[Federal Register Volume 84, Number 58 (Tuesday, March 26, 2019)]
[Notices]
[Pages 11364-11371]
[FR Doc No: 2019-05700]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85370; File No. SR-CboeBZX-2019-017]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule To List and Trade
Shares of the iShares iBonds Dec 2026 Term Muni Bond ETF, iShares
iBonds Dec 2027 Term Muni Bond ETF, and iShares iBonds Dec 2028 Term
Muni Bond ETF Under BZX Rule 14.11(c)(4)

March 20, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 19, 2019, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Exchange filed the proposal as
a ``non-controversial'' proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to list and trade under BZX Rule 14.11(c)(4)
the shares of the iShares iBonds Dec 2026

Term Muni Bond ETF (the ``2026 Fund''), iShares iBonds Dec 2027 Term
Muni Bond ETF (the ``2027 Fund''), and iShares iBonds Dec 2028 Term
Muni Bond ETF (the ``2028 Fund'', each a ``Fund'' and, collectively,
the ``Funds'') of iShares Trust (the ``Trust'').
    The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list and trade shares (``Shares'') of the
Funds under BZX Rule 14.11(c)(4),\5\ which governs the listing and
trading of index fund shares based on fixed income securities
indexes.\6\ The Shares will be offered by the Trust, which was
established as a Delaware statutory trust on December 16, 1999. The
Trust is registered with the Commission as an open-end investment
company and has filed a registration statement on behalf of the Funds
on Form N-1A (``Registration Statement'') with the Commission.\7\
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    \5\ 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).
    \6\ The Exchange notes that the Commission has already published
an immediately effective rule filing allowing the listing and
trading of shares of a series of Index Fund Shares very similar to
the Funds on the Exchange. See Securities Exchange Act Release No.
84107 (September 13, 2018), 83 FR 47210 (September 18, 2018) (SR-
CboeBZX-2018-070) (the ``2025 Filing''). Further, the Commission has
also approved a proposed rule change allowing the listing and
trading of shares of two series of Index Fund Shares very similar to
the Funds on the Exchange. See Securities Exchange Act Release No.
79381 (November 22, 2016), 81 FR 86044 (November 29, 2016) (SR-
BatsBZX-2016-48) (Order Granting Accelerated Approval of a Proposed
Rule Change, as Modified by Amendments No. 1 and No. 2 Thereto, To
List and Trade Shares of the iShares iBonds Dec 2023 Term Muni Bond
ETF and iShares iBonds Dec 2024 Term Muni Bond ETF of the iShares
U.S. ETF Trust Pursuant to BZX Rule 14.11(c)(4)) (the ``Approval
Order''). Finally, the Commission has also published an immediately
effective rule filing allowing the listing and trading of shares of
the 2026 Fund on NYSE Arca, Inc. (``NYSE Arca''). See Securities
Exchange Act Release No. 84396 (October 10, 2018), 83 FR 52266
(October 16, 2018) (SR-NYSEArca-2018-70) (the ``Arca Filing'').
While the Arca Filing was published and would have allowed the
listing and trading of shares of the 2026 Fund on NYSE Arca, the
shares of the 2026 Fund have not been listed or traded. In addition
to proposing to list and trade the Shares of each Fund on the
Exchange, this proposal would change the underlying index associated
with the 2026 Fund, as described in the Arca Filing, from the S&P
AMT-Free Municipal Series Dec 2026 Index to the S&P AMT-Free
Municipal Callable Factor Adjusted 2026 Series Index, which would
expand the index universe to include certain callable securities, as
described below.
    \7\ See Registration Statement on Form N-1A for the Trust, dated
January 11, 2019 (File Nos. 333-92935 and 811-09729). The
descriptions of the Funds and the Shares contained herein are based,
in part, on information in the Registration Statement. The
Commission has issued an order granting certain exemptive relief to
the Trust under the Investment Company Act of 1940 (15 U.S.C. 80a-1)
(``1940 Act'') (the ``Exemptive Order''). See Investment Company Act
Release No. 27661 (January 17, 2007) (File No. 812-13208).
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    Rule 14.11(c)(4)(B)(i)(b) requires that component fixed income
securities that, in the aggregate, account for at least 75% of the
weight of the index or portfolio shall have a minimum principal amount
outstanding of $100 million or more. The Exchange submits this proposal
because the Underlying Indexes, as defined below, do not meet this
requirement. The Underlying Indexes do, however, meet all of the other
requirements of Rule 14.11(c)(4).
Description of the Shares and the Funds
    BlackRock Fund Advisors (``BFA'') is the investment adviser to the
Funds.\8\ State Street Bank and Trust Company is the administrator,
custodian, and transfer agent for the Trust. S&P is the index provider
(the ``Index Provider'') for the Funds. BlackRock Investments, LLC
serves as the distributor for the Trust.
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    \8\ BFA is an indirect wholly owned subsidiary of BlackRock,
Inc.
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S&P AMT-Free Municipal Callable Factor Adjusted 2026 Series Index
    According to the Registration Statement, the 2026 Fund will seek to
track the investment results, before fees and expenses, of the S&P AMT-
Free Municipal Callable Factor Adjusted 2026 Series Index (the ``2026
Underlying Index''), which measures the performance of investment-grade
(as determined by Index Provider), non-callable and callable U.S.
municipal bonds which will mature or be redeemed prior to December 1,
2026. The 2026 Underlying Index includes only municipal bonds from
issuers that are state, local or federal district governments or
agencies such that the interest on each such bond is exempt from U.S.
federal income taxes and the federal alternative minimum tax (``AMT'')
(``Municipal Securities'').
    As of December 31, 2018, the 2026 Underlying Index included 12,222
component fixed income municipal bond securities from issuers in 51
different states or U.S. territories.\9\ The most heavily weighted
security in the 2026 Underlying Index represented approximately 0.41%
of the total weight of the 2026 Underlying Index and the aggregate
weight of the top five most heavily weighted securities in the 2026
Underlying Index represented less than 1.33% of the total weight of the
2026 Underlying Index. Approximately 6.76% of the weight of the
components in the 2026 Underlying Index had a minimum original
principal outstanding of $100 million or more and 76.02% of the weight
of the components were a constituent of an offering where the original
offering amount was at least $100 million. In addition, the total
dollar amount outstanding of issues in the 2026 Underlying Index was
approximately $101,777,956,000 and the average dollar amount
outstanding of issues in the 2026 Underlying Index was approximately
$8,327,000.
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    \9\ Unless otherwise noted, all statistics related to the 2026
Underlying Index presented hereafter were accurate as of December
31, 2018.
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Requirement for Index Constituents
    Each bond in the 2026 Underlying Index must be denominated in U.S.
dollars and must have a minimum par amount of $2 million. To remain in
the 2026 Underlying Index, bonds must maintain a minimum par amount
greater than or equal to $2 million as of the next rebalancing date.
The 2026 Underlying Index includes Municipal Securities that have a
rating of at least BBB- by S&P Global Ratings, Baa3 by Moody's
Investors Service, Inc., or BBB by Fitch Ratings, Inc. A bond must be
rated by at least one of these three rating agencies in order to
qualify for the 2026 Underlying Index, and the lowest rating will be
used in determining if the bond is investment-grade. All non-callable
bonds in the 2026 Underlying Index will mature after December 31, 2025
and before December 2, 2026. Callable bonds are eligible subject to the
following: (i) A final maturity date after December 31, 2025 and before
December 2, 2026, and a next call date no sooner than two

years prior to final maturity; or (ii) a final maturity up to four
years after the index maturity year, if the next call date is within
the index maturity range. The 2026 Underlying Index will also contain
at least 500 component securities.
S&P AMT-Free Municipal Callable Factor Adjusted 2027 Series Index
    According to the Registration Statement, the 2027 Fund will seek to
track the investment results, before fees and expenses, of the S&P AMT-
Free Municipal Callable Factor Adjusted 2027 Series Index (the ``2027
Underlying Index''), which measures the performance of investment-grade
(as determined by Index Provider), non-callable and callable U.S.
municipal bonds which will mature or be redeemed prior to December 1,
2027. The 2027 Underlying Index includes only Municipal Securities.
    As of December 31, 2018, the 2027 Underlying Index included 9,582
component fixed income municipal bond securities from issuers in 51
different states or U.S. territories.\10\ The most heavily weighted
security in the 2027 Underlying Index represented approximately 0.57%
of the total weight of the 2027 Underlying Index and the aggregate
weight of the top five most heavily weighted securities in the 2027
Underlying Index represented less than 2.56% of the total weight of the
2027 Underlying Index. Approximately 5.87% of the weight of the
components in the 2027 Underlying Index had a minimum original
principal outstanding of $100 million or more and 77.82% of the weight
of the components were a constituent of an offering where the original
offering amount was at least $100 million. In addition, the total
dollar amount outstanding of issues in the 2027 Underlying Index was
approximately $81,765,343,000 and the average dollar amount outstanding
of issues in the 2027 Underlying Index was approximately $8,533,000.
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    \10\ Unless otherwise noted, all statistics related to the 2027
Underlying Index presented hereafter were accurate as of December
31, 2018.
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Requirement for Index Constituents
    Each bond in the 2027 Underlying Index must be denominated in U.S.
dollars and must have a minimum par amount of $2 million. To remain in
the 2027 Underlying Index, bonds must maintain a minimum par amount
greater than or equal to $2 million as of the next rebalancing date.
The 2027 Underlying Index includes Municipal Securities that have a
rating of at least BBB-by S&P Global Ratings, Baa3 by Moody's Investors
Service, Inc., or BBB by Fitch Ratings, Inc. A bond must be rated by at
least one of these three rating agencies in order to qualify for the
2027 Underlying Index, and the lowest rating will be used in
determining if the bond is investment-grade. All non-callable bonds in
the 2027 Underlying Index will mature after December 31, 2026 and
before December 2, 2027. Callable bonds are eligible subject to the
following: (i) A final maturity after December 31, 2026 and before
December 2, 2027, and a next call date no sooner than two years prior
to final maturity; or (ii) a final maturity up to four years after the
index maturity year, if the next call date is within the index maturity
range. The 2027 Underlying Index will also contain at least 500
component securities.
S&P AMT-Free Municipal Callable Factor Adjusted 2028 Series Index
    According to the Registration Statement, the 2028 Fund will seek to
track the investment results, before fees and expenses, of the S&P AMT-
Free Municipal Callable Factor Adjusted 2028 Series Index (the ``2028
Underlying Index'' and, collectively with the 2026 Underlying Index and
the 2027 Underlying Index, the ``Underlying Indexes''), which measures
the performance of investment-grade (as determined by Index Provider),
non-callable and callable U.S. municipal bonds which will mature or be
redeemed prior to December 1, 2028. The 2028 Underlying Index includes
only Municipal Securities.
    As of December 31, 2018, the 2028 Underlying Index included 5,852
component fixed income municipal bond securities from issuers in 51
different states or U.S. territories.\11\ The most heavily weighted
security in the 2028 Underlying Index represented approximately 0.85%
of the total weight of the 2028 Underlying Index and the aggregate
weight of the top five most heavily weighted securities in the 2028
Underlying Index represented less than 2.42% of the total weight of the
2028 Underlying Index. Approximately 6.97% of the weight of the
components in the 2028 Underlying Index had a minimum original
principal outstanding of $100 million or more and 80.36% of the weight
of the components were a constituent of an offering where the original
offering amount was at least $100 million. In addition, the total
dollar amount outstanding of issues in the 2028 Underlying Index was
approximately $54,637,103,000 and the average dollar amount outstanding
of issues in the 2028 Underlying Index was approximately $9,336,000.
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    \11\ Unless otherwise noted, all statistics related to the 2028
Underlying Index presented hereafter were accurate as of December
31, 2018.
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Requirement for Index Constituents
    Each bond in the 2028 Underlying Index must be denominated in U.S.
dollars and must have a minimum par amount of $2 million. To remain in
the 2028 Underlying Index, bonds must maintain a minimum par amount
greater than or equal to $2 million as of the next rebalancing date.
The 2028 Underlying Index includes Municipal Securities that have a
rating of at least BBB- by S&P Global Ratings, Baa3 by Moody's
Investors Service, Inc., or BBB- by Fitch Ratings, Inc. A bond must be
rated by at least one of these three rating agencies in order to
qualify for the 2028 Underlying Index, and the lowest rating will be
used in determining if the bond is investment-grade. All non-callable
bonds in the 2028 Underlying Index will mature after December 31, 2027
and before December 2, 2028. Callable bonds are eligible subject to the
following: (i) A final maturity after December 31, 2027 and before
December 2, 2028, and a next call date no sooner than two years prior
to final maturity; or (ii) a final maturity up to four years after the
index maturity year, if the next call date is within the index maturity
range. The 2028 Underlying Index will also contain at least 500
component securities.
Portfolio Holdings
    Each Fund's holdings may include only the following types of
Municipal Securities: General obligation bonds,\12\ limited obligation
bonds (or revenue bonds),\13\ municipal notes,\14\ municipal commercial
paper,\15\ tender option bonds,\16\ variable rate demand notes and

demand obligations (``VRDOs''),\17\ municipal lease obligations,\18\
stripped securities,\19\ structured securities,\20\ and zero coupon
securities.\21\
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    \12\ General obligation bonds are obligations involving the
credit of an issuer possessing taxing power and are payable from
such issuer's general revenues and not from any particular source.
    \13\ Limited obligation bonds are payable only from the revenues
derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise or other specific
revenue source, and also include industrial development bonds issued
pursuant to former U.S. federal tax law. Industrial development
bonds generally are also revenue bonds and thus are not payable from
the issuer's general revenues. The credit and quality of industrial
development bonds are usually related to the credit of the corporate
user of the facilities. Payment of interest on and repayment of
principal of such bonds is the responsibility of the corporate user
(and/or any guarantor).
    \14\ Municipal notes are shorter-term municipal debt obligations
that may provide interim financing in anticipation of tax
collection, receipt of grants, bond sales, or revenue receipts.
    \15\ Municipal commercial paper is generally unsecured debt that
is issued to meet short-term financing needs.
    \16\ Tender option bonds are synthetic floating-rate or
variable-rate securities issued when long-term bonds are purchased
in the primary or secondary market and then deposited into a trust.
Custodial receipts are then issued to investors, such as the Fund,
evidencing ownership interests in the trust.
    \17\ VRDOs are tax-exempt obligations that contain a floating or
variable interest rate adjustment formula and a right of demand on
the part of the holder thereof to receive payment of the unpaid
principal balance plus accrued interest upon a short notice period
not to exceed seven days.
    \18\ Municipal lease obligations include certificates of
participation issued by government authorities or entities to
finance the acquisition or construction of equipment, land, and/or
facilities.
    \19\ Stripped securities are created when an issuer separates
the interest and principal components of an instrument and sells
them as separate securities. In general, one security is entitled to
receive the interest payments on the underlying assets and the other
to receive the principal payments.
    \20\ Structured securities are privately negotiated debt
obligations where the principal and/or interest is determined by
reference to the performance of an underlying investment, index, or
reference obligation, and may be issued by governmental agencies.
While structured securities are part of the principal holdings of
the Fund, the Issuer represents that such securities, when combined
with those instruments held as part of the other portfolio holdings
described below, will not exceed 20% of the Fund's net assets.
    \21\ Zero coupon securities are securities that are sold at a
discount to par value and do not pay interest during the life of the
security. The discount approximates the total amount of interest the
security will accrue and compound over the period until maturity at
a rate of interest reflecting the market rate of the security at the
time of issuance. Upon maturity, the holder of a zero coupon
security is entitled to receive the par value of the security.
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    Under normal market conditions,\22\ each Fund will generally invest
at least 90% of its assets in the component securities of its
respective Underlying Index, except during the last months of the
Fund's operations. With respect to the remaining 10% of its assets,
each Fund may invest in certain futures, options and swap
contracts,\23\ cash and cash equivalents, including shares of money
market funds advised by BFA or its affiliates, as well as in Municipal
Securities not included in its respective Underlying Index, but which
BFA believes will help the Fund track the Underlying Index. From time
to time when conditions warrant, however, a Fund may invest at least
80% of its assets in the component securities of its respective
Underlying Index.
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    \22\ The term ``normal market conditions'' includes, but is not
limited to, the absence of trading halts in the applicable financial
markets generally; operational issues (e.g., systems failure)
causing dissemination of inaccurate market information; or force
majeure type events such as natural or manmade disaster, act of God,
armed conflict, act of terrorism, riot or labor disruption or any
similar intervening circumstance.
    \23\ Such futures, options and swap contracts will include only
the following: Interest rate futures, interest rate options, and
interest rate swaps. The derivatives will be centrally cleared and
they will be collateralized. At least 90% of the Fund's net assets
that are invested in listed derivatives will be invested in
instruments that trade in markets that are members or affiliates of
members of the Intermarket Surveillance Group (``ISG'') or are
parties to a comprehensive surveillance sharing with the Exchange.
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    In the last months of operation, as the bonds held by a Fund mature
(other than the tender options bonds mentioned below), the proceeds
will not be reinvested in bonds (except as discussed below) but instead
will be held in cash and cash equivalents, including, without
limitation, shares of money market funds advised by BFA or its
affiliates (``BlackRock Cash Funds''), AMT-free tax-exempt municipal
notes, variable rate demand notes and obligations, tender option bonds
and municipal commercial paper. These cash equivalents may not be
included in the Fund's benchmark index.
Discussion
    Based on the characteristics of the Underlying Indexes and the
representations made in the Requirements for Index Constituents
sections above, the Exchange believes it is appropriate to allow the
listing and trading of the Shares. The Underlying Indexes and Funds
each satisfy all of the generic listing requirements for Index Fund
Shares based on a fixed income index, except for the minimum principal
amount outstanding requirement of 14.11(c)(4)(B)(i)(b). The Exchange
notes that the representations in the Requirements for Index
Constituents for the Underlying Indexes include the same
representations made regarding the S&P AMT-Free Municipal Series Dec
2023 Index, the S&P AMT-Free Municipal Series Dec 2024 Index, and the
S&P AMT-Free Municipal Series Dec 2025 Index (collectively, with the
S&P AMT-Free Municipal Series Dec 2023 Index and the S&P AMT-Free
Municipal Series Dec 2024 Index, the ``Comparable Indexes''). Further,
the Requirements for Index Constituents also include an additional
representation that each Underyling [sic] Index will have at least 500
constituents on a continuous basis, which was also included in the
filing related to the S&P AMT-Free Municipal Series Dec 2025 Index. The
Exchange believes that this representation ensures diversification
among constituent securities of the Indexes.\24\
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    \24\ See Approval Order and the 2025 Filing. The Exchange notes
that the only substantive difference between the Comparable Indexes
and the Underlying Indexes, other than the maturity dates of the
constituents, is that the Underlying Indexes may include callable
and non-callable Municipal Securities, while the Comparable Indexes
include only non-callable Municipal Securities.
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    The Approval Order and 2025 Filing included the representation that
a bond must be investment-grade and must have an outstanding par value
of at least $2 million in order to be included in the Comparable
Indexes. Each Underlying Index requires that, in order to remain in the
Underlying Index, bonds must be investment-grade and maintain a minimum
par amount greater than or equal to $2 million and, further, BFA has
represented that each Underlying Index will have at least 500
constituents on a continuous basis. As such, the Exchange believes that
the proposal is consistent with the Act because the representations
regarding the quality and size of the issuances included in each
Underlying Index provide a strong degree of protection against index
manipulation that is consistent with other proposals that have either
been approved for listing and trading by the Commission or were
effective upon filing, which is only furthered by the additional
representation that each Underyling [sic] Index will have at least 500
constituents on a continuous basis, which ensures diversification among
constituent securities.
    In addition, the Exchange represents that: (1) Except for Rule
14.11(c)(4)(B)(i)(b), each Underyling [sic] Index currently satisfies
all of the generic listing standards under Rule 14.11(c)(4); (2) the
continued listing standards under Rule 14.11(c), as applicable to Index
Fund Shares based on fixed income securities, will apply to the Shares;
and (3) the issuer of the Funds is required to comply with Rule 10A-3
\25\ under the Act for the initial and continued listing of the Shares.
In addition, the Exchange represents that each Fund will comply with
all other requirements applicable to Index Fund Shares, including, but
not limited to, requirements relating to the dissemination of key
information such as the value of the Underlying Indexes and the
Intraday Indicative Value (``IIV''),\26\ rules governing the trading of
equity securities, trading hours, trading halts, surveillance,
information barriers and the Information Circular, as set forth in the
Exchange rules applicable to Index Fund Shares and prior Commission
orders approving the generic listing rules applicable to the listing
and trading of Index Fund Shares.
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    \25\ 17 CFR 240.10A-3.
    \26\ The IIV will be widely disseminated by one or more major
market data vendors at least every 15 seconds during the Exchange's
Regular Trading Hours. Currently, it is the Exchange's understanding
that several major market data vendors display and/or make widely
available IIVs taken from the Consolidated Tape Association
(``CTA'') or other data feeds.

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    The current value of each Underlying Index will be widely
disseminated by one or more major market data vendors at least once per
day, as required by Rule 14.11(c)(4)(C)(ii). The portfolio of
securities and other assets held by each Fund will be disclosed daily
on its respective website at www.ishares.com. Further, each Fund's
website will contain the Fund's prospectus and additional data relating
to net asset value (``NAV'') and other applicable quantitative
information. The issuer has represented that the NAV of each Fund will
be calculated daily and will be made available to all market
participants at the same time. The Index Provider is not a broker-
dealer and is not affiliated with a broker-dealer. To the extent that
the Index Provider becomes a broker-dealer or becomes affiliated with a
broker-dealer, the Index Provider will implement and will maintain a
``fire wall'' around the personnel who have access to information
concerning changes and adjustments to each Underlying Index and each
Underlying Index shall be calculated by a third party who is not a
broker-dealer or fund advisor. In addition, any advisory committee,
supervisory board or similar entity that advises the Index Provider or
that makes decisions on each Index, methodology and related matters,
will implement and maintain, or be subject to, procedures designed to
prevent the use and dissemination of material non-public information
regarding the Underlying Indexes.
    The Exchange's existing rules require that the issuer of the Funds
notify the Exchange of any material change to the methodology used to
determine the composition of an Underlying Index and, therefore, if the
methodology of an Underlying Index was to be changed in a manner that
would materially alter its existing composition, the Exchange would
have advance notice and would evaluate the modifications to determine
whether that Underyling [sic] Index remained sufficiently broad-based
and well diversified.
Availability of Information
    The Funds' website, which will be publicly available prior to the
public offering of Shares, will include a form of the prospectus for
the Funds that may be downloaded. The website will include additional
quantitative information updated on a daily basis, including, for each
Fund: (1) The prior business day's reported NAV, daily trading volume,
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, each
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, such as the type of swap); 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 each Fund's portfolio. The
website and information will be publicly available at no charge. The
value, components, and percentage weightings of each Underlying Index
will be calculated and disseminated at least once daily and will be
available from major market data vendors. Rules governing each Fund's
respective Underlying Indexes are available on S&P's website and in the
applicable Fund's prospectus.
    In addition, an estimated value, defined in BZX Rule 14.11(c)(6)(A)
as the IIV that reflects an estimated intraday value of each 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.\27\ In addition, the quotations of certain of a Fund's
holdings may not be updated during U.S. trading hours if updated prices
cannot be ascertained.
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    \27\ Currently, it is the Exchange's understanding that several
major market data vendors display and/or make widely available IIVs
published via the 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 each 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. Price information regarding
Municipal Securities and other non-exchange traded assets including
certain derivatives, money market funds and other instruments, and
repurchase agreements is available from third party pricing services
and major market data vendors. Price information regarding Municipal
Securities can also be obtained from the Municipal Securities
Rulemaking Board's Electronic Municipal Market Access (``EMMA'')
system. For exchange-traded assets, including futures, and certain
options, such intraday information is available directly from the
applicable listing exchange. In addition, price information for U.S.
exchange-traded options will be available from the Options Price
Reporting Authority.
Surveillance
    The Exchange represents that trading in the Shares will be subject
to the existing trading surveillances, administered by the Financial
Industry Regulatory Authority (``FINRA'') on behalf of the Exchange, or
by regulatory staff of the Exchange, which are designed to detect
violations of Exchange rules and applicable federal securities laws.
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.\28\
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    \28\ FINRA conducts 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.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting
securities trading outside their normal patterns, which could be
indicative of manipulative or other violative activity. When such
situations are detected, surveillance analysis follows and
investigations are opened, where appropriate, to review the behavior of
all relevant parties for all relevant trading violations.
    The Exchange or FINRA, on behalf of the Exchange, or both, will

communicate as needed regarding trading in the Shares with other
markets and other entities that are members of the ISG, and the
Exchange or FINRA, on behalf of the Exchange, or both, may obtain
trading information regarding trading in the Shares from such markets
and other entities. In addition, the Exchange may obtain information
regarding trading in the Shares 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, FINRA, on
behalf of the Exchange, is able to access, as needed, trade information
for certain fixed income securities held by the Funds reported to
FINRA's Trade Reporting and Compliance Engine (``TRACE''). FINRA also
can access data obtained from the Municipal Securities Rulemaking
Board's EMMA system relating to municipal bond trading activity for
surveillance purposes in connection with trading in the Shares.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section
6(b) of the Act \29\ in general and Section 6(b)(5) of the Act \30\ 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.
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    \29\ 15 U.S.C. 78f.
    \30\ 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 a
fixed income index in Rule 14.11(c)(4), except for the minimum
principal amount outstanding requirement of 14.11(c)(4)(B)(i)(b). 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 the 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, or both, will communicate as needed regarding
trading in the Shares with other markets that are members of the ISG.
In addition, the Exchange will communicate as needed regarding trading
in the Shares with other markets that are members of the ISG or with
which the Exchange has in place a comprehensive surveillance sharing
agreement. FINRA also can access data obtained from the EMMA system
relating to municipal bond trading activity for surveillance purposes
in connection with trading in the Shares. FINRA, on behalf of the
Exchange, is able to access, as needed, trade information for certain
fixed income securities held by the Funds reported to TRACE.
    As discussed above, the Exchange believes that each Underlying
Index is sufficiently broad-based to deter potential manipulation. The
Underlying Indexes currently include at least 5,852 component
securities. Whereas the Rule 14.11(c)(4)(B)(i)(e) requires that an
index contain securities from a minimum of 13 non-affiliated issuers,
the Underlying Indexes each include securities issued by municipal
entities in at least 51 states or U.S. territories. Further, whereas
the generic listing rules permit a single component security to
represent up to 30% of the weight of an index and the top five
component securities to, in aggregate, represent up to 65% of the
weight of an index, the largest component security in each Underlying
Index constitutes no more than 0.85% of the weight of the Underlying
Index and the largest five component securities represent no more than
2.56% of the weight of an Underlying Index.
    The Exchange believes that this significant diversification and the
lack of concentration among constituent securities provide each
Underlying Index with a strong degree of protection against index
manipulation. Each Underlying Index and Fund satisfy all of the generic
listing requirements for Index Fund Shares based on a fixed income
index, except for the minimum principal amount outstanding requirement
of 14.11(c)(4)(B)(i)(b). With this in mind, the Exchange notes that the
representations in the Requirements for Index Constituents for each
Underlying Index are identical to or more robust than the
representations made regarding the Comparable Indexes and, further, BFA
has made an additional representation regarding diversification that
was also included in the 2025 Filing.
    The Approval Order and 2025 Filing included the representation that
a bond must be investment-grade and must have an outstanding par value
of at least $2 million in order to be included in the Comparable
Indexes. To remain in an Underlying Index, bonds must be investment-
grade and maintain a minimum par amount greater than or equal to $2
million and, further, BFA has represented that each Underlying Index
will have at least 500 constituents on a continuous basis, which
ensures diversification among constituent securities, a representation
that was also included in the 2025 Filing. As such, the Exchange
believes that the proposal is consistent with the Act because the
representations regarding the quality and size of the issuances
included in each Underlying Index provide a strong degree of protection
against index manipulation that is consistent with other proposals that
have either been approved for listing and trading by the Commission or
were effective upon filing, which is only furthered by the additional
representation that each Underyling [sic] Index will have at least 500
constituents on a continuous basis, which ensures diversification among
constituent securities.
    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that a large amount of information is publicly available regarding each
Fund, thereby promoting market transparency. Each Fund's portfolio
holdings will be disclosed on its respective website daily after the
close of trading on the Exchange. Moreover, the IIV for the Shares will
be widely disseminated by one or more major market data vendors at
least every 15 seconds during the Exchange's Regular Trading Hours. The
current value of each Underlying Index will be disseminated by one or
more major market data vendors at least once per 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 Funds will include the prospectus for each
Fund and additional data relating to NAV and other applicable
quantitative information.
    If the Exchange becomes aware that a Fund's NAV is not being
disseminated to all market participants at the same time, it will halt
trading in the applicable Fund's Shares until such

time as the NAV is available to all market participants. 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
inadvisable. If the IIV and index value are not being disseminated for
a 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 a Fund; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present. In addition, investors will have
ready access to information regarding the applicable IIV, and quotation
and last sale information for the Shares. Trade price and other
information relating to Municipal Securities is available through the
EMMA system.
    All statements and representations made in this filing regarding
the composition of the Underlying Indexes, the description of the
portfolio or reference assets, limitations on portfolio holdings or
reference assets, dissemination and availability of index, reference
asset, and IIV, or the applicability of Exchange listing rules shall
constitute continued listing requirements for listing the Shares on the
Exchange. The issuer is required to advise the Exchange of any failure
by a Fund to comply with the continued listing requirements, and,
pursuant to its obligations under Section 19(g)(1) of the Act, the
Exchange will monitor for compliance with the continued listing
requirements. If a Fund is not in compliance with the applicable
listing requirements, the Exchange will commence delisting procedures
under Rule 14.12.
    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
several new exchange-traded products that principally hold Municipal
Securities and that will enhance competition among market participants,
to the benefit of investors and the marketplace. The Exchange has in
place surveillance procedures relating to trading in the Shares and may
obtain information via ISG from other exchanges that are members of ISG
or with which the Exchange has entered into a comprehensive
surveillance sharing agreement. In addition, investors will have ready
access to information regarding the IIV and quotation and last sale
information for the Shares.
    For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change will facilitate the listing and trading of three
additional exchange-traded products 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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \31\ and Rule 19b-
4(f)(6) thereunder.\32\
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    \31\ 15 U.S.C. 78s(b)(3)(A).
    \32\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \33\ normally does not become operative for 30 days after the date
of its filing. However, Rule 19b-4(f)(6)(iii) \34\ permits the
Commission to designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay so
that the proposed rule change may become operative upon filing. The
Exchange noted that this proposal includes identical representations
regarding the requirements for index constituents of each Underlying
Index as are included in relation to the Comparable Indexes in the
Approval Order and the 2025 Filing and thus raises no new or novel
issues. The Exchange noted this proposal further includes an additional
representation that each Underlying Index will have at least 500
constituents on a continuous basis, which the Commission believes
should help ensure diversification among constituent securities in a
manner similar to the 2025 Filing. Finally, the Exchange notes that
waiver of the 30-day operative delay will expedite the listing and
trading of the Shares, which may enhance competition among market
participants, without undue delay, to the benefit of investors and the
marketplace. The Commission believes that the proposal raises no new or
substantive issues and that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
The Commission hereby waives the operative delay and designates the
proposed rule change operative upon filing.\35\
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    \33\ 17 CFR 240.19b-4(f)(6).
    \34\ 17 CFR 240.19b-4(f)(6)(iii).
    \35\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act.

Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CboeBZX-2019-017 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-2019-017. 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-2019-017, and should be
submitted on or before April 16, 2019.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-05700 Filed 3-25-19; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register Volume 76, Number 213 (Thursday, November 3, 2011)]
[Notices]
[Pages 68260-68262]
[FR Doc No: 2011-28541]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

Petition for Exemption From the Federal Motor Vehicle Theft
Prevention Standard; Chrysler

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

ACTION: Grant of petition for exemption.

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SUMMARY: This document grants in full the Chrysler LLC, (Chrysler)
petition for exemption of the Chrysler [confidential] vehicle line in
accordance with 49 CFR part 543, Exemption from Vehicle Theft
Prevention Standard. This petition is granted because the agency has
determined that the antitheft device to be placed on the line as
standard equipment is likely to be as effective in reducing and
deterring motor vehicle theft as compliance with the parts-marking
requirements of the Theft Prevention Standard 49 CFR part 541, Federal
Motor Vehicle Theft Prevention Standard. Chrysler requested
confidential treatment for specific information in its petition. The
agency granted Chrysler's request for confidential treatment by letter
dated September 14, 2011. Chrysler informed the agency that the
nameplate and

model year of introduction will be released to the public prior to
introduction of the vehicle line.

DATES: The exemption granted by this notice is effective beginning with
the [confidential] Model Year (MY).

FOR FURTHER INFORMATION CONTACT: Ms. Deborah Mazyck, International
Policy, Fuel Economy and Consumer Programs, NHTSA, W43-443, 1200 New
Jersey Avenue SE., Washington, DC 20590. Ms. Mazyck's phone number is
(202) 366-4139. Her fax number is<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: In a petition dated July 5, 2011, Chrysler
requested an exemption from the parts-marking requirements of the Theft
Prevention Standard (49 CFR Part 541) for the MY [confidential]
Chrysler [confidential] vehicle line. The petition requested an
exemption from parts-marking pursuant to 49 CFR part 543, Exemption
from Vehicle Theft Prevention Standard, based on the installation of an
antitheft device as standard equipment for the entire vehicle line.
    Under 49 CFR part 543.5(a), a manufacturer may petition NHTSA to
grant an exemption for one vehicle line per model year. In its
petition, Chrysler provided a detailed description and diagram of the
identity, design, and location of the components of the antitheft
device for the [confidential] vehicle line. Chrysler will install the
Sentry Key Immobilizer System (SKIS) antitheft device as standard
equipment on the vehicle line. The SKIS provides passive vehicle
protection by preventing the engine from operating unless a valid
electronically encoded key is detected in the ignition system of the
vehicles. The major components of the SKIS device consist of the Radio
Frequency Hub Module (RFHM), Ignition Node Module (IGNM), Engine
Control Module (ECM), Body Controller Module (BCM), Sentry Key
Immobilizer Module (SKIM), transponder key that performs the
immobilizer function and the Instrument Panel Cluster (IPC) which
contains the telltale function only. According to Chrysler, all of
these components work collectively to perform the immobilizer function.
Chrysler stated that its [confidential] vehicle line will also be
available with an optional visible or audible alarm system to provide
an indication of unauthorized vehicle entry (i.e., flashing lights or
horn alarm).
    According to Chrysler, the immobilizer feature is activated when
the key is removed from the ignition system, whether the doors are open
or not. Only a valid key inserted into the ignition system will allow
the vehicle to start and continue to run.
    Chrysler stated that the functions and features of the Sentry Key
Immobilizer Module (SKIM) are all integral to the RFHM. The SKIM
performs the interrogation with the transponder in the key. The RFHM
receives LF and/or RF signals from the Sentry Key transponder which is
integral to the FOBIK. The RFHM contains a radio frequency (RF)
transceiver, a microprocessor and serves as the Remote Keyless Entry RF
receiver. The RFHM also acts as a receiver if the vehicle is equipped
with a Tire Pressure Monitoring system.
    The RFHM is paired with the IGNM that contains either a rotary
ignition switch (keyed vehicles) or a START/STOP push button (keyless
vehicles). According to Chrysler, the SKIS will be placed on both its
keyless entry vehicles and keyed vehicles. For the keyed vehicles, the
IGNM transmits an LF signal to excite the transponder in the key when
the ignition switch is turned to the ON position. The IGNM waits for a
signal response from the transponder and transmits the response to the
RFHM. If the response identifies the transponder key as invalid or if
no response is received from the transponder key, Chrysler stated that
the RFHM sends an invalid key message to the ECM, which will disable
engine operation and immobilize the vehicle after two seconds of
running. This process is also similar for the keyless vehicles.
Chrysler stated that when the keyless START/STOP button is pressed, the
RFHM transmits a signal to the transponder key through LF antennas to
the RFHM. The RFHM waits for a signal from the transponder. If the
response from the transponder identifies the transponder key as invalid
or the transponder key is not within the car's interior, the engine
will be disabled and the vehicle will be immobilized after two seconds
of running.
    To avoid any perceived delay when starting the vehicle with a valid
transponder key and to prevent unburned fuel from entering the exhaust,
Chrysler stated that the engine is permitted to run for no more than
two seconds if an invalid transponder key is used. Chrysler stated that
only six consecutive invalid vehicle start attempts are permitted and
all other attempts are locked out by preventing the fuel injectors from
firing and disabling the starter.
    Chrysler stated that each ignition key used in the SKIS has an
integral transponder chip included on the circuit board beneath the
cover of the integral Remote Keyless Entry (RKE) transmitter. Each
transponder key has a unique transponder identification code that is
permanently programmed into it by the manufacturer which must be
programmed into the RFHM to be recognized by the SKIS as a valid key.
Chrysler stated that once a Sentry Key has been programmed to a
particular vehicle, it cannot be used on any other vehicle.
    In addressing the specific content requirements of 49 CFR part
543.6, Chrysler provided information on the reliability and durability
of the device. Chrysler conducted tests based on its own specified
standards and stated its belief that the device meets the stringent
performance standards prescribed. Specifically, Chrysler stated that
its device must demonstrate a minimum of 95 percent reliability with 90
percent confidence. In addition to the design and production validation
test criteria, Chrysler stated that the SKIS device also undergoes a
daily short term durability test and all of its systems undergo a
series of three functional tests for durability prior to being shipped
from the supplier to the vehicle assembly plant for installation in its
vehicles.
    Chrysler stated that its vehicles are also equipped with a security
indicator that acts as a diagnostic indicator. Chrysler stated that if
the RFHM detects an invalid transponder key or if a transponder key
related fault exists, the security indicator will flash. If the RFHM
detects a system malfunction or the SKIS has become ineffective, the
security indicator will stay on. If the vehicle is equipped with a
Customer Learn transponder programming feature, the security indicator
will flash whenever Customer Learn programming is in use.
    Chrysler stated that it expects the [confidential] vehicle line to
mirror the lower theft rate results achieved by the Jeep Grand Cherokee
vehicle line when ignition immobilizer systems were included as
standard equipment on the line. Chrysler stated that it has offered the
SKIS immobilizer system as standard equipment on all Jeep Grand
Cherokee vehicles since the 1999 model year. Chrysler indicated that
the average theft rate, based on NHTSA's theft data, for the Jeep Grand
Cherokee vehicles for the four model years prior to 1999 (1995-1998),
when a vehicle immobilizer system was not installed as standard
equipment, was 5.3113 per one thousand vehicles produced, significantly
higher than the 1990/1991 median theft rate of 3.5826. However, the
average theft rate for the nine model years (1999-2008, no data
available for 2007) after installation of the standard immobilizer
device was 2.4734, which

is significantly lower than the median. The Jeep Grand Cherokee vehicle
line was granted an exemption from the parts-marking requirements
beginning with MY 2004. Chrysler further stated that NHTSA's theft data
for the Jeep Grand Cherokee indicates that the inclusion of a standard
immobilizer system resulted in a 52 percent net average reduction in
vehicle thefts.
    Pursuant to 49 U.S.C. 33106 and 49 CFR part 543.7(b), the agency
grants a petition for exemption from the parts-marking requirements of
part 541, either in whole or in part, if it determines that, based upon
substantial evidence, the standard equipment antitheft device is likely
to be as effective in reducing and deterring motor vehicle theft as
compliance with the parts-marking requirements of part 541. The agency
finds that Chrysler has provided adequate reasons for its belief that
the antitheft device for the vehicle line is likely to be as effective
in reducing and deterring motor vehicle theft as compliance with the
parts-marking requirements of the Theft Prevention Standard (49 CFR
part 541). This conclusion is based on the information Chrysler
provided about its device.
    The agency concludes that the device will provide four of the five
types of performance listed in 49 CFR Part 543.6(a)(3): promoting
activation; preventing defeat or circumvention of the device by
unauthorized persons; preventing operation of the vehicle by
unauthorized entrants; and ensuring the reliability and durability of
the device.
    For the foregoing reasons, the agency hereby grants in full
Chrysler's petition for exemption for the vehicle line from the parts-
marking requirements of 49 CFR part 541, beginning with the 2013 model
year vehicles. The agency notes that 49 CFR part 541, Appendix A-1,
identifies those lines that are exempted from the Theft Prevention
Standard for a given model year. 49 CFR part 543.7(f) contains
publication requirements incident to the disposition of all part 543
petitions. Advanced listing, including the release of future product
nameplates, the beginning model year for which the petition is granted
and a general description of the antitheft device is necessary in order
to notify law enforcement agencies of new vehicle lines exempted from
the parts marking requirements of the Theft Prevention Standard.
    If Chrysler decides not to use the exemption for this vehicle line,
it must formally notify the agency. If such a decision is made, the
vehicle line must be fully marked as required by 49 CFR parts 541.5 and
541.6 (marking of major component parts and replacement parts).
    NHTSA notes that if Chrysler wishes in the future to modify the
device on which this exemption is based, the company may have to submit
a petition to modify the exemption. 49 CFR part 543.7(d) states that a
part 543 exemption applies only to vehicles that belong to a line
exempted under this part and equipped with the anti-theft device on
which the line's exemption is based. Further, 49 CFR part 543.9(c)(2)
provides for the submission of petitions ``to modify an exemption to
permit the use of an antitheft device similar to but differing from the
one specified in that exemption.''
    The agency wishes to minimize the administrative burden that 49 CFR
part 543.9(c)(2) could place on exempted vehicle manufacturers and
itself. The agency did not intend in drafting Part 543 to require the
submission of a modification petition for every change to the
components or design of an antitheft device. The significance of many
such changes could be de minimis. Therefore, NHTSA suggests that if the
manufacturer contemplates making any changes, the effects of which
might be characterized as de minimis, it should consult the agency
before preparing and submitting a petition to modify.

    Authority:  49 U.S.C. 33106; delegation of authority at 49 CFR
1.50.

    Issued on: October 27, 2011.
Christopher J. Bonanti,
Associate Administrator for Rulemaking.
[FR Doc. 2011-28541 Filed 11-2-11; 8:45 am]
BILLING CODE 4910-59-P