[Federal Register Volume 82, Number 68 (Tuesday, April 11, 2017)]
[Notices]
[Pages 17510-17511]
[FR Doc No: 2017-07169]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2016-0071; Notice 2]

Cooper Tire & Rubber Company, Grant of Petition for Decision of
Inconsequential Noncompliance

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Grant of petition.

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SUMMARY: Cooper Tire & Rubber Company (Cooper), has determined that
certain MULTI-MILE Grand Tour LS passenger vehicle tires do not fully
comply with Federal Motor Vehicle Safety Standard (FMVSS) No. 139, New
Pneumatic Tires Radial Tires for Light Vehicles. Cooper filed a defect
report dated May 24, 2016. Cooper also petitioned NHTSA on June 8,
2016, for a decision that the subject noncompliance is inconsequential
as it relates to motor vehicle safety.

ADDRESSES: For further information on this decision contact Abraham
Diaz, Office of Vehicle Safety Compliance, the National Highway Traffic
Safety Administration (NHTSA), telephone<PHONE_NUMBER>, facsimile
(202) 366-5930.

SUPPLEMENTARY INFORMATION:
    I. Overview: Cooper Tire & Rubber Company (Cooper), has determined
that certain MULTI-MILE Grand Tour LS passenger vehicle tires do not
fully comply with paragraph S5.5.1(b) of Federal Motor Vehicle Safety
Standard (FMVSS) No. 139, New Pneumatic Tires Radial Tires for Light
Vehicles. Cooper filed a defect report dated May 24, 2016, pursuant to
49 CFR part 573, Defect and Noncompliance Responsibility and Reports.
    Cooper petitioned NHTSA on June 8, 2016, pursuant to 49 U.S.C.
30118(d) and 30120(h) and 49 CFR part 556, for an exemption from the
notification and remedy requirements of 49 U.S.C. Chapter 301 on the
basis that this noncompliance is inconsequential as it relates to motor
vehicle safety.
    Notice of receipt of the petition was published, with a 30-day
public comment period, on August 3, 2016 in the Federal Register (81 FR
51269). No comments were received. To view the petition and all
supporting documents log onto the Federal Docket Management System
(FDMS) Web site at: http://www.regulations.gov/. Then follow the online
search instructions to locate docket number ``NHTSA-2016-0071.''
    II. Tires Involved: Affected are approximately 37 Cooper Tire
MULTI-MILE Grand Tour LS Size 205/70R15 Tubeless Radial Tires
manufactured between March 24, 2016 and March 29, 2016.
    III. Noncompliance: Cooper explains that the noncompliance is that
the outboard sidewalls of the subject tires are labeled with an
incorrect manufacturer's identification mark and therefore do not fully
meet all applicable requirements of paragraph S5.5.1(b) of FMVSS No.
139. Specifically, the tires are labeled with the manufacturer's
identification mark ``Y9,'' assigned to a manufacturing facility in
P.T. Gadjah Tunggual, Kabupaten Tangerang, Jawa Barat, Indonesia,
instead of ``U9,'' assigned to Cooper's manufacturing facility in
Tupelo, Mississippi, where the tires were actually produced.
    IV. Rule Text: Paragraph S5.5.1 of FMVSS No. 139 requires in
pertinent part:
    S5.5.1 Tire Identification Number.
* * * * *
    (b) Tires manufactured on or after September 1, 2009. Each tire
must be labeled with the tire identification number required by 49
CFR part 574 on the intended outboard sidewall of the tire. Except
for retreaded tires, either the tire identification number or a
partial tire identification number, containing all characters in the
tire identification number, except for the date code and, at the
discretion of the manufacturer, any optional code, must be labeled
on the other sidewall of the tire. Except for retreaded tires, if a
tire does not have an intended outboard sidewall, the tire must be
labeled with the tire identification number required by 49 CFR part
574 on one sidewall and with either the tire identification number
or a partial tire identification number, containing all characters
in the tire identification number except for the date code and, at
the discretion of the manufacturer, any optional code, on the other
side wall.

    V. Summary of Cooper's Petition: Cooper states its belief that the
subject noncompliance is inconsequential to motor vehicle safety on
account of the fact that while the subject tires contain an incorrect
manufacturer's identification mark on the outboard sidewall, the full
and correct tire code (including the correct manufacturer's
identification mark) is available on the intended inboard sidewall.
    Cooper also indicated that it has taken the following steps to
ensure proper registration of the subject tires:
    (a) Cooper has informed all internal personnel responsible for
manual processing of tire registration cards about the incorrect
manufacturer identification issue so that cards containing the ``Y9''
designation will be accepted and properly processed when all other
information accurately identifies the subject tires. Additionally,
consistent with its usual practices, whenever a tire registration card
is submitted with inaccurate or incomplete information, Cooper sends a
mailing to the consumer seeking additional information by providing a
prepaid response card.
    (b) Cooper has also modified its database to accept ``Y9'' when
other information (brand, serial weeks affected etc.) is accurate.
    (c) Cooper has contacted Computerized Information and Management
Services, Inc. (CIMS), a third-party vendor that collects and provides
tire registration cards to Cooper, so that tire registration cards will
not be rejected solely due to improper plant code information.
    Cooper also noted that while the subject tires are mislabeled only
with the plant code on the outboard side, they meet all other
performance requirements of the applicable standard. The company
observed that plant code

information has no bearing on the performance or operation of a tire
and does not create a safety concern to either the operator of the
vehicle on which the tires are mounted or the safety of personnel in
the tire repair, retread and recycle industry. Cooper also stated that
on March 29, 2016 the incorrect mold was taken out of service and has
not been used since.
    Please refer to Cooper's petition for its complete reasoning and
any associated illustrations. The petition and all supporting documents
are available by logging onto the Federal Docket Management System
(FDMS) Web site at: http://www.regulations.gov/ and following the
online search instructions to locate the docket number listed in the
title of this notice.
    In summation, Cooper believes that the described noncompliance of
the subject tires is inconsequential as it relates to motor vehicle
safety, and that its petition, to exempt Cooper from providing
notification of the noncompliance, as required by 49 U.S.C. 30118, and
remedying the noncompliance, as required by 49 U.S.C. 30120, should be
granted.
    NHTSA'S DECISION:
    NHTSA'S Analysis:
    In this case, the agency believes that one measure of
inconsequentiality to motor vehicle safety is that there is no effect
of the noncompliance on the operational safety of the vehicles on which
these tires are mounted. Cooper certified and stated that the subject
tires meet and/or exceed all performance requirements and all other
labeling markings required by FMVSS No. 139, and therefore NHTSA has no
reason to believe that there are any operational safety issues for
these tires.
    Second, the agency believes it is necessary that consumers be able
to readily identify the tire manufacturer for safety reasons. Cooper
explained that while the tire identification number (TIN) on the
outboard sidewall of the subject tires is marked with the incorrect
manufacturer's identification mark (known in the industry as ``plant
code'') ``Y9,'' instead of the correct code ``U9'', the information
which identifies the correct manufacturer's identification mark, is
properly marked on the inboard sidewall. These tires can also be
identified by the Cooper brand name and by the tire size marked on the
sidewall of the subject tires.
    Third, NHTSA recognizes that Cooper took steps to prevent the
possibility that customers would not be able to register their tires
because those tires have the incorrect manufacturer's identification
mark on them. Cooper worked with CIMS (Computerized Information and
Management Services), Inc., to ensure that the registration database
could accept the registration regardless of the incorrect code.
    Finally, Cooper informed the agency that in an effort to prevent
reoccurrence of this noncompliance, they have implemented a change to
their support software. Specifically, the selection of the plant code
is no longer manual, but rather selected from a drop down menu with
only one choice ``U9.'' NHTSA feels that this is important to ensure
this noncompliance is corrected on all of Cooper's future production
tires since the cumulative effect of recurring noncompliances could
result in a safety problem.
    NHTSA's Decision: In consideration of the foregoing, NHTSA finds
that Cooper has met its burden of persuasion that the subject FMVSS No.
139 noncompliance in the affected tires is inconsequential to motor
vehicle safety. Accordingly, Cooper's petition is hereby granted and
Cooper is consequently exempted from the obligation of providing
notification of, and a free remedy for, the subject noncompliance under
49 U.S.C. 30118 and 30120.
    NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and
30120(h)) that permit manufacturers to file petitions for a
determination of inconsequentiality allow NHTSA to exempt manufacturers
only from the duties found in sections 30118 and 30120, respectively,
to notify owners, purchasers, and dealers of a defect or noncompliance
and to remedy the defect or noncompliance. Therefore, this decision on
this petition only applies to the subject tires that Cooper no longer
controlled at the time it determined that the noncompliance existed.
However, the granting of this petition does not relieve equipment
distributors and dealers of the prohibitions on the sale, offer for
sale, or introduction or delivery for introduction into interstate
commerce of the noncompliant tires under their control after Cooper
notified them that the subject noncompliance existed.

    Authority:  (49 U.S.C. 30118, 30120: Delegations of authority at
49 CFR 1.95 and 501.8)

Jeffrey M. Giuseppe,
Director, Office of Vehicle Safety Compliance.
[FR Doc. 2017-07169 Filed 4-10-17; 8:45 am]
 BILLING CODE 4910-59-P


[Federal Register Volume 76, Number 67 (Thursday, April 7, 2011)]
[Rules and Regulations]
[Page 19275]
[FR Doc No: 2011-8119]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Parts 115, 170, 176, and 178

[USCG-2007-0030]
RIN 1625-AB20

Passenger Weight and Inspected Vessel Stability Requirements

AGENCY: Coast Guard, DHS.

ACTION: Rule; information collection approval.

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SUMMARY: On December 14, 2010, the Coast Guard amended its regulations
governing the maximum weight and number of passengers that may safely
be permitted on board a vessel and other stability regulations,
including increasing the Assumed Average Weight per Person (AAWPP) to
185 lb. The amendment triggered new information collection requirements
affecting documentation needed from certain inspected vessels as part
of the Coast Guard commercial vessel safety program. This document
announces that the Office of Management and Budget (OMB) approved
changes to the collections of information with control numbers 1625-
0057 and 1625-0064, which will now be enforced.

DATES: Changes to the collection of information requirements with OMB
control numbers 1625-0057 and 1625-0064 will be enforced under 46 CFR
parts 115, 170, 176, and 178 beginning April 7, 2011.

FOR FURTHER INFORMATION CONTACT: If you have questions about this
document, contact Mr. William Peters at<PHONE_NUMBER> or
<EMAIL_ADDRESS>If you have questions about viewing the
docket (USCG-2007-0030), call Ms. Renee V. Wright, Program Manager,
Docket Operations, telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: With the exception of revised collection of
information provisions, the Passenger Weight and Inspected Vessel
Stability Requirements rule became effective on March 14, 2011. Under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), an agency
may not conduct or sponsor a collection of information until the
collection is approved by OMB. Accordingly, the preamble to the final
rule stated that the Coast Guard would not enforce the new collection
of information requirements in 46 CFR parts 115, 170, 176, and 178
until the collection of information requests were approved by OMB, and
also stated that the Coast Guard would publish a notice in the Federal
Register announcing the effective date of those requirements after OMB
approved the collections.
    The Coast Guard submitted the information collection requests to
OMB for approval in accordance with the Paperwork Reduction Act of
1995. OMB approved the collections of information on March 4, 2011, for
1625-0064, and on March 14, 2011, for 1625-0057. The approval for these
collections of information expires on March 31, 2014. Copies of the OMB
notices of action are available in our online docket (USCG-2007-0030)
at http://www.regulations.gov.

    Dated: March 30, 2011.
F.J. Sturm,
Acting Director of Commercial Regulations and Standards, U.S. Coast
Guard.
[FR Doc. 2011-8119 Filed 4-6-11; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 81, Number 84 (Monday, May 2, 2016)]
[Notices]
[Pages 26279-26281]
[FR Doc No: 2016-10109]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32097; 812-14645]

Terra Capital Partners, LLC, et al.; Notice of Application

April 26, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under sections 57(a)(4)
and 57(i) of the Investment Company Act of 1940 (the ``Act'') and rule
17d-1 under the Act permitting certain joint transactions otherwise
prohibited by section 57(a)(4) of the Act and rule 17d-1 under the Act.

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Summary of the Application: Terra Capital Partners, LLC (the
``Sponsor''), Terra Income Fund 6, Inc. (the ``Company''), Terra Income
Advisors, LLC (the ``Advisor''), on behalf of itself and its
successors,\1\ and Terra Capital Markets, LLC (the ``Dealer Manager''
and collectively with the Sponsor, the Company, and the Advisor, the
``Applicants''), on behalf of itself and its successors, request an
order to permit the Applicants to complete certain transactions in
connection with an amendment to the dealer-manager agreement entered
into by and among the Company, the Advisor, and the Dealer Manager.
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    \1\ The term ``successor,'' as applied to each entity, means an
entity that results from a reorganization into another jurisdiction
or change in the type of business organization.

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Filing Date: The application was filed on April 25, 2016.

Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on May 17, 2016, and should be accompanied by proof of service on
the applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants, Bruce D. Batkin,
Terra Income Fund 6, Inc., c/o Terra Capital Partners, LLC, 805 Third
Avenue, 8th Floor, New York, New York 10022.

FOR FURTHER INFORMATION CONTACT: Kieran G. Brown, Senior Counsel, at
(202) 551-6773, or James M. Curtis, Branch Chief, at<PHONE_NUMBER>
(Chief Counsel's Office, Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling<PHONE_NUMBER>.

Applicants' Representations

    1. The Sponsor is a Delaware limited liability company and served
as the organizer and sponsor of the Company. The Sponsor is also the
parent company of the Advisor and the Dealer Manager. Since its
formation in February 2001, the Sponsor has organized or acted as
investment manager for multiple private real estate investment funds
(``REITs'').
    2. The Company, a Maryland corporation, is an externally managed,
non-diversified, closed-end management investment company that has
elected to be regulated as a business development company (``BDC'')
under the Act.\2\ The Company's investment Objectives and Strategies
\3\ are to pay attractive and stable cash distributions and to
preserve, protect and return capital contributions to the holders
(``Common Shareholders'') of the Company's common stock (``Common
Shares''). On March 2, 2015, the Company filed a public registration
statement on Form N-2 (the ``Registration Statement'') with the
Commission to offer its Common Shares in a continuous public offering
(the ``Offering''). The Registration Statement was declared effective
on April 20, 2015. Since commencing the Offering and through April 14,
2016, the Company has sold 2,444,185.856 Common Shares, including
Common Shares purchased by the Sponsor in both an initial private
placement and from the Offering. The Company currently has a five-
member board of directors (the ``Board'') of whom three are not
``interested persons'' of the Company within the meaning of section
2(a)(19) of the Act (the ``Non-interested Directors'').
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    \2\ The Company was incorporated in Maryland in 2013 and
commenced operations on June 24, 2015, upon raising gross proceeds
in excess of $2.0 million in its initial public offering. Section
2(a)(48) defines a BDC to be any closed-end investment company that
operates for the purpose of making investments in securities
described in sections 55(a)(1) through 55(a)(3) of the Act and makes
available significant managerial assistance with respect to the
issuers of such securities.
    \3\ The ``Objectives and Strategies'' means the investment
objectives and strategies, as described in the Registration
Statement, other filings the Company has made with the Commission
under the Securities Act of 1933, as amended or under the Securities
Exchange Act of 1934, as amended (the ``1934 Act''), and the
Company's reports to Common Shareholders.
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    3. The Advisor is a Delaware limited liability company that is
registered as an investment adviser under the Investment Advisers Act
of 1940. The Advisor serves as the investment adviser to the Company.
    4. The Dealer Manager is a Delaware limited liability company that
serves as the dealer manager of the Company pursuant to a dealer
manager agreement dated April 20, 2015 by and among the Company, the
Advisor and the Dealer Manager (the ``Dealer Manager Agreement''). The
Dealer Manager is duly registered as a broker-dealer pursuant to the
provisions of the 1934 Act, a member in good standing with the
Financial Industry Regulatory Authority, Inc. (``FINRA''), and a broker
dealer duly registered as such in those states where the Dealer Manager
is required to be registered in order to carry out the Offering.
    5. Currently, the Common Shares are sold at a public offering price
of $12.50

per Common Share. This public offering price includes $1.25 in
underwriting compensation (the ``Underwriting Compensation'') payable
to the Dealer Manager. The Underwriting Compensation as set forth in
the current prospectus contained in the Registration Statement (the
``Prospectus'') consists of three components: A 6% selling commission,
a 3% dealer manager fee, and a 1% broker-dealer fee (collectively, the
``Upfront Sales Load''), all of which are paid to the Dealer Manager
and a portion of which is re-allowed to the selling broker-dealers as
set forth in the Prospectus. The Underwriting Compensation terms are
currently governed by the Dealer Manager Agreement.
    6. The Board, including the Non-Interested Directors, has
determined that it is in the best interests of the Common Shareholders
to amend the Dealer Manager Agreement (the ``Dealer Manager Agreement
Amendment'') solely to change the Underwriting Compensation terms to
reduce the Upfront Sales Load and implement an asset-based, ongoing
distribution fee (a ``Distribution Fee''). The proposed change would
reduce the selling commissions and dealer manager fees from 6.0% and
3.0% to 3.0% and 1.5%, respectively, of gross offering proceeds or an
aggregate reduction in Upfront Sales Load of 4.5%. The proposed change
also implements the Distribution Fee of 1.125% of gross offering
proceeds, payable annually for four years, or 4.5%. The maximum
Distribution Fee of 4.5% is therefore equal to the reduction in the
Upfront Sales Load. All Common Shares will continue to have an offering
price of $12.50 per Common Share after the proposed change.
    7. To ensure that, following the change in Underwriting
Compensation, the net proceeds to the Company from the sale of all
Common Shares will be equivalent, the Dealer Manager proposes to
reimburse to the Company an amount equal to the Distribution Fee to be
paid with respect to the Common Shares outstanding, or 4.5% of the
gross proceeds from the Offering, before the implementation of the
proposed Dealer Manager Agreement Amendment (the ``Distribution Fee
Reimbursement''). Once this amount is returned to the Company, (1) all
Common Shares will become subject to the same 5.5% Upfront Sales Load;
(2) all holders of Common Shares will become subject to the same
aggregate Distribution Fee of 4.5%; (3) the net proceeds to the Company
from the sale of all Common Shares (whether issued before or after the
implementation of the Dealer Manager Agreement Amendment) will be the
same, $11.25 per Common Share; and (4) all Common Shares will be
subject to the same 10% in Underwriting Compensation, consistent with
the limitations imposed by Conduct Rule 2310 of FINRA (``Conduct Rule
2310'').
    8. Applicants believe that, if the Dealer Manager Agreement
Amendment is entered into, a greater amount of the existing and future
Common Shareholders' capital will be available for investment at an
earlier stage in the Company's investment cycle. This would permit the
Company and all Common Shareholders to benefit from the income
generated from such investments while the Distribution Fee Payment is
deferred, enable the Company to achieve its investment objectives and
acquire a diversified portfolio, and lead to greater demand for the
Company's Common Shares, which would further benefit the Common
Shareholders because of the lower operating expense ratio and Company
portfolio diversification resulting from such increased sales of Common
Shares.
    9. The Company believes that the Dealer Manager Agreement Amendment
will enable the Common Shares to remain competitive with similar
investments sold by broker-dealers. Because the per share estimated
value of Common Shares that appears on customer account statements for
Common Shares with a low Upfront Sales Load combined with a
Distribution Fee is greater than the per share estimated value of
Common Shares with a high Upfront Sales Load and no Distribution Fee,
the Company believes that broker-dealers generally would prefer selling
Common Shares with a with a low Upfront Sales Load and a Distribution
Fee.\4\ To accommodate the needs of these broker-dealers, other
investment products (e.g., non-traded REITs) offer common shares with a
low Upfront Sales Load and a Distribution Fee, and the inability of the
Company to offer Common Shares with a similar fee structure places the
Company at a competitive disadvantage.
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    \4\ NASD Rule 2340 requires, among other things, broker-dealers
to include on customer account statements a ``per share estimated
value'' for shares of non-traded, continuously offered BDCs and
certain similar investments. Amendments to NASD Rule 2340 effective
April 11, 2016 require, among other things, broker-dealers to
include on the customer account statements a ``per share estimated
value,'' generally the current public offering price of the Common
Shares minus sales charges and estimated organization and offering
expenses. Prior to the amendment of Rule 2340, the general industry
practice was to use the public offering price as the per share
estimated value on customer account statements.
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    10. The Board, including the Non-Interested Directors, after
reviewing and evaluating the proposed transactions and the Dealer
Manager Agreement Amendment, determined that: (i) The Dealer Manager
Agreement Amendment is in the best interests of the Company and its
Common Shareholders; (ii) the services to be rendered by the Dealer
Manager are required for the operation of the Company; (iii) the Dealer
Manager can provide the services such that the nature and quality of
the services are at least equal to those provided by others; and (iv)
the fees charged are fair and reasonable in light of the usual and
customary charges made by others for services of the same nature and
quality.
    11. The Company has filed a Post-Effective Amendment to its
registration statement disclosing the changes to the Underwriting
Compensation terms and will seek a declaration of effectiveness of such
Post-Effective Amendment by the Commission prior to commencing sales of
the Common Shares subject to the revised Underwriting Compensation as
implemented by the Dealer Manager Agreement Amendment. All current
Common Shares outstanding immediately prior to the implementation of
the Dealer Manager Agreement Amendment and Common Shares to be issued
upon effectiveness of the Post-Effective Amendment (exclusive of Common
Shares to be issued pursuant to the Company's distribution reinvestment
plan, as further described in the Prospectus) will be subject to the
same Distribution Fee.

Applicants' Legal Analysis

    1. Section 57(a) of the Act prohibits certain transactions between
a BDC and persons related to the BDC absent an order from the
Commission. Specifically, section 57(a)(4) makes it unlawful for any
person who is related to a BDC in a manner described in section 57(b),
acting as principal, knowingly to effect any transaction in which the
BDC or a company controlled by such BDC is a joint or a joint and
several participant with that person in contravention of rules and
regulations as the Commission may prescribe for the purpose of limiting
or preventing participation by the BDC or controlled company on a basis
less advantageous than that of the other participant. Section 57(b)
specifies the persons to whom the prohibitions of section 57(a)(4)
apply. Under section 57(b)(2), these persons include any investment
adviser or promoter of, general partner in, principal underwriter for,
or person directly or indirectly either controlling, controlled by, or
under common control with a BDC (except the BDC itself and

any person who, if it were not directly or indirectly controlled by the
BDC, would not be directly or indirectly under the control of a person
who controls the BDC), or any person who is, within the meaning of
section 2(a)(3)(C) of the Act, an affiliated person of such person.
Sections 2(a)(3)(C) defines an ``affiliated person'' of another person
as any person directly or indirectly controlling, controlled by, or
under common control with, such other person.
    2. Rule 17d-1 under the Act generally prohibits participation by a
registered investment company and an affiliated person (as defined in
section 2(a)(3) of the Act) or principal underwriter for that
investment company, or an affiliated person of such affiliated person
or principal underwriter, in any ``joint enterprise or other joint
arrangement or profit-sharing plan,'' as defined in the rule, without
prior approval by the Commission by order upon application. Although
the Commission has not adopted any rules expressly under section
57(a)(4), section 57(i) provides that the rules (but not section 17(d)
itself) under section 17(d) applicable to registered closed-end
investment companies (e.g., rule 17d-1) are, in the interim, deemed to
apply to transactions subject to section 57(a).
    3. As the investment adviser and principal underwriter to the
Company, the Advisor and the Dealer Manager, respectively, are subject
to the prohibitions of section 57(a)(4) as a result of section 57(b)(2)
of the Act. Moreover, the Sponsor may be deemed to control both the
Advisor and the Dealer Manager and the Advisor may be deemed to control
the Company within the meaning of section 2(a)(9) of the Act.\1\
Accordingly, the Company, the Advisor, the Dealer Manager and the
Sponsor may be deemed to be affiliated persons of each other under
section 2(a)(3)(C) of the Act because they are under common control of
the Sponsor, and thus the Advisor, the Dealer Manager and the Sponsor
would be persons described in section 57(b)(2) subject to the
prohibitions of section 57(a)(4). The Distribution Fee Reimbursement
and the Dealer-Manager Agreement Amendment (the ``Proposed
Transactions'') might be deemed a ``joint enterprise or other joint
arrangement,'' within the meaning of section 57(a)(4) of the Act and
rule 17d-1 thereunder. Therefore, the Sponsor, the Advisor, the Dealer
Manager, and the Company may be prohibited from engaging in the
Proposed Transactions as a result of the prohibitions of section
57(a)(4) and rule 17d-1, without a grant of the Order of the
Commission.
    4. In passing upon applications under rule 17d-1, the Commission
considers whether the company's participation in the joint transaction
is consistent with the provisions, policies, and purposes of the Act
and the extent to which such participation is on a basis different from
or less advantageous than that of other participants.
    5. Applicants believe that the representations and conditions set
forth in the application will ensure that the Proposed Transactions are
consistent with the protection of the Company's Shareholders, including
the Current Common Shareholders (as herein defined), and with the
purposes intended by the policies and provisions of the Act. Applicants
state that the Company's participation in the Proposed Transactions
will be consistent with the provisions, policies, and purposes of the
Act and on a basis that is not different from or less advantageous than
that of other participants.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will
be subject to the following conditions:
    1. The Company will ensure that total Underwriting Compensation
payable in the Offering will not exceed 10% of the gross proceeds of
the Offering, consistent with Conduct Rule 2310.
    2. For the period of time in which the Distribution Fee is payable,
the Dealer Manager will waive any annual Distribution Fee payment to
which it is otherwise entitled in an amount sufficient to ensure that
the total return experienced by the holders of the Company's Common
Shares immediately prior to the implementation of the Dealer Manager
Agreement Amendment (the ``Current Common Shareholders'') is not less
than the total return the Current Common Shareholders would have
experienced if the Proposed Transactions had not occurred and the
Dealer Manager Agreement had not been amended.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-10109 Filed 4-29-16; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 86, Number 192 (Thursday, October 7, 2021)]
[Notices]
[Pages 55873-55879]
[FR Doc No: 2021-21880]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93229; File No. SR-CboeBZX-2020-053]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order
Setting Aside Action by Delegated Authority and Approving a Proposed
Rule Change, as Modified by Amendment Nos. 2 and 4, To List and Trade
Shares of the 2x Long VIX Futures ETF Under BZX Rule 14.11(f)(4) (Trust
Issued Receipts)

October 1, 2021.

I. Introduction

    On June 23, 2020, Cboe BZX Exchange, Inc. (``BZX'') filed with the
Securities and Exchange Commission (``Commission''), pursuant to
Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'' or
``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule
change to list and trade shares (``Shares'') of the 2x Long VIX Futures
ETF (``Fund''), a series of VS Trust (``Trust''), under BZX Rule
14.11(f)(4).\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ On June 26, 2020, the Exchange filed Amendment No. 1 to the
proposed rule change. The proposed rule change, as modified by
Amendment No. 1, was published for comment in the Federal Register
on July 10, 2020. See Securities Exchange Act Release No. 89234
(Jul. 6, 2020), 85 FR 41644. On August 13, 2020, the Commission
extended the time period for Commission action on the proposed rule
change. See Securities Exchange Act Release No. 89545, 85 FR 51124
(Aug. 19, 2020). On October 7, 2020, the Commission instituted
proceedings pursuant to Section 19(b)(2)(B) of the Act (15 U.S.C.
78s(b)(2)(B)) to determine whether to approve or disapprove the
proposed rule change, as modified by Amendment No. 1. See Securities
Exchange Act Release No. 90118, 85 FR 64563 (Oct. 13, 2020)
(``OIP''). On December 15, 2020, the Commission designated a longer
period for Commission action on the proposed rule change. See
Securities Exchange Act Release No. 90671, 85 FR 83136 (Dec. 21,
2020). On February 1, 2021, the Exchange filed Amendment No. 2 to
the proposed rule change, which replaced and superseded the proposed
rule change as modified by Amendment No. 1. On February 16, 2021,
the Exchange submitted Amendment No. 3 to the proposed rule change
and, on February 19, 2021, the Exchange withdrew Amendment No. 3. On
February 19, 2021, the Exchange filed partial Amendment No. 4 to the
proposed rule change.
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    On March 5, 2021, the Commission, acting through authority
delegated to the Division of Trading and Markets (``Division''),\4\
noticed the filing of Amendment Nos. 2 and 4 and approved the proposed
rule change, as modified by Amendment Nos. 2 and 4, on an accelerated
basis.\5\ On March 5, 2021, the Assistant Secretary of the Commission
notified BZX that, pursuant to Commission Rule of Practice 431,\6\ the
Commission would review the Division's action pursuant to delegated
authority and that the Division's action pursuant to delegated
authority was stayed until the Commission ordered otherwise.\7\ On
April 7, 2021, the Commission issued a scheduling order, pursuant to
Commission Rule of Practice 431, providing until May 7, 2021 for any
party or other person to file a written statement in support of, or in
opposition to, the Approval Order.\8\
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    \4\ 17 CFR 200.30-3(a)(12).
    \5\ See Securities Exchange Act Release No. 91265 (Mar. 5,
2021), 86 FR 13922 (Mar. 11, 2021) (``Approval Order'').
    \6\ 17 CFR 201.431.
    \7\ See letter from J. Matthew DeLesDernier, Assistant
Secretary, Commission, to Kyle Murray, Vice President and Associate
General Counsel, Cboe Global Markets, dated March 5, 2021, available
at: https://www.sec.gov/rules/sro/cboebzx/2018/34-91265-letter-from-assistant-secretary.pdf.
    \8\ See Securities Exchange Act Release No. 91501, 86 FR 19292
(Apr.13, 2021). Comments on the proposed rule change, including
statements concerning the Approval Order are available at: https://www.sec.gov/comments/sr-cboebzx-2020-053/srcboebzx2020053.htm.
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    The Commission has conducted a de novo review of BZX's proposal,
giving careful consideration to the entire record, including all
comments and statements submitted, to determine whether the proposal is
consistent with the requirements of the Act and the rules and
regulations thereunder that are applicable to a national securities
exchange. Under Section 19(b)(2)(C) of the Act, the Commission must
approve the proposed rule change of a self-regulatory organization
(``SRO'') if the Commission finds that the proposed rule change is
consistent with the requirements of the Act and the applicable rules
and regulations thereunder; if it does not make such a finding, the
Commission must disapprove the proposed rule change.\9\ Additionally,
under Rule 700(b)(3) of the Commission's Rules of Practice, the
``burden to demonstrate that a proposed rule change is consistent with
the Act and the rules and regulations issued thereunder . . . is on the
self-regulatory organization that proposed the rule change.'' \10\ The
description of a proposed rule change, its purpose and operation, its
effect, and a legal analysis of its consistency with applicable
requirements must all be sufficiently detailed and specific to support
an affirmative Commission finding.\11\ Any failure of a self-regulatory
organization to provide the information required by Rule 19b-4 and
elicited on Form 19b-4 may result in the Commission not having a
sufficient basis to make an affirmative finding that a proposed rule
change is consistent with the Act and the rules and regulations
thereunder that are applicable to the self-regulatory organization.\12\
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    \9\ 15 U.S.C. 78s(b)(2)(C).
    \10\ 17 CFR 201.700(b)(3).
    \11\ See id.
    \12\ See id. See also 17 CFR 240.19b-4.
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    For the reasons discussed further herein, BZX has met its burden to
show that the proposed rule change is consistent with the Act, and this
order sets aside the Approval Order and approves BZX's proposed rule
change, as modified by Amendment Nos. 2 and 4. In particular, the
Commission concludes that the record before the Commission demonstrates
that BZX's proposal is consistent with Section 6(b)(5) of the Act,\13\
which requires that the rules of a national securities exchange be
designed, among other things, to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system and, in general, to protect
investors and the public interest.
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    \13\ 15 U.S.C. 78f(b)(5).
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II. Summary of the Proposal

    The Exchange proposes to list and trade the Shares under BZX Rule
14.11(f)(4), which governs the listing and trading of Trust Issued
Receipts \14\ on the Exchange. Volatility Shares LLC (``Sponsor'')
serves as the Sponsor of the Trust. The Fund's investment objective is
to provide a return that is 200% of the return of its benchmark index
for a single day. The benchmark for the Fund is the Long VIX Futures
Index (LONGVOL) (``Index''),\15\ which

measures the daily performance of a theoretical portfolio of first- and
second-month futures contracts on the Cboe Volatility Index
(``VIX'').\16\ The Index is comprised of VIX futures contracts (``VIX
Futures Contracts'').\17\ Specifically, the Index components represent
the prices of the two near-term VIX Futures Contracts, replicating a
position that rolls the nearest month VIX Futures Contract to the next
month VIX Futures Contract on a daily basis in equal fractional
amounts, resulting in a constant weighted average maturity of
approximately one month.\18\ The Index seeks to reflect the returns
that are potentially available from holding an unleveraged long
position in first- and second- month VIX Futures Contracts by measuring
its daily performance from the weighted average price of VIX Futures
Contracts.\19\
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    \14\ Rule 14.11(f)(4) applies to Trust Issued Receipts that
invest in ``Financial Instruments,'' defined in Rule
14.11(f)(4)(A)(iv) as any combination of investments, including
cash; securities; options on securities and indices; futures
contracts; options on futures contracts; forward contracts; equity
caps, collars and floors; and swap agreements.
    \15\ The Index is sponsored by Cboe Global Indexes (``Index
sponsor''). The Index sponsor is not a registered broker-dealer, but
is affiliated with a broker-dealer and has implemented and will
maintain a fire wall with respect to the broker-dealer affiliate
regarding access to information concerning the composition of and/or
changes to the Index. In addition, the Index sponsor has implemented
and will maintain procedures that are designed to prevent the use
and dissemination of material, non-public information regarding the
Index.
    \16\ The Exchange states that the VIX is an index designed to
measure the implied volatility of the S&P 500 over 30 days in the
future. See Amendment No. 2, supra note 3, at 4, n.4. The VIX is
calculated based on the prices of certain put and call options on
the S&P 500. See id. The VIX is reflective of the premium paid by
investors for certain options linked to the level of the S&P 500.
See id.
    \17\ The Exchange states that VIX Futures Contracts are measures
of the market's expectation of the level of VIX at certain points in
the future, and as such, will behave differently than current, or
spot, VIX. See id. at 8. While the VIX represents a measure of the
current expected volatility of the S&P 500 over the next 30 days,
the prices of VIX Futures Contracts are based on the current
expectation of what the expected 30-day volatility will be at a
particular time in the future (on the expiration date). See id.
    \18\ The Exchange states that the roll period usually begins on
the Wednesday falling 30 calendar days before the S&P 500 option
expiration for the following month (``Cboe VIX Monthly Futures
Settlement Date'') and runs to the Tuesday prior to the subsequent
month's Cboe VIX Monthly Futures Settlement Date. See id. at 10.
    \19\ The Exchange states that because VIX Futures Contracts
correlate to future volatility readings of VIX, while the VIX itself
correlates to current volatility, the Index and the Fund should be
expected to perform significantly differently from the VIX over all
periods of time. See id. at 9-10. Further, unlike the Index, the
VIX, which is not a benchmark for the Fund, is calculated based on
the prices of certain put and call options on the S&P 500. See id.
at 10. According to the Exchange, while the Index does not
correspond to the VIX, the value of the Index, and by extension the
Fund, will generally rise as the VIX rises and fall as the VIX
falls. See id. at 9.
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    To pursue its investment objective, the Fund will primarily invest
in VIX Futures Contracts based on components of the Index. The Fund
will primarily acquire long exposure to the VIX through VIX Futures
Contracts, such that the Fund has exposure intended to approximate 200%
of the return of the Index at the time of the net asset value (``NAV'')
calculation of the Fund. However, in the event that the Fund is unable
to meet its investment objective solely through investment in VIX
Futures Contracts, it may invest in over-the-counter swaps referencing
the Index or referencing particular VIX Futures Contracts comprising
the Index (``VIX Swap Agreements'') or in listed VIX options contracts
(``VIX Options Contracts,'' and, together with VIX Futures Contracts
and VIX Swap Agreements, ``VIX Derivative Products''). The Fund may
also invest in Cash or Cash Equivalents,\20\ which may serve as
collateral to the Fund's investments in VIX Derivative Products.
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    \20\ ``Cash and Cash Equivalents'' are short-term instruments
with maturities of less than 3 months, including the following: (i)
U.S. Government securities, including bills, notes, and bonds
differing as to maturity and rates of interest, which are either
issued or guaranteed by the U.S. Treasury or by U.S. Government
agencies or instrumentalities; (ii) certificates of deposit issued
against funds deposited in a bank or savings and loan association;
(iii) bankers' acceptances, which are short-term credit instruments
used to finance commercial transactions; (iv) repurchase agreements
and reverse repurchase agreements; (v) bank time deposits, which are
monies kept on deposit with banks or savings and loan associations
for a stated period of time at a fixed rate of interest; (vi)
commercial paper, which are short-term unsecured promissory notes;
and (vii) money market funds.
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    The Fund will seek to remain fully invested in VIX Derivative
Products (and Cash and Cash Equivalents as collateral) that provide
exposure to the Index consistent with its investment objective without
regard to market conditions, trends or direction. The Fund's investment
objective is a daily investment objective; that is, the Fund seeks to
track the Index on a daily basis, not over longer periods. Accordingly,
each day, the Fund will position its portfolio so that it can seek to
track the Index. The direction and extent of the Index's movements each
day will dictate the direction and extent of the Fund's portfolio
rebalancing. For example, if the level of the Index falls on a given
day, net assets of the Fund would fall. As a result, exposure to the
Index, through futures positions held by the Fund, would need to be
decreased. The opposite would be the case if the level of the Index
rises on a given day.
    The time and manner in which the Fund will rebalance its portfolio
is defined by the Index methodology but may vary from the Index
methodology depending upon market conditions and other circumstances
including the potential impact of the rebalance on the price of the VIX
Futures Contracts. The Sponsor will seek to minimize the market impact
of rebalances across all exchange traded products based on VIX Futures
Contracts (``VIX ETPs'') that it sponsors (``Funds'') \21\ on the price
of VIX Futures Contracts by limiting the Funds' participation, on any
given day, in VIX Futures Contracts to no more than 10% of the VIX
Futures Contracts traded on Cboe Futures Exchange, Inc. (``CFE'')
during any ``Rebalance Period,'' defined as any fifteen minute period
of continuous market trading.\22\ To limit participation during periods
of market illiquidity, the Sponsor, on any given day, may vary the
manner and period over which all funds it sponsors are rebalanced, and
as such, the manner and period over which the Fund is rebalanced. The
Sponsor believes that the Fund will enter an Extended Rebalance Period
most often during periods of extraordinary market conditions or
illiquidity in VIX Futures Contracts. In the event that the Fund
participates in an Extended Rebalance Period, the Fund represents that
it will notify the Exchange and the Commission of such participation as
soon as practicable, but no later than 9:00 a.m. ET on the trading day
following the event.\23\
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    \21\ For purposes of the filing, the Exchange states that the
Funds include the Fund and the -1x Short VIX Futures ETF (``Short
Fund''), but may in the future include additional VIX ETPs sponsored
by the Sponsor or its affiliates. See Securities Exchange Act
Release No. 93230 (Oct. 1, 2021) (SR-CboeBZX-2020-070) (``Short VIX
Approval'').
    \22\ In the event that the Funds expect to hit the 10% threshold
during the primary Rebalance Period from 3:45 p.m. to 4:00 p.m. ET,
the Funds will extend their respective rebalances into additional
Rebalance Periods and the Trade at Settlement (``TAS'') market. It
is expected that this extension will provide the Funds with the
flexibility to: Begin rebalancing in an earlier period, end
rebalancing in a later period, and execute contracts in TAS (each
``an Extended Rebalance Period'' and collectively ``the Extended
Rebalance Period'') while remaining below the 10% cap during any 15-
minute period of continuous market trading. See Amendment No. 2,
supra note 3, at 11-12, n.10. The Funds will be allocated executions
based on their percentage of notional transaction volume required.
See id. at 12.
    \23\ See Amendment No. 4, supra note 3, at 5.
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III. Discussion and Commission Findings

    The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange.\24\ The
Commission therefore approves the proposed rule change, as modified by
Amendment Nos. 2 and 4.
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    \24\ In approving this proposed rule change, the Commission has
considered the proposed rule change's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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    The Commission received a number of comments letters addressing the
proposed rule change's consistency with the Act, specifically focusing
on (1) the potential for systemic risks; and (2) investor protection
concerns, in particular the potential risks posed to retail investors.
The Commission addresses each of these issues below. In

addition, in approving the listing and trading of the Shares, the
Commission also analyzes the proposal to ensure there is an appropriate
regulatory framework to support the listing and trading of the Shares.
Finally, the Commission addresses the procedural argument that the
proposed rule change has been deemed approved and is currently in
effect.
    The record demonstrates the proposal is reasonably designed to
mitigate the market impact and investor protection concerns articulated
in the OIP and raised by commenters, and that the Exchange has
demonstrated that there is an appropriate regulatory framework to
support the listing and trading of the Shares. Therefore, the
Commission finds the proposal is consistent with the Act, in particular
Section 6(b)(5).

A. Rebalance Design and Market Impact Considerations

    Several of the commenters opposed to the proposal discuss the
events of February 2018 as an example of the potential harm to retail
investors and the potential systemic risk posed by volatility-linked
exchange-traded products.\25\ One commenter summarizes:
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    \25\ See letters from Americans for Financial Reform Education
Fund, dated May 7, 2021 (``AFREF''); Dennis M. Kelleher, President
and CEO; Stephen Hall, Legal Director and Securities Specialist; and
Jason Grimes, Senior Counsel, Better Markets, Inc., dated May 7,
2021 (``Better Markets''); Tyler Gellasch, Executive Director,
Healthy Markets Association, dated May 7, 2021 (``Healthy
Markets''); and Robert Rutkowski, dated May 10, 2021
(``Rutkowski'').

    On February 5, 2018, after years of low market volatility, and
accordingly a low VIX, the VIX doubled, a market event popularly
known as ``Volmageddon.'' One inverted VIX exchange-traded product
(``ETP''), known as the VelocityShares Daily Inverse VIX Short-Term
note (``XIV''), shrunk ``from $1.9 billion in assets to $63 million
in one session.'' \26\
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    \26\ Better Markets at 2.

The commenter further states that the nature of VIX ETPs ``contributed
directly to the market volatility'' because these types of products
must rebalance in order to ensure the appropriate exposure to the
index.\27\ Two commenters describe the rebalance as a ``feedback
loop,'' because the issuer would have to purchase additional futures
that would result in further declines for an inverse product.\28\
According to one of the commenters, this feedback loop led to ``all
sorts of additional knock-effects for other market participants,''
including declines in major market indexes and investor losses in
XIV.\29\ A commenter states that each of the products proposed
``involves the sort of rebalancing that exacerbated volatility during
Volmageddon.'' \30\
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    \27\ See Better Markets at 2.
    \28\ See Better Markets at 3 (citing Patrick Augustin, et al.,
Volmaggedon and the Failure of Short Volatility Products (Apr. 6,
2021, Financial Analysts Journal, Forthcoming)); and AFREF at 3.
    \29\ AFREF at 3-4.
    \30\ Better Markets at 3.
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    The Sponsor also acknowledges that ``[p]ast and existing VIX ETPs
rebalance or roll their futures contracts according to a methodology
linked to the VIX futures' settlement each day.'' \31\ Further,
according to the Sponsor, daily settlement ``has resulted in funds
competing to execute their daily rebalance at a single point in time''
resulting in ``concentrated activity [that] erodes returns and may have
contributed to at least one major market disruption.'' \32\ It
describes previous attempts to reduce this concentration by reducing
the leverage of other existing inverse and leveraged VIX ETPs as having
``slowed the progression of market crowding,'' but concludes that these
deleveraged products can still require ``larger and larger rebalances
at the same crowded settlement time'' if they attract larger
inflows.\33\
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    \31\ Letter from Barry I. Pershkow, Partner, Chapman and Cutler
LLP, on behalf of the Sponsor, dated May 7, 2021 (``Volatility
Shares 1'') at 2.
    \32\ Volatility Shares 1 at 2.
    \33\ See Volatility Shares 1 at 2.
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    The Sponsor further states that commenters arguing in favor of
disapproval because of the failure of other VIX ETPs ``miss a key
point: lessons learned from the failures of previous products are at
the very heart of the new methodology underlying [the proposed
products].'' \34\ The Sponsor describes four ways the proposed products
differ from previous and existing VIX ETPs: (1) The valuation is an
average price over a longer time period instead of exclusively at the
4:00 p.m. ET settlement price; (2) a wider rebalancing period should
distribute trading volume away from 4:00 p.m. ET, resulting in a more
stable market; (3) the rebalance period may be extended to reduce
market impact if required; and (4) the Sponsor has committed to a 10%
participation cap for all VIX ETPs offered by the Sponsor.\35\ The
Sponsor states these differences should result in ``an execution method
that minimizes market impact and meaningfully lowers the chances of
either [proposed product] experiencing a significant disruption'' \36\
and ``less volatile products with minimal impacts to the underlying VIX
futures and the broader market.'' \37\
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    \34\ See letter from Stuart Barton, Chief Investment Officer,
Sponsor, dated May 19, 2021 (``Volatility Shares 2'') at 2.
    \35\ Volatility Shares 1 at 3.
    \36\ Volatility Shares 1 at 3.
    \37\ Volatility Shares 2 at 2.
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    In its proposal, as modified by Amendment Nos. 2 and 4, the
Exchange states that the Sponsor's proposed methodology for the Funds
seeks to reduce the dependence of VIX ETPs on TAS by seeking to execute
part of the Funds' daily rebalance outside of TAS and believes that
this approach will spread VIX futures trading activity over a longer
period of time each day and should help to reduce market impact during
periods of market turmoil or disruption.\38\ In addition, the Exchange
states that the Sponsor expects that allowing the Funds to participate
in an Extended Rebalance Period will minimize the impact of the Funds'
rebalance on the price of VIX Futures Contracts, and particularly
minimize any impact of large rebalances during periods of market
illiquidity.\39\ The Exchange further states that ``the rebalancing
mechanism to be used by the Funds is designed to reduce the Funds'
individual and collective impact on the volatility market and the
associated potentially negative impact on the Funds.'' \40\
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    \38\ See Amendment No. 2, supra note 3, at 12. Commenters
writing in support of SR-CboeBZX-2020-070 also described the
potential benefits of the rebalance design. See Short VIX Approval,
supra note 21, at nn. 38-42 and accompanying text.
    \39\ See Amendment No. 4, supra note 3, at 4.
    \40\ Letter from Kyle Murray, Vice President, Associate General
Counsel, Cboe Global Markets, dated May 7, 2021 (``BZX Letter'') at
2.
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    In its assessment of the proposal, the Commission considered the
potential for market disruption during periods with large percentage
increases in volatility and, because of the potential for large, sudden
moves in VIX levels, the potential for large spikes in rebalancing
demand for VIX ETPs. As commenters note, the events of February 2018
occurred during a period when volatility had been relatively low and
spiked, as the spot price of VIX more than doubled, and there was a
large spike in the trading volume in VIX futures contracts at the end
of day. A portion of the volume was attributable to the rebalancing
demand of volatility-linked ETPs.
    In the OIP, the Commission requested comment on the Fund's
operation during periods with large percentage increases in volatility
and the potential market impact of the Fund's daily rebalance.\41\
Following the OIP, the Exchange amended its proposal to state that the
Sponsor will seek to minimize the market impact of rebalances across
all Funds on the price of VIX Futures

Contracts by limiting the Funds' participation, on any given day, in
VIX Futures Contracts to no more than ten percent of the VIX Futures
Contracts traded on CFE during any Rebalance Period.\42\
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    \41\ See OIP, supra note 3, 85 FR at 64565.
    \42\ See Amendment No. 2, supra note 3, at 11. In its original
proposal, the Exchange did not include a participation limitation.
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    The Exchange's proposal regarding the rebalancing methodology of
the Fund serves as an appropriate limit on the Fund's participation in
the VIX futures market, and is reasonably designed to help mitigate the
potential market impact on the Fund's daily rebalance demand during
periods when there are large percentage increases in volatility.\43\ In
discussing the events of ``Volmageddon,'' commenters describe several
factors that may have contributed to the spike in futures prices: (1)
Growing assets under management (``AUM'') for VIX ETPs, which in turn
required more rebalancing; (2) a large percentage increase in
volatility; and (3) a market where multiple funds were attempting to
rebalance simultaneously, and where the VIX futures TAS market was
halted ``limit up.'' \44\ The design of the rebalancing methodology
helps to mitigate the first and third factors, even if there is a large
percentage increase in volatility. Because the Funds' must limit their
participation in any Rebalance Period to 10%, the participation cap
still serves as a limit on the Funds' rebalancing demand during each
Rebalance Period, regardless of AUM. Further, the Funds' rebalance is
spread over a longer time period and distributes trading away from a
single point in time when other funds may be rebalancing,\45\ and
permits the Funds' limited flexibility in order to reduce market
impact, which may help reduce market crowding. In addition, the
Commission observes that the VIX futures market has changed since the
events of ``Volmageddon:'' (1) TAS has a wider permissible price range;
\46\ and (2) VIX futures settle at 4:00 p.m. ET rather than 4:15 p.m.
ET (i.e., after the close of U.S. equity market trading).\47\
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    \43\ A commenter states that the Commission should not view
individual product proposals in isolation. See Better Markets at 6.
Although the Commission's findings in this order are based on the
specific proposed rule change filed with the Commission, including
how the proposed rule operates under the current market conditions
discussed in this order, the Commission recognizes that, over time,
market conditions in VIX ETP markets, and the related VIX futures
market, may change.
    \44\ See letter from Stuart Barton, Head of Investments,
Sponsor, dated January 6, 2021, at n. 1. This letter was submitted
to the comment file for SR-CboeBZX-2020-070 and is available at:
https://www.sec.gov/comments/sr-cboebzx-2020-070/srcboebzx2020070.htm.
    \45\ For example, two existing leveraged VIX ETPs target a 4
p.m. ET benchmark. See Securities Exchange Act Release No. 90691
(Dec. 16, 2020), 85 FR 83643 (Dec. 22, 2020) (SR-CboeBZX-2020-093).
    \46\ See Cboe Product Update, ``Price Parameter Change for TAS
Transactions in VX Futures,'' 2018, available at: https://cdn.cboe.com/resources/product_update/2018/VX-Trade-at-Settlement-VXT-Price-Parameter-Change.pdf.
    \47\ See Cboe Futures Exchange, LLC Rule Certification,
Submission Number CFE-2020-028 (September 23, 2020), available at:
https://cdn.cboe.com/resources/regulation/rule_filings/pending/2020/
20-028-Daily-Settlement-Determination-
Time.pdf#:~:text=The%20Daily%20Settlement%20Time%20for%20VX%20futures
%20is,for%20VX%20futures%20is%203%3A00%20p.m.%20Chicago%20time.
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    In sum, the Commission considered the potential that VIX ETPs might
have a destabilizing effect on markets during times of market stress.
Based on the record, including commenters' descriptions of the events
of February 2018, the Commission concludes that the Exchange's proposal
is reasonably designed to help mitigate against the market impact
concerns articulated in the OIP and by commenters opposed to the
proposal. The rebalance design of the Funds may help distribute
rebalancing volume. Further, the 10% participation cap strikes an
appropriate balance between allowing the Funds to rebalance within a
reasonably short period of time and managing the potential market
impact of a large rebalance. Therefore, the Commission finds that the
proposal is consistent with Section 6(b)(5) of the Act, including the
protection of investors and the public interest.

B. Investor Protection

    Commenters also raise concerns about the risks and complexity of
leveraged and inverse VIX ETPs and their suitability for retail
investors. One of the commenters asserts that: (1) Recent market events
and the public record with the VIX raise significant questions about
the investor-protection risks posed by VIX-related investment products;
(2) such questions must be adequately addressed by filings to list and
trade more VIX-related products; and (3) the Exchange has not explained
how explain how its proposed listing and trading of the Shares would be
consistent with the Act, including the protection of investors.\48\
Another commenter states that the absence of new sales practices
protections for leveraged investment products ``leaves investors with
extremely inadequate protections in this space.'' \49\ According to the
commenter, shares of leveraged exchange-traded funds are unsuitable for
retail investors because they provide markedly different returns--and
generally significantly underperform--their underlying indices over the
long-term.\50\ That commenter also asserts that it would be
inconsistent with the protection of investors to facilitate gambling-
like market practices by approving additional products that enable
leveraged bets on synthetic indexes.\51\ More specifically, the
commenter states that the Shares would not directly support economic
activity and, in the commenter's view, the assertion that any hedging
achieved through the Shares would lead to a net gain in real capital
formation is not supported.\52\ Another commenter also states that the
product has no purpose beyond the issuer ``invit[ing] speculative
gamblers'' so that it can profit off of management expenses.\53\
Commenters also state that the products are inconsistent with the Act
because there are ``inherent dangers'' for leveraged exchange-traded
products that make them unsuitable for retail investors.\54\ Finally,
one commenter states that the Approval Order does not adequately
address the risks to investors and to retail investors in
particular.\55\
---------------------------------------------------------------------------

    \48\ See Healthy Markets at 6.
    \49\ AFREF at 1-2.
    \50\ See AFREF at 2. Another commenter asserts that certain
investors purchasing the Shares may ``be surprised to see that their
losses would be amplified by a factor of 2 during periods of low
volatility'' and, in the view of this commenter, both products raise
investor protection concerns because they are ``complex and risky.''
See Better Markets at 4-5. A commenter provides annual returns for
another leveraged volatility product and asserts it is ``almost
impossible to make money long side, even for short-term.'' See
letter from John Motson, dated July 10, 2020 (``Motson'').
    \51\ See AFREF at 2.
    \52\ See AFREF at 3.
    \53\ Motson.
    \54\ See Rutkowski, Healthy Markets at 2-3.
    \55\ See Better Markets at 4-5.
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    In response, the Sponsor states that commenters' concerns related
to leveraged and inverse exchange-traded products, and in particular
the concern that such products underperform their benchmarks over time,
have been raised previously. It states that such products are not
designed to perform over long periods of time, and that courts have
``affirmed the adequacy of the disclosure contained in the registration
statement of these products.'' \56\ In addition, the Exchange states
that the proposed products would provide ``investors with new tools to
implement investment strategies to which they might not otherwise have
access.'' \57\ The Sponsor

also cites the Commission's recent amendments to Rule 6c-11 of the
Investment Company Act of 1940, which would include certain leveraged
and inverse exchange-traded funds within the scope of Rule 6c-11, as
well as the Commission's approvals of leveraged and inverse exchange-
traded products that are not registered investment companies.\58\ The
Sponsor asserts that this demonstrates that questions related to
leveraged and inverse products have been therefore ``asked and
answered.'' \59\
---------------------------------------------------------------------------

    \56\ Volatility Shares 2 at 1-2.
    \57\ BZX Letter at 2. The Exchange states that the Funds would
provide greater short and long exposure than ETPs currently trading
on U.S. exchanges. See id. In addition, commenters writing in
support of the Short Fund state that the product would fulfill a
need in the ETP space by permitting certain investors to obtain
short volatility exposure in a more efficient manner than is
currently available. See Short VIX Approval, supra note 21, nn. 60-
62 and accompanying text.
    \58\ See Volatility Shares 2 at 1-2.
    \59\ Volatility Shares 2 at 1-2.
---------------------------------------------------------------------------

    The Commission acknowledges commenters' concerns, but believes this
proposed rule change is consistent with the protection of investors.
Commenters assert that the Exchange has not met its burden to
demonstrate the proposal is consistent with the protection of investors
because leveraged and inverse exchange-traded products, in particular
those linked to volatility, are complex and risky, and underperform
their benchmarks over time. The Commission has recognized that certain
complex products, such as inverse or leveraged exchange-traded
products, ``which may be useful for some sophisticated trading
strategies, are highly complex financial instruments and are typically
designed to achieve their stated objectives on a daily basis.'' \60\
However, there are existing rules and standards of conduct applicable
to other complex products that would apply to listing and trading of
the Shares. The best interest standard of conduct for broker-dealers
required under Regulation Best Interest and the fiduciary obligations
of investment advisers discussed in the Fiduciary Interpretation
thereto apply to transactions in all exchange-traded products where the
transaction is recommended by a broker-dealer or pursuant to the advice
of an investment adviser.\61\ In addition, the Financial Industry
Regulatory Authority (``FINRA'') has implemented increased sales
practice and customer margin requirements for FINRA members applicable
to inverse, leveraged and inverse leveraged securities (which include
the Shares), and has provided specific guidance regarding sales
practice obligations for volatility-linked exchange-traded
products.\62\ Exchange members that carry customer accounts will be
required to follow the FINRA guidance set forth in these notices. The
Exchange also has rules relating to suitability, in particular BZX Rule
3.7.\63\ Therefore, the Commission finds that this proposal is
consistent with the Act, in particular the protection of investors and
the public interest.\64\
---------------------------------------------------------------------------

    \60\ Regulation Best Interest Adopting Release, Exchange Act
Rel. No. 86031 (Jun. 5, 2019), 84 FR 33318 (Jul. 12, 2019), at
33376.
    \61\ See Investment Company Act Rel. No. 34084, (Nov. 2, 2020),
85 FR 83217 (Dec. 21, 2020), at 83217-18 (discussing the best
interest standard of conduct for broker-dealers and the fiduciary
obligations of investment advisers in the context of all exchange-
traded products).
    \62\ See FINRA Regulatory Notices 09-31 (Jun. 2009), 09-53 (Aug.
2009), 09-65 (Nov. 2009), 12-03 (Jan. 2012), and 17-32 (Oct. 2017).
    \63\ In particular, Rule 3.7 imposes suitability obligations on
Exchange members with respect to recommending transactions in the
Shares to customers and Interpretation and Policy .01 of BZX Rule
3.7 imposes a duty of due diligence on Exchange members to learn the
essential facts relating to every customer prior to trading the
Shares, and specifically provides that ``[n]o Member shall recommend
to a customer a transaction in any such product unless the Member
has a reasonable basis for believing at the time of making the
recommendation that the customer has such knowledge and experience
in financial matters that he may reasonably be expected to be
capable of evaluating the risks of the recommended transaction and
is financially able to bear the risks of the recommended position.''
    \64\ Although the Commission finds the proposal is consistent
with the Exchange Act, the Commission is not expressing a view about
whether the Shares are appropriate or suitable for all investors.
---------------------------------------------------------------------------

C. Other Considerations

    In addition, the Commission analyzed other aspects of the
Exchange's proposal and finds, as explained below, that the proposal is
consistent with the Act because it is designed to prevent fraudulent
and manipulative acts and practices and protect investors and the
public interest. The Exchange has demonstrated there is an appropriate
regulatory framework to support listing and trading of the Shares,
including trading rules, surveillance, and listing standards.
    The proposal is reasonably designed to promote fair disclosure of
information that may be necessary to price the Shares appropriately and
to prevent trading in the Shares when a reasonable degree of certain
pricing transparency cannot be assured. Specifically, the Exchange will
obtain a representation from the Sponsor of the Shares that the NAV
will be calculated daily and that the NAV and the Fund's holdings will
be made available to all market participants at the same time. On each
Business Day,\65\ before commencement of trading in Shares during
Regular Trading Hours,\66\ the Fund will disclose on its website the
holdings that will form the basis for the Fund's calculation of NAV at
the end of the Business Day. This website disclosure of the portfolio
composition of the Fund will occur at the same time as the disclosure
by the Fund of the portfolio composition to authorized participants, so
that all market participants will be provided portfolio composition
information at the same time, and the same portfolio information will
be provided on the public website as in electronic files provided to
authorized participants. Quotation and last-sale information regarding
the Shares will be disseminated through the facilities of the
Consolidated Tape Association. As required by BZX Rule 14.11(f)(4), an
updated Intraday Indicative Value (``IIV'') will be calculated and
widely disseminated by one or more major market data vendors every 15
seconds throughout Regular Trading Hours. The IIV will be published on
the Exchange's website and will be available through on-line
information services such as Bloomberg and Reuters. 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. The Fund's
website will include a form of the prospectus for the Fund and
additional data relating to NAV and other applicable quantitative
information. In addition, the level of the Index will be published at
least every 15 seconds in real time from 9:30 a.m. to 4:00 p.m. ET and
at the close of trading on each Business Day by Bloomberg and Reuters.
---------------------------------------------------------------------------

    \65\ A ``Business Day'' means any day other than a day when any
of BZX, Cboe, CFE or other exchange material to the valuation or
operation of the Fund, or the calculation of the VIX, options
contracts underlying the VIX, VIX Futures Contracts or the Index is
closed for regular trading.
    \66\ As defined in BZX Rule 1.5(w), the term ``Regular Trading
Hours'' means the time between 9:30 a.m. and 4:00 p.m. ET.
---------------------------------------------------------------------------

    Quotation and last-sale information regarding VIX Futures Contracts
and VIX Options Contracts will be available from the exchanges on which
such instruments are traded. Quotation and last-sale information
relating to VIX Options Contracts will also be available via the
Options Price Reporting Authority. Quotation and last-sale information
for VIX Swap Agreements will be available from nationally recognized
data services providers, such as Reuters and Bloomberg, through
subscription agreements or from a broker-dealer who makes markets in
such instruments. Pricing information regarding Cash Equivalents in
which the Fund may invest is generally available through nationally
recognized data services providers, such as Reuters and Bloomberg,
through subscription

agreements. The closing prices and settlement prices of the Index
Components (i.e., the first- and second-month VIX Futures Contracts)
will be readily available from the websites of CFE (http://www.cfe.cboe.com), automated quotation systems, published or other
public sources, or on-line information services such as Bloomberg or
Reuters. The CFE also provides delayed futures information on current
and past trading sessions and market news free of charge on its
website. Complete real-time data for component VIX Futures Contracts
underlying the Index, including the specific contract specifications of
Index Components (i.e., first-month and second-month VIX Futures
Contracts), is available by subscription from Reuters and Bloomberg.
    The Exchange's rules regarding trading halts further help to ensure
the maintenance of fair and orderly markets for the Shares, which is
consistent with the protection of investors and the public interest.
Trading in the Shares 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 Exchange will halt
trading in the Shares under the conditions specified in BZX Rule 11.18
(Trading Halts Due to Extraordinary Market Volatility). BZX Rule
14.11(f)(4)(c)(ii) enumerates additional circumstances under which the
Exchange will consider the suspension of trading in and will commence
delisting proceedings for the Shares.
    The Exchange's proposal is designed to safeguard material non-
public information relating to the Fund's portfolio. Specifically, as
the Exchange states, the Sponsor is not a broker-dealer or affiliated
with a broker-dealer. In the event that (a) the Sponsor becomes a
broker-dealer or newly affiliated with a broker-dealer, or (b) any new
sponsor is a broker-dealer or becomes affiliated with a broker-dealer,
it will implement and maintain a fire wall with respect to its relevant
personnel or such broker-dealer affiliate, as applicable, regarding
access to information concerning the composition of and/or changes to
the portfolio, and will be subject to procedures designed to prevent
the use and dissemination of material non-public information regarding
the portfolio. Moreover, trading of the Shares will be subject to BZX
Rule 14.11(f)(4)(D), which sets forth certain restrictions on Exchange
members acting as registered Market Makers \67\ in Trust Issued
Receipts to facilitate surveillance. In addition, the Exchange has a
general policy prohibiting the distribution of material, non-public
information by its employees.
---------------------------------------------------------------------------

    \67\ As defined in BZX Rule 1.5(l), the term ``Market Maker''
means an Exchange member that acts as a Market Maker pursuant to
Chapter XI of the BZX Rules.
---------------------------------------------------------------------------

    Furthermore, the Exchange or FINRA, on behalf of the Exchange, or
both, will communicate and may obtain information regarding trading in
the Shares and the underlying listed instruments, including listed
derivatives held by the Fund, with the Intermarket Surveillance Group
(``ISG''), other markets or entities who are members or affiliates of
the ISG, or with which the Exchange has entered into a comprehensive
surveillance sharing agreement. The trading of the Shares through the
Exchange will be subject to the Exchange's surveillance procedures for
derivative products, and these procedures are adequate to properly
monitor Exchange trading of the Shares during all trading sessions and
to deter and detect violations of Exchange rules and applicable federal
securities laws. In addition, all of the VIX Futures Contracts and VIX
Options Contracts held by the Fund will trade on markets that are a
member of ISG or affiliated with a member of ISG or with which the
Exchange has in place a comprehensive surveillance sharing agreement.
    Moreover, the trading of the Shares on the Exchange will be subject
to the Exchange's and other rules listed below. Specifically:
    (1) 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;
    (2) The Shares will conform to the initial and continued listing
criteria under BZX Rule 14.11(f);
    (3) Pursuant to BZX Rule 14.11(a), all statements and
representations made in the filing regarding the Index composition,
description of the portfolio or reference assets, limitations on
portfolio holdings or reference assets, dissemination and availability
of the Index, reference assets, and IIV, or the applicability of
Exchange listing rules specified in the filing shall constitute
continued listing requirements for the Shares. 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 Act, the Exchange will surveil for compliance with the
continued listing requirements. If the Fund or the Shares are not in
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under Exchange Rule 14.12.
    (4) The Exchange has the appropriate rules to facilitate
transactions in the Shares during all trading sessions;
    (5) 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; \68\
---------------------------------------------------------------------------

    \68\ The Exchange states that 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)
Interpretation and Policy .01 of BZX Rule 3.7 which imposes a duty
of due diligence on its members to learn the essential facts
relating to every customer prior to trading the Shares, and
specifically provides that ``[n]o Member shall recommend to a
customer a transaction in any such product unless the Member has a
reasonable basis for believing at the time of making the
recommendation that the customer has such knowledge and experience
in financial matters that he may reasonably be expected to be
capable of evaluating the risks of the recommended transaction and
is financially able to bear the risks of the recommended position;''
(d) how information regarding the IIV and the Fund's holdings is
disseminated; (e) the risks involved in trading the Shares during
the Pre-Opening and After Hours Trading Sessions (as such terms are
defined in BZX Rules) when an updated IIV will not be calculated or
publicly disseminated; (f) the requirement that Exchange members
deliver a prospectus to investors purchasing newly issued Shares
prior to or concurrently with the confirmation of a transaction; and
(g) trading information.
---------------------------------------------------------------------------

    (6) FINRA has implemented increased sales practice and customer
margin requirements for FINRA members applicable to inverse, leveraged
and inverse leveraged securities (which include the Shares) and options
on such securities, as described in FINRA Regulatory Notices 09-31
(June 2009), 09-53 (August 2009), and 09-65 (November 2009). Exchange
members that carry customer accounts will be required to follow the
FINRA guidance set forth in these notices;
    (7) For initial and continued listing, the Fund and the Trust must
be in compliance with Rule 10A-3 under the Act; \69\ and
---------------------------------------------------------------------------

    \69\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    (8) A minimum of 100,000 Shares of the Fund will be outstanding at
the commencement of trading on the Exchange.

D. Procedural Considerations

    The Sponsor also asserts that the proposed rule change has been
deemed

approved pursuant to Exchange Act Section 19(b)(2)(D)(ii).\70\ The
Commission disagrees with the Sponsor's assertions that: (1) Because
the Approval Order is stayed, ``the Commission did not effectively
approve or disapprove [the Proposal] by the 240th day'' and therefore
the proposal has been deemed approved; \71\ and (2) the Commission's
discretionary review of the order by delegated authority conflicts with
the purpose and language of the statute.\72\
---------------------------------------------------------------------------

    \70\ See Volatility Shares 1 at 4. Section 19(b) of the Exchange
Act requires the Commission to ``issue an order'' approving or
disapproving a proposed rule change within, at most, 240 days of the
proposed rule change's filing. See 15 U.S.C. 78s(b)(2)(B)(ii). If
the Commission fails to issue an order within that period, the
proposed rule change is deemed to have been approved. See 15 U.S.C.
78s(b)(2)(D).
    \71\ See Volatility Shares 1 at 4. The Sponsor cites this
proposal as having been deemed approved since the relevant period
had not yet elapsed for CboeBZX-2020-070 when it made its argument.
It states that CboeBZX-2020-070 would also be deemed approved unless
the Commission acted by May 21, 2021.
    \72\ See Volatility Shares 1 at 2.
---------------------------------------------------------------------------

    The Commission complied with the requirements of the statute.
Section 19(b)(2)(D) requires only that the Commission ``issue an
order'' approving or disapproving the proposed rule change within 240
days. The Approval Order was issued within that period.
    Although orders issued by delegated authority are issued by
Commission staff, they are issued with the full authority of the
Commission and are signed by the Secretary's office on behalf of the
Commission. Section 4A of the Exchange Act authorizes the Commission to
delegate certain functions--including approval or disapproval of
proposed rule changes under Section 19--to a ``division of the
Commission.'' \73\ And the Commission's Rules of Practice make clear
that ``an action made pursuant to delegated authority shall have
immediate effect and be deemed the action of the Commission.'' \74\
---------------------------------------------------------------------------

    \73\ 15 U.S.C. 78d-1(a).
    \74\ Commission Rule of Practice 431(e), 17 CFR 201.431(e). See
also, e.g., Rule of Practice 430(c), 17 CFR 201.430(c) (referring to
``a final order entered pursuant to [delegated authority]''); Rule
of Practice 431(f), 17 CFR 201.431(f) (giving an order by delegated
authority operative effect, even when review has been sought, until
a person receives actual notice that it was been stayed, modified,
or reversed on review). Moreover, as the Commission has previously
explained, Congress was aware of the Commission's ability to
delegate authority to approve SRO rule filings when the time
restrictions in Exchange Act Section 19(b)(2)(D) were enacted. And
to construe Section 19(b)(2), as the Sponsor does, to require
Commission review of an order by delegated authority to be completed
within 240 days ``would undermine both the specific deadlines set
forth in the statute and the Commission's ability to delegate
functions. Nor is such a construction necessary to fulfill
Congress's purpose in enacting the deadlines to ``streamline'' the
rule filing process. With rare exception, rule filings are decided,
by delegated authority or otherwise, within 240 days. See Securities
Exchange Act Release Nos. 88493 (Mar. 27, 2020), 85 FR 18617 (Apr.
2, 2020) (Order Affirming Action by Delegated Authority and
Disapproving Proposed Rule Changes Related to Connectivity and Port
Fee in the Matter BOX Exchange LLC) at 18626; and 82727 (Feb. 15,
2018), 83 FR 7793 (Feb. 22, 2017) (Order Setting Aside Action by
Delegated Authority and Disapproving a Proposed Rule Change, as
Modified by Amendment Nos. 1 and 2, Regarding the Acquisition of CHX
Holdings, Inc. by North America Casin Holdings, Inc.) at 7799.
---------------------------------------------------------------------------

IV. Conclusion

    For the foregoing reasons, the Commission finds that the proposed
rule change is consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange.
    It is therefore ordered, pursuant to Rule 431 of the Commission's
Rules of Practice, that the earlier action taken by delegated
authority, Securities Exchange Act Release No. 91265 (March 5, 2021),
86 FR 13922 (March 11, 2021), is set aside and, pursuant to Section
19(b)(2) of the Act, the proposed rule change (SR-CboeBZX-2020-053), as
modified by Amendment Nos. 2 and 4, hereby is approved.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-21880 Filed 10-6-21; 8:45 am]
BILLING CODE 8011-01-P