[Federal Register Volume 84, Number 122 (Tuesday, June 25, 2019)]
[Notices]
[Pages 29912-29919]
[FR Doc No: 2019-13405]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86155; File No. SR-CboeBZX-2019-057]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of a Proposed Rule Change To List and Trade Shares of the
American Century Focused Dynamic Growth ETF and American Century
Focused Large Cap Value ETF Under Currently Proposed Rule 14.11(k)

June 19, 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 June 6, 2019, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I, II, and III below, which
Items have been prepared by the Exchange. The Commission is publishing
this notice to solicit comments on the proposed rule change from
interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes a rule change to list and trade shares of the
following under currently proposed Rule 14.11(k): American Century
Focused Dynamic Growth ETF and American Century Focused Large Cap Value
ETF (each a ``Fund'' and, collectively, the ``Funds'').
    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 Exchange has submitted a proposal to add new Rule 14.11(k) for
the purpose of permitting the listing and trading of Managed Portfolio
Shares, which are securities issued by an actively managed open-end
investment management company, which has not yet been published by the
Commission.\3\

Proposed Rule 14.11(k)(2)(A) would require the Exchange to file
separate proposals under Section 19(b) of the Act before listing and
trading any series of Managed Portfolio Shares on the Exchange. As
such, the Exchange is submitting this proposal in order to list and
trade shares of the American Century Focused Dynamic Growth ETF and the
American Century Focused Large Cap Value ETF under proposed Rule
14.11(k).
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    \3\ As proposed, the term ``Managed Portfolio Share'' means a
security that (a) represents an interest in a registered investment
company (``Investment Company'') organized as an open-end management
investment company, that invests in a portfolio of securities
selected by the Investment Company's investment adviser consistent
with the Investment Company's investment objectives and policies;
(b) is issued in a specified aggregate minimum number of shares
equal to a Creation Unit, or multiples thereof, in return for a
designated portfolio of securities (and/or an amount of cash) with a
value equal to the next determined net asset value which the AP
Representative (defined below) will provide through a confidential
account; and (c) when aggregated in the same specified aggregate
number of shares equal to a Redemption Unit, or multiples thereof,
may be redeemed at the request of an Authorized Participant (as
defined in the Investment Company's Form N-1A filed with the SEC),
which Authorized Participant will be paid through a confidential
account established for its benefit a portfolio of securities and/or
cash with a value equal to the next determined net asset value. See
SR-CboeBZX-2019-047 (the ``Proposal'').
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Description of the Funds and the Trust
    The shares of each Fund will be issued by American Century ETF
Trust (the ``Trust''), a statutory trust organized under the laws of
the State of Delaware and registered with the Commission as an open-end
management investment company.\4\ The investment adviser to the Trust
will be American Century Investment Management, Inc. (the ``Adviser'').
Foreside Fund Services, LLC (the ``Distributor'') will serve as the
distributor of each of the Fund's shares. All statements and
representations made in this filing regarding the description of the
portfolio or reference assets, limitations on portfolio holdings or
reference assets, dissemination and availability of VIIV, reference
assets, and intraday indicative values, and the applicability of
Exchange rules shall constitute continued listing requirements for
listing the shares on the Exchange.
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    \4\ The Trust is registered under the 1940 Act. On June 18,
2018, the Trust filed a registration statement on Form N-1A relating
to the Funds (File No. 811-23305) (the ``Registration Statement'').
The Exchange notes that the names of the Funds have been changed
since the Registration Statement was filed and that such names will
be updated in a subsequent filing. The Shares will not be listed on
the Exchange until an order (``Exemptive Order'') under the 1940 Act
has been issued by the Commission with respect to the application
for exemptive relief (the ``Exemptive Application'') (File No. 812-
15035). Investments made by the Funds will comply with the
conditions set forth in the Exemptive Order. The description of the
operation of the Trust and the Funds herein is based, in part, on
the Registration Statement. The Exchange notes that the Exemptive
Application is very similar to the application for exemptive relieve
submitted by Precidian ETFs Trust, et al. for which an order
granting the requested relief was issued on May 20, 2019 (File No.
812-14405) (the ``Order''). The Order specifically notes that
``granting the requested exemptions is appropriate in and consistent
with the public interest and consistent with the protection of
investors and the purposes fairly intended by the policy and
provisions of the Act. It is further found that the terms of the
proposed transactions, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, and that the proposed transactions
are consistent with the policy of each registered investment company
concerned and with the general purposes of the Act.'' See Investment
Company Act Release Nos. 33440 and 33477.
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    Proposed Rule 14.11(k)(2)(E) provides that, if the investment
adviser to the investment company issuing Managed Portfolio Shares is
registered as a broker-dealer or is affiliated with a broker-dealer,
such investment adviser will erect and maintain a ``fire wall'' between
the investment adviser and personnel of the broker-dealer or broker-
dealer affiliate, as applicable, with respect to access to information
concerning the composition and/or changes to such investment company
portfolio.\5\ In addition, proposed Rule 14.11(k)(2)(E) further
requires 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. Proposed Rule
14.11(k)(2)(E) is similar to Rule 14.11(i)(7), related to Managed Fund
Shares, and Rule 14.11(c)(5)(A)(i), related to Index Fund Shares,
except that proposed Rule 14.11(k)(2)(E) relates to the establishment
of a ``fire wall'' between the investment adviser and the broker-dealer
as applicable to an Investment Company's portfolio, not an underlying
benchmark index, as is the case with index-based funds. The Adviser is
not registered as a broker-dealer, but is affiliated with a broker-
dealer and has implemented and will maintain a ``fire wall'' with
respect to such broker-dealer regarding access to information
concerning the composition and/or changes to a Fund's portfolio.
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    \5\ 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 will be
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
violations, 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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    In the event (a) the Adviser becomes registered as a broker-dealer
or becomes 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 its broker-dealer
affiliate 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.
    The portfolio for each Fund will consist primarily of U.S.
exchange-listed equity securities and shares issued by other U.S.
exchange-listed ETFs.\6\ All exchange-listed equity securities in which
the Funds will invest will be listed and traded on U.S. national
securities exchanges.
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    \6\ For purposes of describing the holdings of the Funds, ETFs
include Portfolio Depository Receipts (as described in Rule
14.11(b)); Index Fund Shares (as described in Rule 14.11(c)); and
Managed Fund Shares (as described in Rule 14.11(i)). The ETFs in
which a Fund will invest all will be listed and traded on U.S.
national securities exchanges. While the Funds may invest in inverse
ETFs, the Funds will not invest in leveraged (e.g., 2X, -2X, 3X or -
3X) ETFs.
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Description of the Funds
American Century Focused Dynamic Growth ETF
    The Fund seeks long-term capital growth. Under Normal Market
Conditions,\7\ the Fund intends to invest primarily in U.S. exchange-
listed equity securities. The portfolio managers look for stocks of
companies they believe will increase in value over time. In
implementing this strategy, the portfolio managers make their
investment decisions based primarily on their analysis of individual
companies, rather than on broad economic forecasts. Management of the
Fund is based on the belief that, over the long term, stock price
movements follow growth in earnings, revenues and/or cash flow. The
portfolio managers use a variety of analytical research tools and
techniques to identify the stocks of companies that meet their
investment criteria.
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    \7\ The term ``Normal Market Conditions'' includes, but is not
limited to, the absence of trading halts in the applicable financial
markets generally; operational issues causing dissemination of
inaccurate market information or system failures; or force majeure
type events such as natural or man-made disaster, act of God, armed
conflict, act of terrorism, riot or labor disruption, or any similar
intervening circumstance.
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    In addition to investing primarily in U.S. exchange-listed equity
securities, the Fund may also invest in exchange-traded funds,
exchange-listed ADRs, U.S. exchange-listed equity futures contracts,
and U.S. exchange-listed

equity index futures contracts. The Fund may also hold cash and Cash
Equivalents \8\ without limitation.
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    \8\ For purposes of this filing and consistent with Rule
14.11(i)(4)(C)(iii) related to Managed Fund Shares, Cash Equivalents
are short-term instruments with maturities of less than three
months, which includes only the following: (i) U.S. Government
securities, including bills, notes, and bonds differing as to
maturity and rates of interest, which are either issued or
guaranteed by the U.S. Treasury or by U.S. Government agencies or
instrumentalities; (ii) certificates of deposit issued against funds
deposited in a bank or savings and loan association; (iii) bankers
acceptances, which are short-term credit instruments used to finance
commercial transactions; (iv) repurchase agreements and reverse
repurchase agreements; (v) bank time deposits, which are monies kept
on deposit with banks or savings and loan associations for a stated
period of time at a fixed rate of interest; (vi) commercial paper,
which are short-term unsecured promissory notes; and (vii) money
market funds.
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    The Exchange notes that the Fund's holdings will meet the generic
listing standards applicable to series of Managed Fund Shares under
Rule 14.11(i)(4)(C). While such standards do not apply directly to
series of Managed Portfolio Shares, the Exchange believes that the
overarching policy issues related to liquidity, market cap, diversity,
and concentration of portfolio holdings that Rule 14.11(i)(4)(C) is
intended to address are equally applicable to series of Managed
Portfolio Shares.
American Century Focused Large Cap Value ETF
    The Fund seeks long-term capital growth. Under Normal Market
Conditions, the Fund intends to invest primarily in U.S. exchange-
listed equity securities. The portfolio managers look for companies
whose stock price may not reflect the company's value. The managers
attempt to purchase the stocks of these undervalued companies and hold
each stock until the price has increased to, or is higher than, a level
the managers believe more accurately reflects the fair value of the
company. The portfolio managers may sell stocks from the fund's
portfolio if they believe a stock no longer meets their valuation
criteria, a stock's risk parameters outweigh its return opportunity,
more attractive alternatives are identified or specific events alter a
stock's prospects.
    In addition to investing primarily in U.S. exchange-listed equity
securities, the Fund may also invest in exchange-traded funds,
exchange-listed ADRs, U.S. exchange-listed equity futures contracts,
and U.S. exchange-listed equity index futures contracts. The Fund may
also hold cash and Cash Equivalents without limitation.
    The Exchange notes that the Fund's holdings will meet the generic
listing standards applicable to series of Managed Fund Shares under
Rule 14.11(i)(4)(C). While such standards do not apply directly to
series of Managed Portfolio Shares, the Exchange believes that the
overarching policy issues related to liquidity, market cap, diversity,
and concentration of portfolio holdings that Rule 14.11(i)(4)(C) is
intended to address are equally applicable to series of Managed
Portfolio Shares.
Investment Restrictions
    Each Fund may hold up to an aggregate amount of 15% of its total
assets in illiquid assets,\9\ consistent with Commission guidance. Each
Fund will monitor its portfolio liquidity on an ongoing basis to
determine whether, in light of current circumstances, an adequate level
of liquidity is being maintained, and will consider taking appropriate
steps in order to maintain adequate liquidity. Illiquid assets include
securities subject to contractual or other restrictions on resale and
other instruments that lack readily available markets as determined in
accordance with Commission staff guidance.\10\ In any event, the Funds
will not purchase any securities that are illiquid investments at the
time of purchase.
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    \9\ In reaching liquidity decisions, the Adviser may consider
the following factors: The frequency of trades and quotes for the
security; the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; dealer
undertakings to make a market in the security; and the nature of the
security and the nature of the marketplace in which it trades (e.g.,
the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer).
    \10\ The Commission has stated that long-standing Commission
guidelines have required open-end funds to hold no more than 15% of
their net assets in illiquid securities and other illiquid assets.
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR
14618 (March 18, 2008), footnote 34. See also, Investment Company
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31,
1970) (Statement Regarding ``Restricted Securities''); Investment
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio
security is illiquid if it cannot be disposed of in the ordinary
course of business within seven days at approximately the value
ascribed to it by the fund. See Investment Company Act Release No.
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990)
(adopting Rule 144A under the Securities Act of 1933). The
Commission recently codified this long standing position in Rule
22e-4. See Investment Company Act Release No. 32315 (October 13,
2016), 81 FR 82142 (November 18, 2016) (adopting requirements for
investment company liquidity risk management programs).
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    According to the Registration Statement, each Fund will seek to
qualify for treatment as a Regulated Investment Company (``RIC'') under
the Internal Revenue Code.\11\
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    \11\ 26 U.S.C. 851.
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    The shares of each Fund will conform to the initial and continued
listing criteria under proposed Rule 14.11(k). The Funds will not
invest in forwards or swaps.
    Each Fund's investments will be consistent with its investment
objective and will not be used to enhance leverage. While a Fund may
invest in inverse ETFs, a Fund will not invest in leveraged (e.g., 2X,
-2X, 3X or -3X) ETFs.
Creations and Redemptions of Shares
    Creations and redemptions of the shares will occur as described in
the Proposal. More specifically, in connection with the creation and
redemption of Creation Units and Redemption Units, the delivery or
receipt of any portfolio securities in-kind will be required to be
effected through a separate confidential brokerage account (a
``Confidential Account''). Authorized Participants (as defined in the
Funds' registration statements, ``AP'') will sign an agreement with an
agent (an ``AP Representative'' \12\) establishing the Confidential
Account for the benefit of the AP. AP Representatives will be broker-
dealers. An AP must be a Depository Trust Company (``DTC'') Participant
that has executed a ``Participant Agreement'' with the Distributor with
respect to the creation and redemption of Creation Units and Redemption
Units and formed a Confidential Account for its benefit in accordance
with the terms of the Participant Agreement. For purposes of creations
or redemptions, all transactions will be effected through the
respective AP's Confidential Account, for the benefit of the AP without
disclosing the identity of such securities to the AP.
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    \12\ Each AP shall enter into its own separate Confidential
Account agreement (``Confidential Account Agreement'') with an AP
Representative.
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    Each AP Representative will be given, before the commencement of
trading each Business Day (defined below), the Creation Basket (as
described below) for that day. This information will permit an AP that
has established a Confidential Account with an AP Representative, to
instruct the AP Representative to buy and sell positions in the
portfolio securities to permit creation and redemption of Creation
Units and Redemption Units. Shares of each Fund will be issued in
Creation Units of 5,000 or more shares. The Funds will offer and redeem
Creation

Units and Redemption Units on a continuous basis at the NAV per share
next determined after receipt of an order in proper form. The NAV per
share of each Fund will be determined as of the close of regular
trading on the Exchange on each day that the Exchange is open (a
``Business Day''). The Funds will sell and redeem Creation Units and
Redemption Units only on Business Days. The Adviser anticipates that
the initial price of a share will range from $20 to $60, and that the
price of a Creation Unit will be at least $100,000.
    To keep costs low and permit each Fund to be as fully invested as
possible, shares will be purchased and redeemed in Creation Units and
Redemption Units and generally on an in-kind basis. Accordingly, except
where the purchase or redemption will include cash under the
circumstances described in the Registration Statement, APs will be
required to purchase Creation Units by making an in-kind deposit of
specified instruments (``Deposit Instruments''), and APs redeeming
their shares will receive an in-kind transfer of specified instruments
(``Redemption Instruments'') through the AP Representative in their
Confidential Account.\13\ On any given Business Day, the names and
quantities of the instruments that constitute the Deposit Instruments
and the names and quantities of the instruments that constitute the
Redemption Instruments will be identical, and these instruments may be
referred to, in the case of either a purchase or a redemption, as the
``Creation Basket.'' \14\
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    \13\ The Funds must comply with the federal securities laws in
accepting Deposit Instruments and satisfying redemptions with
Redemption Instruments, including that the Deposit Instruments and
Redemption Instruments are sold in transactions that would be exempt
from registration under the 1933 Act.
    \14\ In determining whether a particular Fund will sell or
redeem Creation Units entirely on a cash or in-kind basis, whether
for a given day or a given order, the key consideration will be the
benefit that would accrue to a Fund and its investors. To the extent
a fund allows creations or redemptions to be conducted in cash, such
transactions will be effected in the same manner for all APs.
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Placement of Purchase Orders
    Each Fund will issue shares through the Distributor on a continuous
basis at NAV. The Exchange represents that the issuance of shares will
operate in a manner similar to that of other ETFs. Each Fund will issue
shares only at the NAV per share next determined after an order in
proper form is received.
    In the case of a creation, the AP would enter an irrevocable
creation order with the Fund and then direct the AP Representative to
purchase the necessary basket of portfolio securities. The AP
Representative would then purchase the necessary securities in the
Confidential Account. In purchasing the necessary securities, the AP
Representative will use methods, such as breaking the transaction into
multiple transactions and transacting in multiple marketplaces, to
avoid revealing the composition of the Creation Basket. Once the
necessary basket of securities has been acquired, the purchased
securities held in the Confidential Account would be contributed in-
kind to the Fund.
    The Distributor will furnish acknowledgements to those placing such
orders that the orders have been accepted, but the Distributor may
reject any order which is not submitted in proper form, as described in
a Fund's prospectus or Statement of Additional Information (``SAI'').
The NAV of each Fund is expected to be determined once each Business
Day at a time determined by the Trust's Board of Trustees (``Board''),
currently anticipated to be as of the close of the regular trading
session on the Exchange (ordinarily 4:00 p.m. E.T.) (the ``Valuation
Time''). Each Fund will establish a cut-off time (``Order Cut-Off
Time'') for purchase orders in proper form. To initiate a purchase of
shares, an AP must submit to the Distributor an irrevocable order to
purchase such shares after the most recent prior Valuation Time. All
orders to purchase Creation Units must be received by the Distributor
no later than the Order Cut-Off Time in each case on the date such
order is placed (``Transmittal Date'') for the purchaser to receive the
NAV per share determined on the Transmittal Date.
    Purchases of shares will be settled in-kind and/or cash for an
amount equal to the applicable NAV per share purchased plus applicable
``Transaction Fees,'' as discussed below.
Authorized Participant Redemption
    The shares may be redeemed to a Fund in Redemption Unit size or
multiples thereof as described below. Redemption orders of Redemption
Units must be placed by an AP (``AP Redemption Order''). Each Fund will
establish an Order Cut-Off Time for redemption orders of Redemption
Units in proper form. Redemption Units of the Fund will be redeemable
at their NAV per share next determined after receipt of a request for
redemption by the Trust in the manner specified below before the Order
Cut-Off Time. To initiate an AP Redemption Order, an AP must submit to
the Distributor an irrevocable order to redeem such Redemption Unit
after the most recent prior Valuation Time, but not later than the
Order Cut-Off Time.
    In the case of a redemption, the AP would enter into an irrevocable
redemption order, and then immediately instruct the AP Representative
to sell the underlying basket of securities that it will receive in the
redemption. As with the purchase of securities, the AP Representative
will use methods, such as breaking the transaction into multiple
transactions and transacting in multiple marketplaces, to avoid
revealing the composition of the Creation Basket.
    Consistent with the provisions of Section 22(e) of the 1940 Act and
Rule 22e-2 thereunder, the right to redeem will not be suspended, nor
payment upon redemption delayed, except for: (1) Any period during
which the Exchange is closed other than customary weekend and holiday
closings, (2) any period during which trading on the Exchange is
restricted, (3) any period during which an emergency exists as a result
of which disposal by a Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for a Fund to determine
its NAV, and (4) for such other periods as the Commission may by order
permit for the protection of shareholders.
    Redemptions will occur primarily in-kind, although redemption
payments may also be made partly or wholly in cash.\15\ The Participant
Agreement signed by each AP will require establishment of a
Confidential Account to receive distributions of securities in-kind
upon redemption. Each AP will be required to open a Confidential
Account with an AP Representative in order to facilitate orderly
processing of redemptions. While a Fund will generally distribute
securities in-kind, the Adviser may determine from time to time that it
is not in a Fund's best interests to distribute securities in-kind, but
rather to sell securities and/or distribute cash. For example, the
Adviser may distribute cash to facilitate orderly portfolio management
in connection with rebalancing or transitioning a portfolio in line
with its investment objective, or if there is substantially more
creation than redemption activity during the period immediately
preceding a redemption request, or as necessary or appropriate in
accordance with applicable laws and regulations.
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    \15\ The value of any positions not susceptible to in-kind
settlement may be paid in cash.
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    The Redemption Instruments will consist of the same securities for
all APs on any given day subject to the

Adviser's ability to make minor adjustments to address odd lots,
fractional shares, tradeable sizes or other situations.
Net Asset Value
    The NAV per share of a Fund will be computed by dividing the value
of the net assets of a Fund (i.e., the value of its total assets less
total liabilities) by the total number of shares of a Fund outstanding,
rounded to the nearest cent. Expenses and fees, including, without
limitation, the management, administration and distribution fees, will
be accrued daily and taken into account for purposes of determining
NAV. Interest and investment income on the Trust's assets accrue daily
and will be included in the Fund's total assets. The NAV per share for
a Fund will be calculated by a Fund's administrator (``Administrator'')
and determined as of the close of the regular trading session on the
Exchange (ordinarily 4:00 p.m., E.T.) on each day that the Exchange is
open.
    Shares of U.S. exchange-listed equity securities, exchange-traded
funds, exchange-listed ADRs, and U.S. exchange-listed futures will be
valued at market value, which will generally be determined using the
last reported official closing or last trading price on the exchange or
market on which the securities are primarily traded at the time of
valuation. Cash Equivalents will generally be valued on the basis of
independent pricing services or quotes obtained from brokers and
dealers or price quotations or other equivalent indications of value
provided by a third-party pricing service.
Availability of Information
    The Funds' website (www.americancenturyetfs.com), which will be
publicly available prior to the listing and trading of shares, will
include a form of the prospectus for each Fund that may be downloaded.
The Funds' website will include additional quantitative information
updated on a daily basis, including, for each Fund, (1) the prior
Business Day's NAV, market closing price or mid-point of the bid/ask
spread at the time of calculation of such NAV (the ``Bid/Ask
Price''),\16\ and a calculation of the premium and discount of the
market closing price or Bid/Ask Price against the NAV, and (2) data in
chart format displaying the frequency distribution of discounts and
premiums of the daily Bid/Ask Price against the NAV, within appropriate
ranges, for each of the four previous calendar quarters. The website
and information will be publicly available at no charge.
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    \16\ The Bid/Ask Price of a Fund will be determined using the
mid-point between the current NBB and NBO as of the time of
calculation of a Fund's NAV. The records relating to Bid/Ask Prices
will be retained by each Fund and its service providers.
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    The Trust's SAI and each Fund's shareholder reports will be
available free upon request from the Trust. These documents and forms
may be viewed on-screen or downloaded from the Commission's website at
www.sec.gov.
    Information regarding market price and trading volume of the shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Quotation
and last sale information for the shares will be available via the
Consolidated Tape Association (``CTA'') high-speed line. In addition,
the VIIV, as defined in proposed Rule 14.11(k)(3)(B) and as described
further below, will be widely disseminated by one or more major market
data vendors in one-second intervals during Regular Trading Hours.
Dissemination of the VIIV
    According to the Exemptive Application, the pricing verification
agent, on behalf of each Fund, will utilize two separate calculation
engines to calculate intra-day indicative values (``Calculation
Engines''), generally based on the mid-point between the current
national best bid and offer disseminated by the Consolidated Quotation
System (``CQS'') and Unlisted Trading Privileges (``UTP'') Plan
Securities Information Processor,\17\ to provide the estimated real-
time value on a per Share basis every second during the Exchange's
Regular Trading Hours.\18\ The specific methodology for calculating and
disclosing the VIIV will be disclosed on each Fund's website. The VIIV
should not be viewed as a ``real-time'' update of NAV because the VIIV
may not be calculated in the same manner as NAV, which is computed once
per day. The VIIV for each Fund will be disseminated by one or more
major market data vendors in one-second intervals during Regular
Trading Hours. For purposes of the VIIV, securities held by a Fund will
be valued throughout the day based on the mid-point between the
disseminated current national best bid and offer. If the Adviser
determines that a portfolio security does not have a readily available
market quotation, that fact, along with the identity and weighting of
that security in a Fund's VIIV calculation, will be publicly disclosed
on each Fund's website.
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    \17\ According to the Exemptive Application, all Commission-
registered exchanges and market centers send their trades and quotes
to a central consolidator where the Consolidated Tape System (CTS)
and CQS data streams are produced and distributed worldwide. See
https://www.ctaplan.com/index. Although there is only one source of
market quotations, each Calculation Engine will receive the data
directly and calculate an indicative value separately and
independently from each other Calculation Engine.
    \18\ The Adviser represents that the dissemination of VIIV at
one second intervals strikes a balance of providing all investors
with usable information at a rate that can be processed by retail
investors, does not provide so much information so as to allow
market participants to accurately determine the constituents, and
their weightings, of the portfolio, can be accurately calculated and
disseminated, and still provides professional traders with per
second data.
---------------------------------------------------------------------------

Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the shares of the Funds. The Exchange will halt trading in
the shares under the conditions specified in BZX Rule 11.18. Trading
may be halted because of market conditions or for reasons that, in the
view of the Exchange, make trading in the shares inadvisable, including
whether unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. Trading in the
shares also will be subject to proposed Rule 14.11(k)(4)(B)(iii) in the
Proposal, which sets forth circumstances under which shares of the
Funds will be halted.
Trading Rules
    The Exchange deems the shares to be equity securities, thus
rendering trading in the shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the Exchange only during Regular Trading Hours as provided in proposed
Rule 14.11(k)(2)(B). As provided in BZX Rule 11.11(a), the minimum
price variation for quoting and entry of orders in securities traded on
the Exchange is $0.01, with the exception of securities that are priced
less than $1.00, for which the minimum price variation for order entry
is $0.0001.
    The shares will conform to the initial and continued listing
criteria under Rule 14.11(k). The Exchange represents that, for initial
and/or continued listing, each Fund will be in compliance with Rule
10A-3 under the Act.\19\ A minimum of 100,000 shares of each Fund will
be outstanding at the commencement of trading on the Exchange. The
Exchange will obtain a representation from the issuer of the shares of
each Fund that the NAV per

share of each Fund will be calculated daily and will be made available
to all market participants at the same time.
---------------------------------------------------------------------------

    \19\ See 17 CFR 240.10A-3.
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Surveillance
    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 Portfolio Shares.
The issuer has represented to the Exchange that it will advise the
Exchange of any failure by a Fund to comply with the continued listing
requirements, and, pursuant to its obligations under Section 19(g)(1)
of the Exchange Act, the Exchange will surveil for compliance with the
continued listing requirements. If a Fund is not in compliance with the
applicable listing requirements, the Exchange will commence delisting
procedures under Exchange Rule 14.12.
    The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the shares, underlying
equity securities and U.S. exchange-listed futures with other markets
and other entities that are members of the Intermarket Surveillance
Group (``ISG''), and the Exchange or FINRA, on behalf of the Exchange,
or both, may obtain trading information regarding trading such
securities from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the shares,
underlying stocks and U.S. exchange-listed futures from markets and
other entities that are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement.\20\
---------------------------------------------------------------------------

    \20\ For a list of the current members of ISG, see
www.isgportal.org.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Circular
    Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular (``Circular'') of the special
characteristics and risks associated with trading the shares.
Specifically, the Circular will discuss the following: (1) The
procedures for purchases and redemptions of shares; (2) BZX Rule 3.7,
which imposes suitability obligations on Exchange members with respect
to recommending transactions in the shares to customers; (3) how
information regarding the VIIV is disseminated; (4) the requirement
that members deliver a prospectus to investors purchasing newly issued
shares prior to or concurrently with the confirmation of a transaction;
and (5) trading information.
    In addition, the Circular will reference that the Funds are subject
to various fees and expenses described in the Registration Statement.
The Circular will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Act. The
Circular will also disclose that the NAV for the shares will be
calculated after 4:00 p.m., E.T. each trading day.
2. Statutory Basis
    The Exchange believes that the Proposal is consistent with Section
6(b) of the Act \21\ in general and Section 6(b)(5) of the Act \22\ 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.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78f.
    \22\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that, to the extent that the Proposal and,
thus proposed Rule 14.11(k) is approved by the Commission, this
proposed rule change is designed to prevent fraudulent and manipulative
acts and practices in that the Funds would meet each of the rules
relating to listing and trading of Managed Portfolio Shares and, to the
extent that a Fund is not in compliance with such rules, the Exchange
would either prevent the Fund from listing and trading if it hadn't
started trading on the Exchange or would commence delisting procedures
under Exchange Rule 14.12. More specifically, the Exchange will
consider the suspension of trading in, and will commence delisting
proceedings under Rule 14.12 for, a series of Managed Portfolio Shares
under any of the following circumstances: (a) If, following the initial
twelve-month period after commencement of trading on the Exchange of a
series of Managed Portfolio Shares, there are fewer than 50 beneficial
holders of the series of Managed Portfolio Shares; (b) if the value of
the VIIV is no longer calculated or available to all market
participants at the same time; (c) if the holdings of a series of
Managed Portfolio Shares are not made available on a quarterly basis as
required under the 1940 Act or are not made available to all market
participants at the same time; (d) if the Investment Company issuing
the Managed Portfolio Shares has failed to file any filings required by
the Commission or if the Exchange is aware that the Investment Company
is not in compliance with the conditions of any exemptive order or no-
action relief granted by the Commission to the Investment Company with
respect to the series of Managed Portfolio Shares; (e) if any of the
continued listing requirements set forth in Rule 14.11(k) are not
continuously maintained; (f) if any of the applicable Continued Listing
Representations for the issue of Managed Fund Shares are not
continuously met; or (g) if such other event shall occur or condition
exists which, in the opinion of the Exchange, makes further dealings on
the Exchange inadvisable.
    The Adviser is not registered as a broker-dealer, but is affiliated
with a broker-dealer and has implemented and will maintain a ``fire
wall'' with respect to such broker-dealer regarding access to
information concerning the composition and/or changes to a Fund's
portfolio.
    In the event (a) the Adviser becomes registered as a broker-dealer
or becomes 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 its broker-dealer
affiliate 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.
    With respect to the proposed listing and trading of shares of the
Funds, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in Rule 14.11(k). Price
information for the U.S. exchange-listed equity securities held by the
Funds will be available through major market data vendors or securities
exchanges listing and trading such securities. The listing and trading
of such securities is subject to rules of the exchanges on which they
are listed and traded, as approved by the Commission. The Funds will
primarily hold U.S.-listed equity securities. All exchange-listed
equity securities in

which the Funds will invest will be listed and traded on U.S. national
securities exchanges. A Fund's investments will be consistent with its
respective investment objective and will not be used to enhance
leverage. The Funds will not invest in non-U.S. exchange-listed
securities. The Exchange or FINRA, on behalf of the Exchange, or both,
will communicate as needed regarding trading in the shares, underlying
stocks and U.S. exchange-listed futures with other markets and other
entities that are members of the ISG, and the Exchange or FINRA, on
behalf of the Exchange, or both, may obtain trading information
regarding trading such securities from such markets and other entities.
In addition, the Exchange may obtain information regarding trading in
the shares, underlying stocks, and U.S. exchange-listed futures from
markets and other entities that are members of ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
An AP Representative will provide information related to creations and
redemption of Creation Units and Redemption Units to FINRA upon
request.
    With respect to trading of shares of the Funds, the ability of
market participants to buy and sell shares at prices near the VIIV is
dependent upon their assessment that the VIIV is a reliable, indicative
correlated value for a Fund's underlying holdings. Market participants
may view the VIIV as a reliable, indicative correlated value because
(1) the VIIV will be calculated and disseminated based on a Fund's
actual portfolio holdings, (2) the securities in which the Funds plan
to invest are generally highly liquid and actively traded and therefore
generally have accurate real time pricing available, and (3) market
participants will have a daily opportunity to evaluate whether the VIIV
at or near the close of trading is indeed predictive of the actual
NAV.\23\ The Exchange, however, notes that the VIIV should not be
viewed as a ``real-time'' update of NAV because the VIIV may not be
calculated in the same manner as NAV, which is computed once per day.
---------------------------------------------------------------------------

    \23\ The statements in the Statutory Basis section of this
filing relating to pricing efficiency, arbitrage, and activities of
market participants, including market makers and APs, are based on
representation by the Adviser and review by the Exchange.
---------------------------------------------------------------------------

    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation from the issuer of an
issue of Managed Portfolio Shares that the NAV per share of the Funds
will be calculated daily and that the NAV will be made available to all
market participants at the same time. Investors can also obtain a
Fund's SAI, shareholder reports, Form N-CSR, and Form N-PORT. A Fund's
SAI and shareholder reports will be available free upon request from
the applicable fund, and those documents and the Form N-CSR and Form N-
PORT may be viewed on-screen or downloaded from the Commission's
website. In addition, with respect to the Funds, 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 the shares will be available via the CTA high-speed
line. Information regarding the VIIV will be widely disseminated every
second throughout Regular Trading Hours by one or more major market
data vendors. The website for the Funds will include a prospectus for
the Funds 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 the shares. The Exchange will halt
trading in the shares under the conditions specified in BZX Rule 11.18
or for reasons that, in the view of the Exchange, make trading in the
shares inadvisable. Trading in the shares will be subject to proposed
Rule 14.11(k)(4)(B)(iii), which sets forth circumstances under which
shares of the Funds will be halted. In addition, as noted above,
investors will have ready access to the VIIV, and quotation and last
sale information for the shares. The shares will conform to the initial
and continued listing criteria under proposed Rule 14.11(k). The Funds
will not invest in forwards or swaps. Each Fund's investments will be
consistent with its investment objective and will not be used to
enhance leverage. While a Fund may invest in inverse ETFs, a Fund will
not invest in leveraged (e.g., 2X, -2X, 3X or-3X) ETFs.
    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
an additional type of actively-managed exchange-traded product that
will enhance competition among market participants, to the benefit of
investors and the marketplace. As noted above, the Exchange has in
place surveillance procedures relating to trading in the shares and may
obtain information via ISG from other exchanges that are members of ISG
or with which the Exchange has entered into a comprehensive
surveillance sharing agreement. In addition, as noted above, investors
will have ready access to information regarding the VIIV and quotation
and last sale information for the shares.
    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, rather will facilitate the listing and trading of
actively-managed exchange-traded products that will enhance competition
among both market participants and listing venues, to the benefit of
investors and the marketplace.

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

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

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

    Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
    A. By order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule
change should be 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_ADDRESS>Please include
File Number SR-CboeBZX-2019-057 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-2019-057. 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-2019-057 and should be submitted
on or before July 16, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
---------------------------------------------------------------------------

    \24\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019-13405 Filed 6-24-19; 8:45 am]
 BILLING CODE 8011-01-P


P-19-0155-0157 Sanitized Support Documents Index:
 P-19-0155-0157 Sanitized Determination Document (linked)
 P-19-0155 Sanitized CHEM Report (attached)
 P-19-0156 Sanitized CHEM Report (attached)
 P-19-0157 Sanitized CHEM Report (attached)
 P-19-0155 Sanitized ECO Report (attached)
 P-19-0156 Sanitized ECO Report (attached)
 P-19-0157 Sanitized ECO Report (attached)
 P-19-0155-0157 Sanitized ENG Report (attached)
 P-19-0155 Sanitized EXP Report (attached)
 P-19-0156 Sanitized EXP Report (attached)
 P-19-0157 Sanitized EXP Report (attached)
 P-19-0155 Sanitized Fate Report (attached)
 P-19-0156 Sanitized Fate Report (attached)
 P-19-0157 Sanitized Fate Report (attached)
 P-19-0155-0157 Sanitized HLTH Report_POST-FOCUS FINAL (attached)