[Federal Register Volume 84, Number 72 (Monday, April 15, 2019)]
[Notices]
[Pages 15248-15257]
[FR Doc No: 2019-07377]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85557; File No. SR-CboeBZX-2019-001]

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 List and Trade
Under BZX Rule 14.11(c)(3) Shares of the Global X Russell 2000 Covered
Call ETF of Global X Funds

April 9, 2019.

I. Introduction

    On January 28, 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 (the ``Act'' or the ``Exchange Act'') \1\ and Rule
19b-4 thereunder,\2\ a proposed rule change to list and trade under BZX
Rule 14.11(c)(3) shares of the Global X Russell 2000 Covered Call ETF
(``Fund'') of Global X Funds. The proposed rule

change was published for comment in the Federal Register on February
15, 2019.\3\ On March 14, 2019, the Exchange filed Amendment No. 1 to
the proposed rule change, which replaced and superseded the proposed
rule change as originally filed.\4\ On March 21, 2019, the Commission
extended the time period within which to approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to approve or disapprove the proposed rule
change.\5\ On April 5, 2019, the Exchange filed Amendment No. 2 to the
proposed rule change, which replaced and superseded the proposed rule
change as originally filed.\6\ The Commission received no comments on
the proposed rule change. The Commission is publishing this notice to
solicit comments on Amendment No. 2 from interested persons and is
approving the proposed rule change, as modified by Amendment No. 2, on
an accelerated basis.
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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. 85099 (February 11,
2019), 84 FR 4584.
    \4\ Amendment No. 1 to the proposed rule change is available at:
https://www.sec.gov/comments/sr-cboebzx-2019-001/srcboebzx2019001-5145199-183369.pdf.
    \5\ See Securities Exchange Act Release No. 85388, 84 FR 11597
(March 27, 2019). The Commission designated May 16, 2019, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
    \6\ In Amendment No. 2, the Exchange: (1) Clarified that the
Fund and the Underlying Index (as defined below) meet all
requirements of the listing standards applicable to index fund
shares in BZX Rule 14.11(c)(3), except for Rule
14.11(c)(3)(A)(i)(e); (2) modified the name of the Underlying Index
(as defined below); (3) specified that the Fund will invest at least
80% of its total assets in equity components of the Reference Index
(as defined below), U.S. exchange-listed ETFs designed to track the
Reference Index, U.S. listed options on equities that are components
of the Reference Index, U.S. listed options on ETFs designed to
track the Reference Index, as well as certain instruments that are
either included in the Underlying Index or have economic
characteristics that are substantially identical to the economic
characteristics of such component securities, either individually or
in the aggregate, including only the following: U.S. listed equity
index futures, U.S. listed equity index options, and U.S. listed
options on U.S. listed equity index futures; (4) clarified that the
Fund may hold cash and Cash Equivalents (as defined below); (5)
clarified that the Fund's investments will not be used to enhance
leverage, although certain derivatives and other investments may
result in leverage; (6) added representations regarding the Fund's
risk disclosure in its offering documents, including leveraging
risk; (7) clarified the types of instruments in which the Fund may
invest up to 20% of its net assets; (8) added a representation that
all of the Fund's holdings in equities, ETFs, futures, and options
will be listed on members of the Intermarket Surveillance Group or
on markets with which the Exchange has in place a comprehensive
surveillance sharing agreement; (9) added a representation that the
Fund's use of derivatives instruments will be collateralized; and
(10) made technical and conforming changes. Amendment No. 2 to the
proposed rule change is available at: https://www.sec.gov/comments/sr-cboebzx-2019-001/srcboebzx2019001-5321696-183907.pdf.
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II. The Exchange's Description of the Proposed Rule Change, as Modified
by Amendment No. 2

    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 proposes to list and trade shares (``Shares'') of the
Fund under BZX Rule 14.11(c)(3),\7\ which governs the listing and
trading of index fund shares based on an index composed of U.S.
Component Stocks.\8\ The Exchange notes that the Commission has
previously approved a fund that employs a very similar strategy.\9\
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    \7\ The Commission approved BZX Rule 14.11(c) in Securities
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148
(September 6, 2011) (SR-BATS-2011-018).
    \8\ Rule 14.11(c)(1)(D) provides that the term ``U.S. Component
Stock'' shall mean an equity security that is registered under
Sections 12(b) or 12(g) of the Act.
    \9\ See Securities Exchange Act Release No. 68708 (January 23,
2013), 78 FR 6161 (January 29, 2013) (SR-NYSEArca-2012-131) (order
granting approval of proposed rule change relating to listing and
trading of shares of the Horizons S&P 500 Covered Call ETF).
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    The Shares are offered by Global X Funds, which is organized as a
Delaware statutory trust and is registered with the Commission as an
open-end management investment company.\10\ The investment adviser and
administrator to the Fund is Global X Management Company LLC (the
``Adviser'' or ``Administrator'').\11\
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    \10\ The Trust is registered under the Investment Company Act of
1940 (15 U.S.C. 80a-1) (``1940 Act''). On December 20, 2018, the
Trust filed with the Commission an amendment to its Form N-1A under
the Securities Act of 1933 (15 U.S.C. 77a), and under the 1940 Act
relating to the Funds (File Nos. 333-151713 and 811-22209)
(``Registration Statement''). The description of the operation of
the Trust and the Fund herein is based, in part, on the Registration
Statement. In addition, the Commission has issued an order granting
certain exemptive relief to the Trust under the 1940 Act. See
Investment Company Act Release No. 29852 (October 28, 2011) (File
No. 812-13830).
    \11\ The Adviser is not registered as a broker-dealer, but is
affiliated with broker-dealers and has implemented and will maintain
a fire wall with respect to its broker-dealer affiliates regarding
access to information concerning the portfolio holdings of the Fund.
In the event (a) the Adviser becomes newly affiliated with a broker-
dealer, or (b) any new adviser or sub-adviser becomes affiliated
with a broker-dealer, it will implement and maintain a fire wall
with respect to such broker-dealer regarding access to information
concerning the portfolio holdings of the Fund, and will be subject
to procedures designed to prevent the use and dissemination of
material non-public information regarding said portfolio.
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    SEI Investments Distribution Co. (the ``Distributor'') is the
principal underwriter and distributor of the Shares. Brown Brothers
Harriman & Co. (the ``Custodian'' or ``Transfer Agent'') will serve as
custodian and transfer agent for the Fund.
    The Exchange submits this proposal because the Underlying Index, as
defined below, includes options on the Russell 2000 Index. Rule
14.11(c)(3)(A)(i)(e) provides that all securities in the applicable
index or portfolio shall be U.S. Component Stocks listed on a national
securities exchange and shall be NMS Stocks as defined in Rule 600
under Regulation NMS of the Act. Options are excluded from the
definition of U.S. Component Stocks. As such, because the Underlying
Index, as defined below, includes options, it does not meet the generic
listing standards applicable to Index Fund Shares under Rules
14.11(c)(3)(A)(i)(a)-(e). The Fund and the Underlying Index do,
however, meet all other requirements of the listing standards for Index
Fund Shares in Rule 14.11(c)(3). The Exchange also notes that each
component stock of the Russell 2000 Index is a U.S. Component Stock
that is listed on a national securities exchange and is an NMS Stock
and that such component stocks of the Russell 2000 Index satisfy the
requirements of Rule 14.11(c)(3)(A)(i)(a)-(e).
    As described below, the Fund will seek investment results that,
before fees and expenses, generally correspond to the performance of
the Cboe Russell 2000 BuyWrite Index (the ``Underlying Index'')
provided by FTSE Russell (the ``Index Provider'').\12\ The Underlying
Index measures the performance of a theoretical portfolio that holds a
portfolio of the stocks included in the Russell 2000 Index \13\ (the
``Reference

Index''), and ``writes'' (or sells) a succession of one-month at-the-
money covered call options on the Reference Index. The written covered
call options on the Reference Index are held until expiration. The
Reference Index is an equity benchmark which measures the performance
of the small-capitalization sector of the U.S. equity market, as
defined by FTSE Russell.\14\
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    \12\ The Underlying Index is provided by the Index Provider,
which is unaffiliated with the Fund or the Adviser. The Index
Provider maintains, calculates and publishes information regarding
the Underlying Index. The Index Provider is not a broker-dealer and
has implemented and will maintain procedures designed to prevent the
use and dissemination of material, non-public information regarding
the Underlying Index.
    \13\ The Exchange notes that the Russell 2000 Index has been
previously approved by the Commission under Section 19(b)(2) of the
Act in connection with the listing and trading of FLEX Options and
Quarterly Index Options, as well as other securities. See, e.g.,
Securities Exchange Act Release Nos. 32694 (July 29, 1993), 58 FR
41814 (July 5, 1993) (approving the listing and trading of FLEX
Options based on the Russell 2000 Index); 32693 (July 29, 1993), 58
FR 41817 (August 5, 1993) (approving the listing and trading of
Quarterly Index Option based on the Russell 2000 Index).
    \14\ The Underlying Index methodology is available at http://www.cboe.com/products/strategy-benchmark-indexes/buywrite-indexes/cboe-russell-2000-buywrite-index-bxr. The Index Provider may amend
the methodology from time to time. In such case, the methodology
would be updated accordingly on the website.
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    The Exchange is submitting this proposed rule change because the
Underlying Index for the Fund does not meet all of the ``generic''
listing requirements of Rule 14.11(c)(3)(A)(i) applicable to the
listing of Index Fund Shares based upon an index of U.S. Component
Stocks. Specifically, Rule 14.11(c)(3)(A)(i) sets forth the
requirements to be met by components of an index or portfolio of U.S.
Component Stocks. As further described below, the Underlying Index
consists of the constituent securities of the Russell 2000 Index and
options on the Russell 2000 Index. The Underlying Index meets all the
requirements of Rule 14.11(c)(3)(A)(i) except that the Underlying Index
includes call options, which are not NMS Stocks as defined in Rule 600
of Regulation NMS. As described below, the Underlying Index is
comprised solely of Russell 2000 companies and includes an exposure to
call options on the Reference Index. All securities in the Reference
Index are listed and traded on a U.S. national securities exchange. The
options on the Reference Index are traded on Cboe Exchange, Inc.
(``Cboe Options''). Notwithstanding that the Underlying Index does not
meet all of the generic listing requirements of Rule 14.11(c)(3)(A)(i),
the Exchange believes that the Underlying Index is sufficiently broad-
based enough to deter potential manipulation in that the Reference
Index stocks are among the most actively traded, highly capitalized
stocks traded in the U.S.
The Underlying Index
    According to the Registration Statement, the Global X Russell 2000
Covered Call ETF will seek investment results that, before fees and
expenses, generally correspond to the performance of the Fund's
Underlying Index, which is the Cboe Russell 2000 BuyWrite Index. The
Underlying Index measures the performance of a theoretical portfolio
that holds a portfolio of the stocks included in the Reference Index,
and ``writes'' (or sells) a succession of one-month at-the-money
covered call options on the Reference Index. The written covered call
options on the Reference Index are held until the applicable expiration
date. The Reference Index is an equity benchmark which measures the
performance of the small-capitalization sector of the U.S. equity
market, as defined by FTSE Russell. The Underlying Index is comprised
of all the equity securities in the Reference Index and a succession of
short (written) one-month at-the-money covered call options on the
Reference Index. The written covered call options on the Reference
Index are held until the expiration date.
The Fund
    According to the Registration Statement, the Fund will invest at
least 80% of its total assets in securities that comprise its
Underlying Index or in investments that have economic characteristics
that are substantially identical to the economic characteristics of
such component securities, either individually or in the aggregate (the
``80% Instruments'').\15\ The Fund may also hold cash and Cash
Equivalents.\16\ In seeking to track the Underlying Index, the Fund
follows a ``buy-write'' (also called a covered call) investment
strategy on the Reference Index in which the Fund purchases the
component securities of the Reference Index or purchases other
investments (including other ETFs) \17\ that have economic
characteristics that are substantially identical to the economic
characteristics of such component securities, and also writes (or
sells) call options that correspond to the Reference Index.
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    \15\ The term 80% Instruments includes only the following:
Equity components of the Reference Index, U.S. exchange-listed ETFs
designed to track the Reference Index, U.S. listed options on
equities that are components of the Reference Index, U.S. listed
options on ETFs designed to track the Reference Index, as well as
certain instruments that are either included in the Underlying Index
or have economic characteristics that are substantially identical to
the economic characteristics of such component securities, either
individually or in the aggregate, including only the following: U.S.
listed equity index futures, U.S. listed equity index options, U.S.
listed equity index futures [sic], U.S. listed equity index options
[sic], and U.S. listed options on U.S. listed equity index futures.
    \16\ As defined in Exchange Rule 14.11(i)(4)(C)(iii)(b), 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.
    \17\ For purposes of this filing, ETFs include index fund shares
(as described in BZX Rule 14.11(c)); Portfolio Depositary Receipts
(as described in BZX Rule 14.11(b)); and Managed Fund Shares (as
described in BZX Rule 14.11(i)). The ETFs all will be listed and
traded in the U.S. on registered exchanges. The Fund may invest in
the securities of ETFs registered under the 1940 Act consistent with
the requirements of Section 12(d)(1) of the 1940 Act, or any rule,
regulation or order of the Commission or interpretation thereof.
While the Fund may invest in inverse ETFs, the Fund will not invest
in leveraged (e.g., 2X, -2X, 3X or -3X) ETFs.
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    According to the Registration Statement, the Fund will be an index
fund that employs a ``passive management'' investment strategy in
seeking to achieve its objective. According to the Registration
Statement, the Adviser's strategy will consist of holding a portfolio
indexed to the Reference Index and writing (selling) covered call
options on the Reference Index.\18\ The Underlying Index provides a
benchmark measure of the total return of this hypothetical portfolio.
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    \18\ A covered call strategy is generally considered to be an
investment strategy in which an investor buys a security, and sells
a call option that corresponds to the security. In return for a
premium, the Fund will give the purchaser of the option written by
the Fund either the right to buy the security from the Fund at an
exercise price or the right to receive a cash payment equal to the
difference between the value of the security and the exercise (or
``strike'') price, if the value is above the exercise price on or
before the expiration date of the option. In addition, the covered
call options hedge against a decline in the price of the securities
on which they are written to the extent of the premium the Fund
receives. A covered call strategy is generally used in a neutral-to-
bullish market environment, where a slow and steady rise in market
prices is anticipated.
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    According to the Registration Statement, the Fund will generally
use a representative sampling methodology, meaning it will invest in a
representative sample of securities that collectively has an investment
profile similar to the Underlying Index in terms of key risk factors,
performance attributes and other characteristics.
    The Fund's investments, including derivatives, will be consistent
with the 1940 Act and the Fund's investment objective and policies and
will not be

used to enhance leverage (although certain derivatives and other
investments may result in leverage).\19\ That is, while the Fund will
be permitted to borrow as permitted under the 1940 Act, the Fund's
investments will not be used to seek performance that is the multiple
or inverse multiple (i.e., 2Xs and 3Xs) of the Fund's primary broad-
based securities benchmark index (as defined in Form N-1A). The Fund
will only use those derivatives described above. The Fund's use of
derivative instruments will be collateralized.
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    \19\ The Fund will include appropriate risk disclosure in its
offering documents, including leveraging risk. Leveraging risk is
the risk that certain transactions of a fund, including a fund's use
of derivatives, may give rise to leverage, causing a fund to be more
volatile than if it had not been leveraged. To mitigate leveraging
risk, the Fund will segregate or earmark liquid assets determined to
be liquid by the Adviser in accordance with procedures established
by the Trust's Board and in accordance with the 1940 Act (or, as
permitted by applicable regulations, enter into certain offsetting
positions) to cover its obligations under derivative instruments.
These procedures have been adopted consistent with Section 18 of the
1940 Act and related Commission guidance. See 15 U.S.C. 80a-18;
Investment Company Act Release No. 10666 (April 18, 1979), 44 FR
25128 (April 27, 1979); Dreyfus Strategic Investing, Commission No-
Action Letter (June 22, 1987); Merrill Lynch Asset Management, L.P.,
Commission No-Action Letter (July 2, 1996).
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    According to the Registration Statement, the Fund will concentrate
its investments (i.e., hold 25% or more of its total assets) in a
particular industry or group of industries to approximately the same
extent that the Underlying Index is so concentrated. The Fund will be
diversified under the 1940 Act.
Investment Guidelines
    According to the Registration Statement, the Fund will write (sell)
call options on the Reference Index to the same extent as such short
call options are included in its Underlying Index.
    The Trust, on behalf of the Fund, has filed a notice of eligibility
for exclusion from the definition of the term ``commodity pool
operator'' in accordance with Rule 4.5 so that the Fund is not subject
to registration or regulation as a commodity pool operator under the
Commodity Exchange Act (``CEA'').
Other Investments
    The Fund may also hold up to 20% of its net assets in shares of
non-exchange traded registered open-end investment companies, subject
to applicable limitations under Section 12(d)(1) of the 1940 Act
(``Mutual Funds''),\20\ U.S. listed options on equities that are not
components of the Reference Index, U.S. listed options on ETFs that are
not designed to track the Reference Index, and U.S. exchange-listed
listed equities that are not components of the Reference Index,
including ETFs that are not designed to track the Reference Index,
which the Adviser believes will help the Fund track the Underlying
Index, as well as in certain instruments that would be included in the
definition of the 80% Instruments except that such instruments are not
included in the Underlying Index or do not have economic
characteristics that are substantially identical to the economic
characteristics of such component securities, either individually or in
the aggregate, including only the following: U.S. listed equity index
futures, U.S. listed equity index options, and U.S. listed options on
U.S. listed equity index futures.
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    \20\ The Fund will not invest in leveraged (e.g., 2x, -2x, 3x,
or -3x) Mutual Funds.
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    The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid securities (calculated at the time of
investment).\21\ The Fund will monitor its portfolio liquidity on an
ongoing basis to determine whether, in the light of current
circumstances, an adequate level of liquidity is being maintained, and
will consider taking appropriate steps in order to maintain adequate
liquidity if, through a change in values, net assets, or other
circumstances, more than 15% of the Fund's net assets are held in
illiquid securities and other illiquid assets.
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    \21\ 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. 8901 (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 exchange traded fund (``ETF''). 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).
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    The Fund will seek to qualify for treatment as a regulated
investment company (``RIC'') under the Code.\22\
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    \22\ 26 U.S.C. 851.
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Availability of Information
    The Fund's website, which will be publicly available prior to the
public offering of Shares, will include a form of the prospectus for
the Fund that may be downloaded. The website will include additional
quantitative information updated on a daily basis, including, for the
Fund: (1) The prior business day's reported NAV and a calculation of
the premium and discount of the 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.
Daily trading volume information for the Shares will also be available
in the financial section of newspapers, through subscription services
such as Bloomberg, Thomson Reuters, and International Data Corporation,
which can be accessed by authorized participants and other investors,
as well as through other electronic services, including major public
websites. On each business day, the Fund will disclose on its website
the identities and quantities of the portfolio of securities and other
assets in the daily disclosed portfolio held by the Fund that formed
the basis for the Fund's calculation of NAV at the end of the previous
business day. The daily disclosed portfolio will include, as
applicable: The ticker symbol; CUSIP number or other identifier, if
any; a description of the holding (including the type of holding); the
identity of the security, index or other asset or instrument underlying
the holding, if any; for options, the option strike price; quantity
held (as measured by, for example, par value, notional value or number
of shares, contracts, or units); maturity date, if any; coupon rate, if
any; effective date, if any; market value of the holding; and the
percentage weighting of the holding in the Fund's portfolio. The
website and information will be publicly available at no charge. The
value, components, and percentage weightings of the Underlying Index
will be calculated and disseminated at least once daily and will be
available from major market data vendors. Rules governing the
Underlying Index are available on the Exchange's website and in the
Fund's prospectus.
    In addition, an estimated value, defined in BZX Rule 14.11(c)(6)(A)
as the ``Intraday Indicative Value,'' (the ``IIV'') that reflects an
estimated intraday value of the Fund's portfolio, will be disseminated.
Moreover, the IIV will be based upon the current value for the
components of the daily disclosed portfolio and will be updated and
widely disseminated by one or more major market data vendors at least
every

15 seconds during the Exchange's Regular Trading Hours.\23\
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    \23\ Currently, it is the Exchange's understanding that several
major market data vendors display and/or make widely available IIVs
published via the Consolidated Tape Association (``CTA'') or other
data feeds.
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    The dissemination of the IIV, together with the daily disclosed
portfolio, will allow investors to determine the value of the
underlying portfolio of the Fund on a daily basis and provide a close
estimate of that value throughout the trading day.
    Quotation and last sale information for the Shares will be
available via the CTA high speed line and, for the securities held by
the Fund, will be available from the exchange on which they are listed.
Quotation and last sale information for options contracts held by the
Fund will be available via the Options Price Reporting Authority. The
intra-day, closing, and settlement prices of the portfolio instruments,
including equities, ETFs, futures, and options, will also be readily
available from the exchanges trading such instruments, automated
quotation systems, published or other public sources, or online
information services such as Bloomberg or Reuters. Price information
for Cash Equivalents will be available from major market data vendors.
Mutual Funds are typically priced once each business day and their
prices will be available through the applicable fund's website or from
major market data vendors.
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. Trading also may be halted because of market
conditions or for reasons that, in the view of the Exchange, make
trading in the shares the Fund inadvisable. If the IIV and index value
are not being disseminated for the Fund as required, the Exchange may
halt trading during the day in which the interruption to the
dissemination of the IIV or index value occurs. If the interruption to
the dissemination of an IIV or index value persists past the trading
day in which it occurred, the Exchange will halt trading. The Exchange
may consider all relevant factors in exercising its discretion to halt
or suspend trading in the Shares. The Exchange will halt trading in the
Shares under the conditions specified in 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. These may
include: (1) The extent to which trading is not occurring in the
securities and/or the financial instruments composing the daily
disclosed portfolio of the Fund; or (2) whether other 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 Rule 14.11(c)(1)(B)(iv), which sets forth circumstances
under which Shares of a Fund may 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. The Exchange will
allow trading in the Shares from 8:00 a.m. until 8:00 p.m. Eastern Time
and has the appropriate rules to facilitate transactions in the Shares
during all trading sessions. As provided in 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.
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 Index Fund Shares. The
issuer has represented to the Exchange that it will advise the Exchange
of any failure by the Fund to comply with the continued listing
requirements, and, pursuant to its obligations under Section 19(g)(1)
of the Exchange Act, the Exchange will surveil for compliance with the
continued listing requirements. FINRA conducts certain cross-market
surveillances on behalf of the Exchange pursuant to a regulatory
services agreement. The Exchange is responsible for FINRA's performance
under this regulatory services agreement. If the Fund is not in
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under Exchange Rule 14.12.
    The Exchange or FINRA, on behalf of the Exchange, will communicate
as needed regarding trading in the Shares, underlying equities
(including ETFs), futures, and options contracts with other markets and
other entities that are members of the Intermarket Surveillance Group
(``ISG'') \24\ and may obtain trading information regarding trading in
the Shares, underlying equities (including ETFs), futures, and options
contracts from such markets and other entities. In addition, the
Exchange may obtain information regarding trading in the Shares,
underlying equities (including ETFs), futures, and the options
contracts from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. In addition, the Exchange is able to access, as
needed, trade information for certain fixed income securities held by
the Fund reported to FINRA's Trade Reporting and Compliance Engine
(``TRACE'').
---------------------------------------------------------------------------

    \24\ For a list of the current members of ISG, see
www.isgportal.org. The Exchange notes that not all of the components
of the portfolio for the Fund may trade on exchanges that are
members of the ISG or with which the Exchange has in place a
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
    The Exchange represents that, for initial and/or continued listing,
the Fund will be in compliance with Rule 10A-3 \25\ under the Exchange
Act, as provided by generic listing standards under Rule 14.11(c)(4)
and the continued listing standards under Rule 14.11(c). A minimum of
100,000 Shares for the Fund will be outstanding at the commencement of
trading on the Exchange. The Exchange represents that, except for the
exceptions to BZX Rule 14.11(c) described above, the Fund and Shares
will satisfy all applicable requirements for Index Fund Shares under
Rule 14.11(c), including the requirements related to the net asset
value (``NAV'') per Share being calculated daily and made available to
all market participants at the same time, intraday indicative value,
suspension of trading or removal, trading halts, disclosure, and
firewalls.
---------------------------------------------------------------------------

    \25\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Information Circular
    Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular of the special characteristics and
risks associated with trading the Shares. Specifically, the Information
Circular will discuss the following: (1) The procedures for purchases
and redemptions of Shares in Creation Units (and that Shares are not
individually redeemable); (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 Intraday
Indicative Value and the portfolio holdings is disseminated; (4) the
risks involved in trading the Shares during the Pre-Opening \26\ and
After Hours Trading Sessions \27\ when an updated Intraday Indicative
Value will not be calculated or publicly disseminated; (5) the
requirement that members deliver a prospectus to investors purchasing
newly issued Shares prior to or concurrently with the confirmation of a
transaction; and (6) trading information.
---------------------------------------------------------------------------

    \26\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m.
Eastern Time.
    \27\ The After Hours Trading Session is from 4:00 p.m. to 5:00
p.m. Eastern Time.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to
the commencement of trading, of the prospectus delivery requirements
applicable to the Fund. Members purchasing Shares from the Fund for
resale to investors will deliver a prospectus to such investors. The
Information Circular will also discuss any exemptive, no-action and
interpretive relief granted by the Commission from any rules under the
Act.
    In addition, the Information Circular will reference that the Fund
is subject to various fees and expenses described in the Registration
Statement. The Information Circular will also disclose the trading
hours of the Shares of the Fund and the applicable NAV calculation time
for the Shares. The Information Circular will disclose that information
about the Shares of the Fund will be publicly available on the Fund's
website.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section
6(b) of the Act \28\ in general and Section 6(b)(5) of the Act \29\ in
particular in that it is designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and
a national market system and, in general, to protect investors and the
public interest.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78f.
    \29\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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 for Index Fund Shares based on
an index composed of U.S. Component Stocks in Rule 14.11(c)(3). The
Exchange represents that trading in the Shares will be subject to the
existing trading surveillances administered by the Exchange as well as
cross-market surveillances administered by FINRA on behalf of the
Exchange, which are designed to detect violations of Exchange rules and
federal securities laws applicable to trading on the Exchange. The
Exchange represents that these procedures are adequate to properly
monitor Exchange trading of the Shares in all trading sessions and to
deter and detect violations of Exchange rules and federal securities
laws applicable to trading on the Exchange. The Exchange or FINRA, on
behalf of the Exchange, will communicate as needed regarding trading in
the Shares, underlying equities (including ETFs), futures, and options
contracts with other markets and other entities that are members of the
ISG and may obtain trading information regarding trading in the Shares,
underlying equities (including ETFs), futures, and options contracts
from such markets and other entities.\30\ In addition, the Exchange may
obtain information regarding trading in the Shares, underlying equities
(including ETFs), futures, and the options contracts from markets and
other entities that are members of ISG or with which the Exchange has
in place a comprehensive surveillance sharing agreement. All securities
in the Reference Index are listed and traded on a U.S. national
securities exchange. The options on the Reference Index are traded on
Cboe Options, a U.S. national options exchange and member of ISG. In
addition, FINRA, on behalf of the Exchange, is able to access, as
needed, trade information for certain fixed income securities held by
the Fund reported to TRACE.
---------------------------------------------------------------------------

    \30\ The Exchange notes that all of the Funds [sic] holdings in
equities, ETFs, futures, and options will be listed on members of
ISG or on markets with which the Exchange has in place a
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    The Fund's investments, including derivatives, will be consistent
with the 1940 Act and the Fund's investment objective and policies and
will not be used to enhance leverage (although certain derivatives and
other investments may result in leverage). That is, while the Fund will
be permitted to borrow as permitted under the 1940 Act, the Fund's
investments will not be used to seek performance that is the multiple
or inverse multiple (i.e., 2Xs and 3Xs) of the Fund's primary broad-
based securities benchmark index (as defined in Form N-1A). The Fund
will only use those derivatives described above. The Fund's use of
derivative instruments will be collateralized.
    The Adviser is affiliated with broker-dealers and has implemented
and will maintain a fire wall with respect to its broker-dealer
affiliates regarding access to information concerning the portfolio
holdings of the Fund. In the event (a) the Adviser becomes newly
affiliated with a broker-dealer, or (b) any new adviser or sub-adviser
becomes affiliated with a broker-dealer, it will implement and maintain
a fire wall with respect to such broker-dealer regarding access to
information concerning the portfolio holdings of the Fund, and will be
subject to procedures designed to prevent the use and dissemination of
material non-public information regarding such portfolios. The Index
Provider is not a broker-dealer and has implemented and will maintain
procedures designed to prevent the use and dissemination of material,
non-public information regarding the Underlying Index.
    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 the
Shares that the NAV per Share will be calculated daily and that the NAV
will be made available to all market participants at the same time. In
addition, a large amount of information is publicly available regarding
the Fund and the Shares, thereby promoting market transparency.
Moreover, the IIV and the Underlying Index value will be widely
disseminated by one or more major market data vendors at least every 15
seconds during Regular Trading Hours. If the IIV or the Underlying
Index value of a Fund is not being disseminated as required, the
Exchange may halt trading during the day in which the interruption to
the dissemination of the applicable IIV or Underlying Index value
occurs. If the interruption to the dissemination of the applicable IIV
or Underlying Index value persists past the trading day in which it
occurred, the Exchange will halt trading. In addition, if the Exchange
becomes aware that the NAV of a Fund is not being disseminated to all
market participants at the same time, it will halt trading in the
relevant Shares on the Exchange until such time as the NAV is available
to all market participants. On each business day, before commencement
of trading in Shares during Regular Trading Hours on the Exchange, the
Fund will disclose on its website the securities and other financial
instruments in the Fund's

portfolio that will form the basis for the Fund's calculation of NAV at
the end of the business day. 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, and quotation and last sale information will be
available via the CTA high-speed line. The website for the Fund will
include a form of the prospectus for the Fund and additional data
relating to NAV and other applicable quantitative information.
Moreover, prior to the commencement of trading, the Exchange will
inform its Members in an Information 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 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. These may include: (1) The extent to which trading
is not occurring in the securities and/or the financial instruments
composing the daily disclosed portfolio of the Fund; or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition, the
equity securities (including ETFs), futures, and options in which the
Fund will invest will trade in markets that are ISG members. Additional
information regarding the Underlying and Reference Indices' components
and their percentage weights will be available from the Index Provider
and major market data vendors. In addition, quotation and last sale
information for the components of the Underlying and Reference Indices
will be available from the exchanges on which they trade. The intra-
day, closing and settlement prices of the portfolio instruments will
also be readily available from the exchanges trading such instruments,
automated quotation systems, published or other public sources, or on-
line information services such as Bloomberg or Reuters. In addition, as
noted above, investors will have ready access to information regarding
the Fund's holdings, the IIV, the Underlying Index's value, and
quotation and last sale information for the Shares.
    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
additional types of Index Fund Shares 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, the underlying equities
(including ETFs), futures, and options contracts 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 Fund's holdings, the IIV,
relevant Underlying Index value, and quotation and last sale
information for the Shares.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of an
additional series of Index Fund Shares on the Exchange that will
enhance competition among market participants, to the benefit of
investors and the marketplace.

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

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

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change, as modified by Amendment 2, is consistent with the Act and the
rules and regulations thereunder applicable to a national securities
exchange.\31\ 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,\32\ which requires, among other things, that the
Exchange's rules be designed 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. The Commission also finds
that the proposal to list and trade the Shares on the Exchange is
consistent with Section 11A(a)(1)(C)(iii) of the Act,\33\ which sets
forth Congress' finding that it is in the public interest and
appropriate for the protection of investors and the maintenance of fair
and orderly markets to assure the availability to brokers, dealers and
investors of information with respect to quotations for and
transactions in securities.
---------------------------------------------------------------------------

    \31\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
    \32\ 15 U.S.C. 78f(b)(5).
    \33\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------

    Quotation and last-sale information for the Shares will be
available via the CTA high speed line and, for the securities held by
the Fund, will be available from the exchange on which they are
listed.\34\ Quotation and last sale information for options contracts
held by the Fund will be available via the Options Price Reporting
Authority.\35\ The intra-day, closing, and settlement prices of the
portfolio instruments, including equities, ETFs, futures, and options,
will also be readily available from the exchanges trading such
instruments, automated quotation systems, published or other public
sources, or online information services such as Bloomberg or
Reuters.\36\ Price information for Cash Equivalents will be available
from major market data vendors.\37\ Mutual Fund prices will be
available through the applicable fund's website or from major market
data vendors.\38\
---------------------------------------------------------------------------

    \34\ See Amendment No. 2, supra note 6, at 14.
    \35\ See id.
    \36\ See id.
    \37\ See id. at 14-15.
    \38\ See id. at 15.
---------------------------------------------------------------------------

    On each business day, before commencement of trading in Shares
during Regular Trading Hours on the Exchange, the Fund will disclose on
its website the identities and quantities of the portfolio of
securities and other assets in the daily disclosed portfolio held by
the Fund that formed the basis for the Fund's calculation of NAV at the
end of the previous business day.\39\ The daily disclosed portfolio
will include, as applicable: The ticker symbol; CUSIP number or other
identifier, if any; a description of the holding (including the type of
holding); the identity of the security, index or other asset or
instrument underlying the holding, if any; for options, the option
strike price; quantity held (as measured by, for example, par value,
notional value or number of shares, contracts, or units); maturity
date, if any; coupon rate, if any; effective date, if any; market value
of the holding; and the percentage weighting of the holding in the
Fund's portfolio.\40\ The website and

information will be publicly available at no charge.\41\
---------------------------------------------------------------------------

    \39\ See id. at 13.
    \40\ See Amendment No. 2, supra note 6, at 13.
    \41\ See id.
---------------------------------------------------------------------------

    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, and
quotation and last sale information will be available via the CTA high-
speed line.\42\ Daily trading volume information for the Shares will
also be available in the financial section of newspapers, through
subscription services such as Bloomberg, Thomson Reuters, and
International Data Corporation, which can be accessed by authorized
participants and other investors, as well as through other electronic
services, including major public websites.\43\ The website for the Fund
will include a form of the prospectus for the Fund and additional data
relating to NAV and other applicable quantitative information.\44\ The
value, components, and percentage weightings of the Underlying Index
will be calculated and disseminated at least once daily and will be
available from major market data vendors.\45\ Additional information
regarding the Underlying and Reference Indices' components and their
percentage weights will be available from the Index Provider and major
market data vendors.\46\ Moreover, the Underlying Index value and the
IIV, as defined in BZX Rule 14.11(c)(6)(A), will be widely disseminated
by one or more major market data vendors at least every 15 seconds
during Regular Trading Hours.\47\
---------------------------------------------------------------------------

    \42\ See id. at 22.
    \43\ See id. at 13.
    \44\ See id. at 22.
    \45\ See id. at 13-14.
    \46\ See Amendment No. 2, supra note 6, at 23.
    \47\ See id. at 22.
---------------------------------------------------------------------------

    The Commission also believes that the proposal to list and trade
the Shares is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading when a reasonable degree of transparency cannot be
assured. The Exchange will obtain a representation from the issuer of
the Shares that the NAV per Share will be calculated daily and that the
NAV will be made available to all market participants at the same
time.\48\ Trading may be halted because of market conditions or for
reasons that, in the view of the Exchange, make trading in the Shares
inadvisable.\49\ Trading in the Shares also will be subject to Rule
14.11(c)(1)(B)(iv), which sets forth circumstances under which Shares
of a Fund may be halted.\50\ The Exchange states that it has a general
policy prohibiting the distribution of material, non-public information
by its employees.\51\ In addition, the Exchange states that the Index
Provider is not a broker-dealer and has implemented and will maintain
procedures designed to prevent the use and dissemination of material,
non-public information regarding the Underlying Index.\52\ The Exchange
also represents that the Adviser is not registered as a broker-dealer,
but is affiliated with broker-dealers, and has implemented and will
maintain a fire wall with respect to its broker-dealer affiliates
regarding access to information concerning the portfolio holdings of
the Fund.\53\
---------------------------------------------------------------------------

    \48\ See id. at 21.
    \49\ See id. at 23. These may include: (1) The extent to which
trading is not occurring in the securities and/or the financial
instruments composing the daily disclosed portfolio of the Fund; or
(2) whether other unusual conditions or circumstances detrimental to
the maintenance of a fair and orderly market are present.
    \50\ See id. at 15.
    \51\ See id. at 17.
    \52\ See Amendment No. 2, supra note 6, at 6, n.8.
    \53\ See id. at 4, n.7.
---------------------------------------------------------------------------

    The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, which are designed to detect
violations of Exchange rules and federal securities laws applicable to
trading on the Exchange.\54\ The Exchange further represents that these
procedures are adequate to properly monitor Exchange trading of the
Shares in all trading sessions and to deter and detect violations of
Exchange rules and federal securities laws applicable to trading on the
Exchange.\55\ Moreover, prior to the commencement of trading, the
Exchange will inform its Members in an Information Circular of the
special characteristics and risks associated with trading the
Shares.\56\
---------------------------------------------------------------------------

    \54\ See id. at 19-20.
    \55\ See id. at 20.
    \56\ See id. at 18.
---------------------------------------------------------------------------

    The Commission notes that the Fund and the Shares must comply with
the initial and continued listing criteria in Rule 14.11(c) for the
Shares to the listed and traded on the Exchange. Except for the
Underlying Index's exposure to call options, the Fund and Shares will
satisfy all applicable requirements for Index Fund Shares under Rule
14.11(c), including the requirements related to the NAV per Share being
calculated daily and made available to all market participants at the
same time, intraday indicative value, suspension of trading or removal,
trading halts, disclosure, and firewalls.\57\ Additionally, all of the
Fund's holdings in equities, ETFs, futures and options will be listed
on members of ISG or on markets with which the Exchange has in place a
comprehensive surveillance sharing agreement.\58\
---------------------------------------------------------------------------

    \57\ See id. at 17-18.
    \58\ See Amendment No. 2, supra note 6, at 20, n.26.
---------------------------------------------------------------------------

    The Exchange represents that it 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.\59\ In support of this proposal, the Exchange has also made
the following representations:
---------------------------------------------------------------------------

    \59\ See id. at 16.
---------------------------------------------------------------------------

    (1) The Fund and the Shares will satisfy all of the generic listing
standards under BZX Rule 14.11(c) except BZX Rule
14.11(c)(3)(A)(i)(e).\60\
---------------------------------------------------------------------------

    \60\ See id. at 5, 18.
---------------------------------------------------------------------------

    (2) The Exchange has the appropriate rules to facilitate
transactions in the Shares during all trading sessions.\61\
---------------------------------------------------------------------------

    \61\ See id. at 16.
---------------------------------------------------------------------------

    (3) The Exchange or FINRA, on behalf of the Exchange, will
communicate as needed regarding trading in the Shares, underlying
equities, futures, and options contracts with other markets and other
entities that are members of the ISG and may obtain trading information
regarding trading in the Shares, underlying equities (including ETFs),
futures, and options contracts from such markets and other entities. In
addition, the Exchange may obtain information regarding trading in the
Shares, underlying equities (including ETFs), futures, and the options
contracts from markets and other entities that are members of ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. The Exchange is also able to access, as needed,
trade information for certain fixed income securities held by the Fund
reported to FINRA's TRACE.\62\
---------------------------------------------------------------------------

    \62\ See id. at 17.
---------------------------------------------------------------------------

    (4) Prior to the commencement of trading, the Exchange will inform
its members in an Information Circular of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Circular will discuss the following: (a) The procedures for
purchases and redemptions of Shares in Creation Units (and that Shares
are not individually redeemable); (b) BZX Rule 3.7, which imposes
suitability obligations on Exchange members with respect to
recommending transactions in the Shares to customers; (c) how
information regarding the Intraday Indicative Value and the portfolio
holdings is disseminated; (d) the risks involved in trading the Shares
during

the Pre-Opening and After Hours Trading Sessions when an updated
Intraday Indicative Value will not be calculated or publicly
disseminated; (e) the requirement that members deliver a prospectus to
investors purchasing newly issued Shares prior to or concurrently with
the confirmation of a transaction; and (f) trading information.\63\
---------------------------------------------------------------------------

    \63\ See id. at 18.
---------------------------------------------------------------------------

    (5) For initial and continued listing, the Fund will be in
compliance with Rule 10A-3 under the Act.\64\
---------------------------------------------------------------------------

    \64\ 17 CFR 240.10A-3; see Amendment No. 2, supra note 6, at 17.
---------------------------------------------------------------------------

    (6) A minimum of 100,000 Shares will be outstanding at the
commencement of trading on the Exchange.\65\
---------------------------------------------------------------------------

    \65\ See id. at 17.
---------------------------------------------------------------------------

    (7) All of the Fund's holdings in equities, ETFs, futures, and
options will be listed on members of ISG or on markets with which the
Exchange has in place a comprehensive surveillance sharing
agreement.\66\
---------------------------------------------------------------------------

    \66\ See id. at 20, n.26.
---------------------------------------------------------------------------

    (8) The Fund may hold up to an aggregate amount of 15% of its net
assets in illiquid securities (calculated at the time of
investment).\67\
---------------------------------------------------------------------------

    \67\ See id. at 12.
---------------------------------------------------------------------------

    (9) The Fund's investments, including derivatives, will be
consistent with the 1940 Act and the Fund's investment objective and
policies and will not be used to enhance leverage (although certain
derivatives and other investments may result in leverage). The Fund's
investments will not be used to seek performance that is the multiple
or inverse multiple (i.e., 2Xs and 3Xs) of the Fund's primary broad-
based securities benchmark index (as defined in Form N-1A).\68\
---------------------------------------------------------------------------

    \68\ See id. at 10.
---------------------------------------------------------------------------

    (10) All securities in the Reference Index are listed and traded on
a U.S. national securities exchange. The options on the Reference Index
are traded on Cboe Options.\69\
---------------------------------------------------------------------------

    \69\ See id. at 7.
---------------------------------------------------------------------------

    (11) The Fund's use of derivative instruments will be
collateralized.\70\
---------------------------------------------------------------------------

    \70\ See Amendment No. 2, supra note 6, at 10.
---------------------------------------------------------------------------

    (12) The Fund will not invest in leveraged (e.g., 2x, -2x, 3x, or -
3x) Mutual Funds.\71\
---------------------------------------------------------------------------

    \71\ See id. at 11, n.16.
---------------------------------------------------------------------------

    (13) Trading of the Shares through the Exchange will be subject to
the Exchange's surveillance procedures for derivative products,
including Index Fund Shares,\72\ as well as cross-market surveillances
administered by FINRA on behalf of the Exchange, which are designed to
detect violations of Exchange rules and federal securities laws
applicable to trading on the Exchange.\73\
---------------------------------------------------------------------------

    \72\ See id. at 16.
    \73\ See id. at 20.
---------------------------------------------------------------------------

    (14) The issuer will advise the Exchange of any failure by the Fund
to comply with the continued listing requirements, and, pursuant to its
obligations under Section 19(g)(1) of the Exchange Act, the Exchange
will surveil for compliance with the continued listing
requirements.\74\
---------------------------------------------------------------------------

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

    (15) If the Fund is not in compliance with the applicable listing
requirements, the Exchange will commence delisting procedures under
Exchange Rule 14.12.\75\
---------------------------------------------------------------------------

    \75\ See id.
---------------------------------------------------------------------------

    This approval order is based on all of the Exchange's statements
and 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 thereto, is consistent with
Section 6(b)(5) of the Act \76\ and the rules and regulations
thereunder applicable to a national securities exchange.
---------------------------------------------------------------------------

    \76\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Solicitation of Comments on Amendment No. 2 to the Proposed Rule
Change

    Interested persons are invited to submit written views, data, and
arguments concerning whether Amendment No. 2 is consistent with the
Act. Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-CboeBZX-2019-001 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-2019-001. 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-2019-001 and should be submitted
on or before May 6, 2019.

V. Accelerated Approval of the 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. Amendment No. 2 supplements the proposal by,
among other things: (1) Providing additional information regarding the
Fund's permissible holdings; and (2) making additional representations
regarding the Fund's use of leveraging. The changes and additional
information in Amendment No. 2 assists the Commission in evaluating the
Exchange's proposal and in determining that the listing and trading of
the Shares is consistent with the Act. Accordingly, the Commission
finds good cause, pursuant to Section 19(b)(2) of the Act,\77\ to
approve the proposed rule change, as modified by Amendment No. 2, on an
accelerated basis.
---------------------------------------------------------------------------

    \77\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\78\ that the proposed rule change (SR-CboeBZX-2019-001), as
modified by Amendment No. 2 thereto, be, and it hereby is, approved on
an accelerated basis.
---------------------------------------------------------------------------

    \78\ Id.

---------------------------------------------------------------------------

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\79\
---------------------------------------------------------------------------

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

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-07377 Filed 4-12-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register: August 2, 2007 (Volume 72, Number 148)]
[Notices]
[Page 42449-42450]
[DOCID:fr02au07-137]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27915; 812-13394]

The BISYS Group, Inc., et al.; Temporary Order

July 27, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Temporary order under section 9(c) of the Investment Company
Act of 1940 (``Act'').

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SUMMARY: Applicants have received a temporary order exempting them from
section 9(a) of the Act, with respect to an injunction entered against
The BISYS Group, Inc. (``BISYS'') on or about July 27, 2007 by the
United States District Court for the Southern District of New York (the
``Injunction''), until the Commission takes final action on an
application for a permanent order or, if earlier, September 24, 2007.
    Applicants: BISYS, BISYS Fund Services Limited Partnership, BNY
Hamilton Distributors, Inc., Funds Distributor, Inc., Heartland
Investor Services, LLC, Mercantile Investment Services, Inc.,
Performance Funds Distributor, Inc., ProFunds Distributors, Inc. and
Victory Capital Advisers, Inc. (collectively, other than BISYS, the
``Underwriter Applicants'', and, together with BISYS, the
``Applicants'').\1\
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    \1\ Applicants request that any relief granted pursuant to the
application also apply to any other company of which BISYS is an
affiliated person or may become an affiliated person in the future
(together with the Applicants, the ``Covered Persons'').
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    Filing Date: The application was filed on June 6, 2007.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090. Applicants, BISYS, 105
Eisenhower Parkway, Roseland, New Jersey 07068, the Underwriter
Applicants, 100 Summer Street, 15th Floor, Boston, Massachusetts 02110.

FOR FURTHER INFORMATION CONTACT: Shannon Conaty, Senior Counsel, at
(202) 551-6827, or Janet M. Grossnickle, Branch Chief, at (202) 551-
6821, (Division of Investment Management, Office of Investment Company
Regulation).

SUPPLEMENTARY INFORMATION: The application may be obtained for a fee at
the Commission's Public Reference Desk, 100 F Street, NE., Washington,
DC 20549-0102 (tel.<PHONE_NUMBER>).

Applicants' Representations

    1. BISYS, a Delaware corporation, directly and through wholly-owned
subsidiaries, provides products and support services to financial
institutions, including insurance companies, banks and mutual funds.
Each of the Underwriter Applicants is an indirect, wholly-owned
subsidiary of BISYS and serves as principal underwriter for one or more
registered management investment companies (``Funds''). Each
Underwriter Applicant is registered with the Commission as a broker-
dealer under section 15 of the Securities Exchange Act of 1934
(``Exchange Act'').
    2. On or about July 27, 2007, the United States District Court for
the Southern District of New York entered the Injunction against BISYS
in a matter brought by the Commission.\2\ The Commission alleged in the
complaint (``Complaint'') that BISYS violated sections 13(a) and
13(b)(2)(A) and (B) of the Exchange Act and rules 12b-20, 13a-1, 13a-11
and 13a-13 thereunder when it engaged in improper accounting practices
that resulted in an overstatement of BISYS's financial results for
fiscal years 2001 through 2003 by about $180 million. Without admitting
or denying the allegations in the Complaint, except as to jurisdiction,
BISYS consented to the entry of the Injunction and the payment of
disgorgement and prejudgment interest.
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    \2\ United States Securities and Exchange Commission v. The
BISYS Group, Inc., 07-CIV-4010 (KMK) (S.D.N.Y. May 23, 2007).
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Applicants' Legal Analysis

    1. Section 9(a)(2) of the Act, in relevant part, prohibits a person
who has been enjoined from engaging in or continuing any conduct or
practice in connection with the purchase or sale of a security from
acting, among other things, as an investment adviser or depositor of
any registered investment company or a principal underwriter for any
registered open-end investment company, registered unit investment
trust or registered face-amount certificate company. Section 9(a)(3) of

the Act extends the prohibitions of section 9(a)(2) to a company any
affiliated person of which has been disqualified under the provisions
of section 9(a)(2). Section 2(a)(3) of the Act defines ``affiliated
person'' to include any person directly or indirectly controlling,
controlled by, or under common control with, the other person.
Applicants state that BISYS is an affiliated person of each of the
other Applicants. Applicants state that the entry of the Injunction
would result in Applicants being subject to the disqualification
provisions of section 9(a) of the Act.
    2. Section 9(c) of the Act provides that the Commission shall grant
an application for exemption from the disqualification provisions of
section 9(a) if it is established that these provisions, as applied to
the Applicants, are unduly or disproportionately severe or that the
Applicants' conduct has been such as not to make it against the public
interest or the protection of investors to grant the exemption.
Applicants have filed an application pursuant to section 9(c) seeking a
temporary and permanent order exempting the Applicants and the other
Covered Persons from the disqualification provisions of section 9(a) of
the Act.
    3. Applicants state that no current officer or employee of any of
the Underwriter Applicants who is or was involved in providing
underwriting services to the Funds participated in the conduct which
resulted in the filing of the Complaint. Applicants also state that
none of the Applicants has ever previously applied for an exemption
pursuant to section 9(c) of the Act.
    4. Applicants assert that, if the Underwriter Applicants were
barred from serving as principal underwriter to the Funds, the effect
on their businesses and employees would be severe. Applicants further
represent that the inability of the Underwriter Applicants to continue
to serve as principal underwriter to the Funds would result in
potentially severe hardships for the Funds and their shareholders.
    5. For these and other reasons discussed in the application,
Applicants believe they meet the standard for exemption specified in
section 9(c).

Applicants' Condition

    Applicants agree that any order granting the requested relief will
be subject to the following condition:

    Any temporary exemption granted pursuant to the application
shall be without prejudice to, and shall not limit the Commission's
rights in any manner with respect to, any Commission investigation
of, or administrative proceedings involving or against, Applicants,
including without limitation, the consideration by the Commission of
a permanent exemption from section 9(a) of the Act requested
pursuant to the application, or the revocation or removal of any
temporary exemptions granted under the Act in connection with the
application.

Temporary Order

    Rule 30-5(a)(7) of the Commission's Rules of Practice and
Investigations provides that the Division of Investment Management may
exempt persons, for a temporary period not exceeding 60 days, from
section 9(a) of the Act, if, on the basis of the facts then set forth
in the application, it appears that: (i)(A) the prohibitions of section
9(a), as applied to the applicant, may be unduly or disproportionately
severe, or (B) the applicant's conduct has been such as not to make it
against the public interest or the protection of investors to grant the
temporary exemption; and (ii) granting the temporary exemption would
protect the interests of the investment companies being served by the
applicant by allowing time for the orderly consideration of the
application for permanent relief or the orderly transition of the
applicant's responsibilities to a successor, or both.
    The Division has considered the matter and, without necessarily
agreeing with all of the facts represented or all of the arguments
asserted by the Applicants, finds, in accordance with 17 CFR 200.30-
5(a)(7), that it appears that (i) The prohibitions of section 9(a), as
applied to the Applicants, may be unduly or disproportionately severe,
(ii) the Applicants' conduct has been such as not to make it against
the public interest or the protection of investors to grant the
temporary exemption, and (iii) granting the temporary exemption would
protect the interests of the investment companies served by the
Applicants by allowing time for the orderly consideration of the
application for permanent relief.
    Accordingly, in the matter of The BISYS Group, Inc., et al. (File
No. 812-13394),
    It is hereby ordered, pursuant to section 9(c) of the Act, that the
Applicants are granted a temporary exemption from the provisions of
section 9(a), effective forthwith, solely with respect to the
Injunction, subject to the condition in the application, until the date
the Commission takes final action on their application for a permanent
order or, if earlier, September 24, 2007.

    For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E7-15022 Filed 8-1-07; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register: October 31, 2007 (Volume 72, Number 210)]
[Rules and Regulations]
[Page 61531-61533]
[DOCID:fr31oc07-13]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R04-OAR-2007-0227-200722(a); FRL-8488-5]

Approval and Promulgation of Implementation Plans; North
Carolina: State Implementation Plan Revisions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule.

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SUMMARY: EPA is approving the State Implementation Plan (SIP) revisions
submitted by the State of North Carolina, through the North Carolina
Department of Environment and Natural Resources (NCDENR), on February
8, 2007. The submittal encompasses revisions to NCDENR regulations
.0605 ``General Recordkeeping and Reporting Requirements,'' .0927
``Bulk Gasoline Terminals,'' and .0932 ``Gasoline Truck Tanks and Vapor
Collections.'' This action is being taken pursuant to section 110 of
the Clean Air Act (CAA). The intended effect of these revisions is to
clarify certain provisions and to ensure consistency with the
requirements of the CAA.

DATES: This direct final rule is effective December 31, 2007 without
further notice, unless EPA receives adverse comment by November 30,
2007. If EPA receives such comments, it will publish a timely
withdrawal of the direct final rule in the Federal Register and inform
the public that the rule will not take effect.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R04-
OAR-2007-0227, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for

submitting comments.
    2. E-mail<EMAIL_ADDRESS>    3. Fax:<PHONE_NUMBER>.
    4. Mail: EPA-R04-OAR-2007-0227, Regulatory Development Section, Air
Planning Branch, Air, Pesticides and Toxics Management Division, U.S.
Environmental Protection Agency, Region 4, 61 Forsyth Street, SW.,
Atlanta, Georgia 30303-8960.
    5. Hand Delivery or Courier: Sean Lakeman, Regulatory Development
Section, Air Planning Branch, Air, Pesticides and Toxics Management
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth
Street, SW., Atlanta, Georgia 30303-8960. Such deliveries are only
accepted during the Regional Office's normal hours of operation. The
Regional Office's official hours of business are Monday through Friday,
8:30 a.m. to 4:30 p.m., excluding federal holidays.
    Instructions: Direct your comments to Docket ID No. EPA-R04-OAR-
2007-0227. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information

provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit through http://www.regulations.gov
 or e-mail, information that you consider to be CBI

or otherwise protected. The http://www.regulations.gov Web site is an

``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov, your e-mail address will be

automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses. For additional information about EPA's public
docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm
.

    Docket: All documents in the electronic docket are listed in the
http://www.regulations.gov index. Although listed in the index, some

information is not publicly available, i.e., CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, is not placed on the Internet and will be
publicly available only in hard copy form. Publicly available docket
materials are available either electronically in http://www.regulations.gov
 or in hard copy at the Regulatory Development

Section, Air Planning Branch, Air, Pesticides and Toxics Management
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth
Street, SW., Atlanta, Georgia 30303-8960. EPA requests that if at all
possible, you contact the person listed in the FOR FURTHER INFORMATION
CONTACT section to schedule your inspection. The Regional Office's
official hours of business are Monday through Friday, 8:30 a.m. to 4:30
p.m., excluding federal holidays.

FOR FURTHER INFORMATION CONTACT: Sean Lakeman, Regulatory Development
Section, Air Planning Branch, Air, Pesticides and Toxics Management
Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth
Street, SW., Atlanta, Georgia 30303-8960. The telephone number is (404)
562-9043. Mr. Lakeman can also be reached via electronic mail at
<EMAIL_ADDRESS>

SUPPLEMENTARY INFORMATION:

I. Analysis of State's Submittal

    The February 8, 2007, submittal revises NCDENR regulation:
    .0605 ``General Recordkeeping and Reporting Requirements'' by
adding a section to prohibit the falsifying of information and
submission of falsified information. The intent of this addition is to
aid NCDENR in prosecuting persons who falsify records or submit false
records.
    .0927 ``Bulk Gasoline Terminals'' by adding details on leak
detection, recordkeeping, and requirements for leak repair. The intent
of this addition is to standardize procedures used at bulk gasoline
terminals to locate, repair, and document leaks of volatile organic
compounds (VOC).
    .0932 ``Gasoline Truck Tanks and Vapor Collections'' to make
corrections, updates, and clarifications. The intent of this revision
is to correct the definitions of ``bulk terminal'' and ``bulk gasoline
terminal,'' update the pressure standard to correspond to the current
Department of Transportation standard, and clarify the requirements for
gasoline truck tanks and vapor control systems.

II. Final Action

    EPA is approving the aforementioned changes to the North Carolina
SIP because they meet the requirements of EPA and the CAA. EPA is
publishing this rule without prior proposal because the Agency views
this as a noncontroversial submittal and anticipates no adverse
comments. However, in the proposed rules section of this Federal
Register publication, EPA is publishing a separate document that will
serve as the proposal to approve the SIP revision should adverse
comments be filed. This rule will be effective December 31, 2007.
without further notice unless the Agency receives adverse comments by
November 30, 2007.
    If the EPA receives such comments, then EPA will publish a document
withdrawing the final rule and informing the public that the rule will
not take effect. All public comments received will then be addressed in
a subsequent final rule based on the proposed rule. The EPA will not
institute a second comment period. Parties interested in commenting
should do so at this time. If no such comments are received, the public
is advised that this rule will be effective on December 31, 2007 and no
further action will be taken on the proposed rule. Please note that if
we receive adverse comment on an amendment, paragraph, or section of
this rule and if that provision may be severed from the remainder of
the rule, we may adopt as final those provisions of the rule that are
not the subject of an adverse comment.

Statutory and Executive Order Reviews

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this
action is not a ``significant regulatory action'' and therefore is not
subject to review by the Office of Management and Budget. For this
reason, this action is also not subject to Executive Order 13211,
``Actions Concerning Regulations That Significantly Affect Energy
Supply, Distribution, or Use'' (66 FR 28355, May 22, 2001). This action
merely approves state law as meeting Federal requirements and imposes
no additional requirements beyond those imposed by state law.
Accordingly, the Administrator certifies that this rule will not have a
significant economic impact on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because
this rule approves pre-existing requirements under state law and does
not impose any additional enforceable duty beyond that required by
state law, it does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4).
    This rule also does not have tribal implications because it will
not have a substantial direct effect on one or more Indian tribes, on
the relationship between the Federal Government and Indian tribes, or
on the distribution of power and responsibilities between the Federal
Government and Indian tribes, as specified by Executive Order 13175 (65
FR 67249, November 9, 2000). This action also does not have Federalism
implications because it does not have substantial direct effects on the
States, on the relationship between the national government and the
States, or on the distribution of power and responsibilities among the
various levels of government, as specified in Executive Order 13132 (64
FR 43255, August 10, 1999). This action merely approves a state rule
implementing a Federal standard, and does not alter the relationship or
the distribution of power and responsibilities established in the CAA.
This rule also is not subject to Executive Order 13045 ``Protection of
Children from Environmental Health Risks and Safety Risks'' (62 FR
19885, April 23, 1997), because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve state
choices, provided that they meet the criteria of the CAA. In this
context, in the absence of a prior existing requirement for the State
to use voluntary consensus standards (VCS), EPA has no authority to
disapprove a SIP submission for failure to use VCS. It would thus be
inconsistent with applicable law for EPA, when it reviews a SIP
submission, to use VCS in place of a SIP submission that otherwise
satisfies the provisions of the CAA. Thus, the requirements of section
12(d) of the National Technology Transfer and Advancement Act of 1995
(15 U.S.C. 272 note) do not apply. This rule does not impose an
information collection burden under the provisions of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this rule and other
required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by December 31, 2007. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements. (See section 307(b)(2)).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide,
Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate
matter, Reporting and recordkeeping requirements, Sulfur oxides,
Volatile organic compounds.

    Dated: October 19, 2007.
Russell L. Wright, Jr.,
Acting Regional Administrator, Region 4.

0
40 CFR part 52, is amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart II--North Carolina

0
2. In Sec.  52.1770 (c), table 1 is amended under subchapter 2D by
revising the entries for ``Sect .0605'', ``Sect .0927'' and ``Sect
.0932'' to read as follows:

Sec.  52.1770  Identification of plan.

* * * * *
    (c) * * *

                                Table 1.--EPA-Approved North Carolina Regulations
----------------------------------------------------------------------------------------------------------------
                                                          State
         State citation             Title/subject    effective date   EPA approval date        Explanation
----------------------------------------------------------------------------------------------------------------

                                                  * * * * * * *
Sect .0605.....................  General                   11/01/06  10/31/07 [Insert
                                  Recordkeeping and                   first page of
                                  Reporting                           publication].
                                  Requirements.
Sect .0927.....................  Bulk Gasoline             11/01/06  10/31/07 [Insert
                                  Terminals.                          first page of
                                                                      publication].

                                                  * * * * * * *
Sect .0932.....................  Gasoline Truck            11/01/06  10/31/07 [Insert
                                  Tanks and Vapor                     first page of
                                  Collections.                        publication].

                                                  * * * * * * *
----------------------------------------------------------------------------------------------------------------

* * * * *
 [FR Doc. E7-21234 Filed 10-30-07; 8:45 am]

BILLING CODE 6560-50-P


NOTES FOR TABLE 2 a Please note: numbers shown in columns ( A), ( C), and ( E) are in personhours except when enclosed in parenthesis. Numbers enclosed by parenthesis signify costs. It was necessary to make several general assumptions regarding 1) how wood heater manufacturers would respond to the various alternatives for compliance and 2) the large variety of wood heater manufacturer size and marketing approaches. Using data from EPA's Section 114 survey of manufacturers, the following assumptions were developed for this burden calculation:

1) 50 woodstove manufacturers 2) 200 woodstove models 3) 4 woodstove models per manufacturer 4) 750 woodstoves produced annually for each model by each manufacturer 5) 3,000 woodstoves produced annually by each manufacturer 6) 150,000 woodstoves produced each year by all manufacturers b Assumes that during the next 3 years of the woodstoves NSPS, the typical manufacturer will require 4 Phase II certification tests over the 3 year period. Thus, 4 notices in 3 years equals 1.33 notices per year.

c Each manufacturer is assumed to pay $ 7,500 per certification test for 4 tests over 3 years ( 1.33 tests per year). This cost is assumed to include the cost incurred by the laboratory to seal the certified stove. There are essentially no burden hours associated with this cost.

d See footnote b.

E Biennial reporting equals 0.50 occurrences/ year.

f Total costs of permanent labeling are estimated at $ 2.00 per stove. There are essentially no burden hours associated with this cost.

g Removable labels estimated to require 30 seconds to apply per wood heater.

h Removable labels estimated to cost $ 0.75 per label.

i Twenty hours required to include requisite information in owner's manual.

j Assumes an emissions test is performed once every 5,000 units and since 750 units are produced each year for each model, 0.15 emission tests are performed annually per manufacturer per model. Since each manufacturer has three models, 0.8 emissions tests per year, per manufacturer will be conducted ( 0.15 * 3 = 0.45).

k See footnote b.

l Assumes that 750 units per model year are produced and that one out of every 150 units undergoes a parameter inspection. Thus, a parameter inspection will occur approximately 5 times per year per manufacturer per model. Since each manufacturer has four models, 20 parameter inspections will be conducted annually for each manufacturer. 2 m See footnote j.

n No additional burden because manufacturers already keep track of sales data for marketing purposes and payment of income taxes.

o Assumes one report filed by each manufacturer annually.

P See footnote b.

q Assumes that one new lab will apply for accreditation each year.

r An average of two notifications per proficiency test is assumed due to test cancellation and rescheduling.

s Annual proficiency tests. It is assumed that for each laboratory applying for accreditation, another laboratory will not renew their accreditation; therefore, there is no net increase in the number of laboratories from year to year and the number of respondents remains constant at four.

t Each laboratory is required to report to EPA changes in the testing schedule or interruptions in testing that last more than 24 hours. It is assumed that two of these events will occur for each test.

u Laboratories are expected to spend 4 hours per week to update and maintain records on certification tests.

v One quarter of the estimated 3,500 wood heater retailers are assumed to buy and sell used wood stoves. These 875 retailers are each assumed to purchase 4 used stoves per year and to spend 6 minutes per purchase maintaining records of each used wood heater purchase.