares inadvisable,
including the following circumstances: (1) Where the Exchange
becomes aware that the net asset value with respect to a series of
ETF Shares is not disseminated to all market participants at the
same time; and (2) if an interruption to the dissemination to the
value of the index or reference asset on which a series of ETF
Shares is based persists past the trading day in which it occurred
or is no longer calculated or available.
---------------------------------------------------------------------------

C. Other Related Rule Changes

    The Exchange proposes to: (1) Expand the definition of ``Derivative
Securities Products'' in BZX Rule 14.11(c)(3)(A)(i)(a) to include ETF
Shares; and (2) exempt ETF Shares from certain corporate governance
requirements by including ETF Shares among the product types enumerated
in BZX Rules 14.10(e)(1)(E) and Interpretations and Policies .13 to BZX
Rule 14.10.\68\ The Exchange states that these changes will subject ETF
Shares to the same corporate governance requirements currently
applicable to Index Fund Shares and Managed Fund Shares. The Commission
believes that these proposed changes simply incorporate proposed BZX
Rule 14.11(l) into the existing framework of BZX's rules, and therefore
finds that such changes are consistent with Section 6(b)(5) of the Act.
---------------------------------------------------------------------------

    \68\ Under the current version of these rules, Index Fund Shares
and Managed Fund Shares are exempted from the specified corporate
governance requirements.
---------------------------------------------------------------------------

D. Exchange Representations

    In support of this proposal, the Exchange has made the following
representations:
    (1) BZX deems ETF Shares to be equity securities, thus rendering
trading in ETF Shares subject to the Exchange's existing rules
governing the trading of equity securities.\69\ The Exchange notes that
ETF Shares will be subject to rules governing Exchange member
disclosure obligations in connection with equities trading, and that
Rule 6c-11 does not change the applicability of these Exchange rules
with respect to these securities.\70\
---------------------------------------------------------------------------

    \69\ See supra note 14.
    \70\ With respect to trading in ETF Shares, the Exchange
represents that all of the BZX member obligations relating to
product description and prospectus delivery requirements will
continue to apply in accordance with the Exchange rules and federal
securities laws, and BZX will continue to monitor its members for
compliance with such requirements, which are not changing as a
result of Rule 6c-11 under the 1940 Act. See supra note 14.
---------------------------------------------------------------------------

    (2) BZX will (a) monitor for compliance with Rule 6c-11 to ensure
that the continued listing standards are being met; (b) review the
website of series of ETF Shares to ensure that the requirements of Rule
6c-11 are being met; and (c) employ numerous intraday alerts that will
notify Exchange personnel of unusual trading activity throughout the
day that could be indicative of unusual conditions or circumstances
that could be detrimental to the maintenance of a fair and orderly
market.\71\
---------------------------------------------------------------------------

    \71\ See Amendment No. 2, supra note 8, at 15. The Exchange also
notes that BZX Rule 14.11(a) would require an issuer of ETF Shares
to notify BZX of any failure to comply with Rule 6c-11 or the 1940
Act. See id. The Exchange notes that failure by an issuer to notify
the Exchange of non-compliance pursuant to Rule 14.11(a) would
itself be considered non-compliance with the requirements of Rule
14.11 and would subject the series of ETF Shares to potential
trading halts and the delisting process under Rule 14.12. See id. at
16, n.22.
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    (3) BZX will obtain a representation from the issuer of ETF Shares
that the net asset value for the series will be calculated daily and
will be made available to all market participants at the same time.\72\
BZX will also obtain a representation from the issuer of each series of
ETF Shares that the requirements of Rule 6c-11 will be continuously
satisfied and that the issuer will notify the Exchange of any failure
to do so.\73\
---------------------------------------------------------------------------

    \72\ See id. at 18, n.24.
    \73\ See id. at 22.
---------------------------------------------------------------------------

    (4) BZX's surveillance procedures are adequate to properly monitor
the trading of the ETF Shares in all trading sessions and to deter and
detect violations of Exchange rules and applicable federal securities
laws.\74\
---------------------------------------------------------------------------

    \74\ See id. at 16.
---------------------------------------------------------------------------

    (5) The Exchange, or FINRA on behalf of the Exchange, will
communicate as needed regarding trading in ETF Shares and certain of
their applicable underlying components with other markets that are
members of the ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement. Additionally, FINRA, on
behalf of the Exchange, is able to access, as needed, trade information
for certain fixed income securities that may be held by a series of ETF
Shares reported to TRACE. FINRA also can access data obtained from the
EMMA system relating to municipal bond trading activity for
surveillance purposes in connection with trading in a series of ETF
Shares, to the extent that a series of ETF Shares holds municipal
securities.\75\
---------------------------------------------------------------------------

    \75\ See id. at 16-17.
---------------------------------------------------------------------------

    (6) The issuer of a series of ETF Shares will be required to comply
with Rule 10A-3 under the Act for the initial and continued listing of
ETF Shares, as provided under BZX Rule 14.10(e)(1)(E) and
Interpretation and Policy .13 to BZX Rule 14.10.\76\
---------------------------------------------------------------------------

    \76\ The Exchange also notes that these proposed changes would
subject ETF Shares to the same corporate governance requirements as
other open-end management investment companies listed on the
Exchange. See id. at 17.
---------------------------------------------------------------------------

    This approval order is based on all of the Exchange's
representations, including those set forth above and in Amendment No.
2. For the foregoing reasons, the Commission finds that the proposed
rule change, as modified by Amendment No. 2, is consistent with
Sections 6(b)(1) and 6(b)(5) of the Act \77\ and the rules and
regulations thereunder applicable to a national securities exchange.
---------------------------------------------------------------------------

    \77\ 15 U.S.C. 78f(b)(1) and 15 U.S.C. 78f(b)(5), respectively.
---------------------------------------------------------------------------

IV. Solicitation of Comments to the Proposed Rule Change, as Modified
by Amendment No. 2

    Interested persons are invited to submit written data, views, and
arguments concerning whether Amendment No. 2 to 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_ADDRESS>Please include
File Number SR-CboeBZX-2019-097 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-2019-097. 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 SR-CboeBZX-2019-097, and should
be submitted on or before May 1, 2020.

V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 2

    The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 2, prior to the thirtieth day
after the date of publication of notice of the filing of Amendment No.
2 in the Federal Register. In Amendment No. 2, the Exchange (among
other things): (1) Modified the circumstances in which it will consider
suspending trading in a series of ETF Shares; (2) broadened its
undertakings with respect to ensuring compliance with the proposed
generic listing standard; (3) clarified that ETF Shares would be
subject to all Exchange rules applicable to equities trading, including
rules governing Exchange member disclosure obligations; and (4)
clarified the applicability of certain current listing rules in light
of proposed BZX Rule 14.11(l). Amendment No. 2 also provides other
clarifications and additional information in support of the proposed
rule change. These changes, as well as additional information in
Amendment No. 2, assisted the Commission in finding that the proposal
is consistent with the Act. Accordingly, the Commission finds good
cause, pursuant to Section 19(b)(2) of the Exchange Act,\78\ to approve
the proposed rule change, as modified by Amendment No. 2, on an
accelerated basis.
---------------------------------------------------------------------------

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

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\79\ that the proposed rule change (SR-CboeBZX-2019-097), as modified
by Amendment No. 2, be, and it hereby is, approved on an accelerated
basis.
---------------------------------------------------------------------------

    \79\ Id.
    \80\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\80\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07550 Filed 4-9-20; 8:45 am]
 BILLING CODE 8011-01-P