[Federal Register Volume 85, Number 34 (Thursday, February 20, 2020)]
[Notices]
[Pages 9834-9843]
[FR Doc No: 2020-03328]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88208; File No. SR-CboeBZX-2019-097]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of Amendment No. 1 and Order Instituting Proceedings To
Determine Whether To Approve or Disapprove a Proposed Rule Change, as
Modified by Amendment No. 1, To Adopt BZX Rule 14.11(l) To Permit the
Listing and Trading of Exchange-Traded Fund Shares That Are Permitted
To Operate in Reliance on Rule 6c-11 Under the Investment Company Act
of 1940

February 13, 2020.
    On November 15, 2019, Cboe BZX Exchange, Inc. (``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to, among other things, adopt BZX Rule 14.11(l) to
permit the listing and trading of Exchange-Traded Fund Shares that are
permitted to operate in reliance on Rule 6c-11 under the Investment
Company Act of 1940. The proposed rule change was published for comment
in the Federal Register on November 22, 2019.\3\
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 87560 (Nov. 18,
2019), 84 FR 64607.
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    On December 17, 2019, pursuant to Section 19(b)(2) of the Act,\4\
the Commission designated a longer period within which to approve the
proposed rule change, disapprove the proposed rule change, or institute
proceedings to determine whether to disapprove the proposed rule
change.\5\ On February 12, 2020, the Exchange filed Amendment No. 1 to
the proposed rule change, which amended and replaced the proposed rule
change in its entirety.\6\ The Commission has received no comment
letters on the proposed rule change.
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    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 87777, 84 FR 70598
(Dec. 23, 2019). The Commission designated February 20, 2019 as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to approve or disapprove,
the proposed rule change.
    \6\ Amendment No. 1 is available at: https://www.sec.gov/comments/sr-cboebzx-2019-097/srcboebzx2019097-6804772-208449.pdf.
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    The Commission is publishing this notice and order to solicit
comments on the proposed rule change, as modified by Amendment No. 1,
from interested persons and to institute proceedings pursuant to
Section 19(b)(2)(B) of the Act \7\ to determine whether to approve or
disapprove the proposed rule change, as modified by Amendment No. 1.
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    \7\ 15 U.S.C. 78s(b)(2)(B).
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I. The Exchange's Description of the Proposal, as Modified by Amendment
No. 1

    The Exchange proposes a rule change to adopt BZX Rule 14.11(l) to
permit the listing and trading of Exchange-Traded Fund Shares that are
permitted to operate in reliance on Rule 6c-11 under the Investment
Company Act of 1940. The Exchange is also proposing to discontinue the
quarterly reports required with respect to Managed Fund Shares listed
on the Exchange pursuant to the generic listing standards under Rule
14.11(i).
    The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    This Amendment No. 1 to SR-CboeBZX-2019-097 amends and replaces in
its entirety the proposal as originally submitted on November 15, 2019.
The Exchange submits this Amendment No. 1 in order to clarify certain
points and add additional details to the proposal.
    The Exchange proposes to add new Rule 14.11(l) \8\ for the purpose
of permitting the generic listing and trading, or trading pursuant to
unlisted trading privileges, of Exchange-Traded

Fund Shares \9\ that are permitted to operate in reliance on Rule 6c-11
(``Rule 6c-11'') under the Investment Company Act of 1940 (the ``1940
Act'').\10\ The Exchange is also proposing to make conforming changes
to the Exchange's corporate governance requirements under Rule 14.10(e)
in order to accommodate the proposed listing of Exchange-Traded Fund
Shares. Finally, the Exchange is proposing to discontinue the quarterly
reports required with respect to Managed Fund Shares listed on the
Exchange pursuant to the generic listing standards under Rule 14.11(i).
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    \8\ The Exchange notes that it is proposing new Rule 14.11(l)
because it has also proposed a new Rule 14.11(k) as part of another
proposal. See Securities Exchange Act Release No. 87062 (September
23, 2019), 84 FR 51193 (September 27, 2019) (SR-CboeBZX-2019-047).
    \9\ As provided below, proposed Rule 14.11(l)(3)(A) provides
that the term ``ETF Shares'' shall mean the shares issued by a
registered open-end management investment company that: (i) Is
eligible to operate in reliance on Rule 6c-11 under the Investment
Company Act of 1940; (ii) issues (and redeems) creation units to
(and from) authorized participants in exchange for a basket and a
cash balancing amount (if any); and (iii) issues shares that it
intends to list or are listed on a national securities exchange and
traded at market-determined prices.
    \10\ 15 U.S.C. 80a-1.
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    The Commission recently adopted Rule 6c-11 to permit exchange-
traded funds (``ETFs'') that satisfy certain conditions to operate
without obtaining an exemptive order from the Commission under the 1940
Act.\11\ Since the first ETF was approved by the Commission in 1992,
the Commission has routinely granted exemptive orders permitting ETFs
to operate under the 1940 Act because there was no ETF specific rule in
place and they have characteristics that distinguish them from the
types of structures contemplated and included in the 1940 Act. After
such an extended period operating without a specific rule set and only
under exemptive relief, Rule 6c-11 is designed to provide a consistent,
transparent, and efficient regulatory framework for ETFs.\12\ Exchange
listing standards applicable to ETFs have been similarly adopted and
tweaked over the years and the Exchange believes that, just as the
Commission has undertaken a review of the 1940 Act as it is applicable
to ETFs, it is appropriate to perform a similar holistic review and
overhaul of Exchange listing rules. With this in mind, the Exchange
submits this proposal to add new Rule 14.11(l) and certain
corresponding rule changes because it believes that this proposal
similarly promotes consistency, transparency, and efficiency
surrounding the exchange listing process for ETF Shares in a manner
that is consistent with the Act, as further described below. Except as
otherwise provided, the Exchange would continue to enforce all
governance, disclosure, and trading rules for this ETF Shares, as
defined below, listed on the Exchange.
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    \11\ See Release Nos. 33-10695; IC-33646; File No. S7-15-18
(Exchange-Traded Funds) (September 25, 2019), 84 FR 57162 (October
24, 2019) (the ``Rule 6c-11 Release'').
    \12\ In approving the rule, the Commission stated that the
``rule will modernize the regulatory framework for ETFs to reflect
our more than two decades of experience with these investment
products. The rule is designed to further important Commission
objectives, including establishing a consistent, transparent, and
efficient regulatory framework for ETFs and facilitating greater
competition and innovation among ETFs.'' Rule 6c-11 Release, at
57163. The Commission also stated the following regarding the rule's
impact: ``We believe rule 6c-11 will establish a regulatory
framework that: (1) Reduces the expense and delay currently
associated with forming and operating certain ETFs unable to rely on
existing orders; and (2) creates a level playing field for ETFs that
can rely on the rule. As such, the rule will enable increased
product competition among certain ETF providers, which can lead to
lower fees for investors, encourage financial innovation, and
increase investor choice in the ETF market.'' Rule 6c-11 Release, at
57204.
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    Consistent with Index Fund Shares and Managed Fund Shares listed
under the generic listing standards in Rules 14.11(c) and 14.11(i),
respectively, series of Exchange-Traded Fund Shares that are permitted
to operate in reliance on Rule 6c-11 would be permitted to be listed
and traded on the Exchange without a prior Commission approval order or
notice of effectiveness pursuant to Section 19(b) of the Act.\13\
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    \13\ Rule 19b-4(e)(1) provides that the listing and trading of a
new derivative securities product by a self-regulatory organization
(``SRO'') is not deemed a proposed rule change, pursuant to
paragraph (c)(1) of Rule 19b-4, if the Commission has approved,
pursuant to Section 19(b) of the Act, the SRO's trading rules,
procedures and listing standards for the product class that would
include the new derivative securities product and the SRO has a
surveillance program for the product class. As contemplated by this
Rule 14.11(l), the Exchange proposes new Rule 14.11(l) to establish
generic listing standards for ETFs that are permitted to operate in
reliance on Rule 6c-11. An ETF listed under proposed Rule 14.11(l)
would therefore not need a separate proposed rule change pursuant to
Rule 19b-4 before it can be listed and traded on the Exchange.
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Proposed Listing Rules
    Proposed Rule 14.11(l)(1) provides that the Exchange will consider
for trading, whether by listing or pursuant to unlisted trading
privileges, the shares of Exchange-Traded Funds (``ETF Shares'') that
meet the criteria of this Rule 14.11(l).
    Proposed Rule 14.11(l)(2) provides that the proposed rule would be
applicable only to ETF Shares. Except to the extent inconsistent with
this Rule 14.11(l), or unless the context otherwise requires, the rules
and procedures of the Board of Directors shall be applicable to the
trading on the Exchange of such securities. ETF Shares are included
within the definition of ``security'' or ``securities'' as such terms
are used in the Rules of the Exchange.
    Proposed Rule 14.11(l)(2) further provides that: (A) Transactions
in ETF Shares will occur throughout the Exchange's trading hours; (B)
the minimum price variation for quoting and entry of orders in ETF
Shares is $0.01; and (C) the Exchange will implement and maintain
written surveillance procedures for ETF Shares.
    Proposed Rule 14.11(l)(3)(A) provides that the term ``ETF Share''
shall mean a share of stock issued by an Exchange-Traded Fund.
    Proposed Rule 14.11(l)(3)(B) provides that the term ``Exchange-
Traded Fund'' has the same meaning as the term ``exchange-traded fund''
as defined in Rule 6c-11 under the Investment Company Act of 1940.
    Proposed Rule 14.11(l)(3)(C) provides that the term ``Reporting
Authority'' in respect of a particular series of ETF Shares means the
Exchange, an institution, or a reporting service designated by the
Exchange or by the exchange that lists a particular series of ETF
Shares (if the Exchange is trading such series pursuant to unlisted
trading privileges) as the official source for calculating and
reporting information relating to such series, including, but not
limited to, the amount of any dividend equivalent payment or cash
distribution to holders of ETF Shares, net asset value, index or
portfolio value, the current value of the portfolio of securities
required to be deposited to the open-end management investment company
in connection with issuance of ETF Shares, or other information
relating to the issuance, redemption or trading of ETF Shares. A series
of ETF Shares may have more than one Reporting Authority, each having
different functions.
    Proposed Rule 14.11(l)(4) provides that the Exchange may approve a
series of ETF Shares for listing and/or trading (including pursuant to
unlisted trading privileges) on the Exchange pursuant to Rule 19b-4(e)
under the Act, provided such series of ETF Shares is eligible to
operate in reliance on Rule 6c-11 under the Investment Company Act of
1940 and must satisfy the requirements of this Rule 14.11(l) on an
initial and continued listing basis.
    Proposed Rule 14.11(l)(4)(A) provides that the requirements of Rule
6c-11 must be satisfied by a series of ETF Shares on an initial and
continued listing basis. Such securities must also satisfy the
following criteria on an initial and, except for paragraph (i) below,
continued, listing basis. Further, proposed Rule 14.11(l)(4)(A)
provides that: (i) For each series, the Exchange

will establish a minimum number of ETF Shares required to be
outstanding at the time of commencement of trading on the Exchange;
(ii) if an index underlying a series of ETF Shares is maintained by a
broker-dealer or fund adviser, the broker-dealer or fund adviser shall
erect and maintain a ``fire wall'' around the personnel who have access
to information concerning changes and adjustments to the index and the
index shall be calculated by a third party who is not a broker-dealer
or fund adviser. If the investment adviser to the investment company
issuing an actively managed series of ETF Shares is affiliated with a
broker-dealer, such investment adviser shall erect and maintain a
``fire wall'' between the investment adviser and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such Investment Company portfolio; and (iii) any advisory
committee, supervisory board, or similar entity that advises a
Reporting Authority or that makes decisions on the composition,
methodology, and related matters of an index underlying a series of ETF
Shares, must implement and maintain, or be subject to, procedures
designed to prevent the use and dissemination of material non-public
information regarding the applicable index. For actively managed
Exchange-Traded Funds, personnel who make decisions on the portfolio
composition must be subject to procedures designed to prevent the use
and dissemination of material nonpublic information regarding the
applicable portfolio.
    Proposed Rule 14.11(l)(4)(B) provides that each series of ETF
Shares will be listed and traded on the Exchange subject to application
of the Proposed Rule 14.11(l)(4)(B)(i) and (ii). Proposed Rule
14.11(l)(4)(B)(i) provides that the Exchange will consider the
suspension of trading in, and will commence delisting proceedings under
Rule 14.12 for, a series of ETF Shares under any of the following
circumstances: (a) If the Exchange becomes aware that the issuer of the
ETF Shares is no longer eligible to operate in reliance on Rule 6c-11
under the Investment Company Act of 1940; (b) if any of the other
listing requirements set forth in this Rule 14.11(l) are not
continuously maintained; (c) if, following the initial twelve month
period after commencement of trading on the Exchange of a series of ETF
Shares, there are fewer than 50 beneficial holders of the series of ETF
Shares for 30 or more consecutive trading days; or (d) if such other
event shall occur or condition exists which, in the opinion of the
Exchange, makes further dealings on the Exchange inadvisable. Proposed
Rule 14.11(l)(4)(B)(ii) provides that upon termination of an investment
company, the Exchange requires that ETF Shares issued in connection
with such entity be removed from Exchange listing.
    Proposed Rule 14.11(l)(5) provides that neither the Exchange, the
Reporting Authority, nor any agent of the Exchange shall have any
liability for damages, claims, losses or expenses caused by any errors,
omissions, or delays in calculating or disseminating any current index
or portfolio value; the current value of the portfolio of securities
required to be deposited to the open-end management investment company
in connection with issuance of ETF Shares; the amount of any dividend
equivalent payment or cash distribution to holders of ETF Shares; net
asset value; or other information relating to the purchase, redemption,
or trading of ETF Shares, resulting from any negligent act or omission
by the Exchange, the Reporting Authority, or any agent of the Exchange,
or any act, condition, or cause beyond the reasonable control of the
Exchange, its agent, or the Reporting Authority, including, but not
limited to, an act of God; fire; flood; extraordinary weather
conditions; war; insurrection; riot; strike; accident; action of
government; communications or power failure; equipment or software
malfunction; or any error, omission, or delay in the reports of
transactions in one or more underlying securities.
    Proposed Rule 14.11(l)(6) provides that the provisions of this
subparagraph apply only to series of ETF Shares that are the subject of
an order by the Securities and Exchange Commission exempting such
series from certain prospectus delivery requirements under Section
24(d) of the Investment Company Act of 1940 and are not otherwise
subject to prospectus delivery requirements under the Securities Act of
1933. The Exchange will inform its Members regarding application of
this subparagraph to a particular series of ETF Shares by means of an
information circular prior to commencement of trading in such series.
The Exchange requires that members provide to all purchasers of a
series of ETF Shares a written description of the terms and
characteristics of those securities, in a form prepared by the open-end
management investment company issuing such securities, not later than
the time a confirmation of the first transaction in such series is
delivered to such purchaser. In addition, members shall include such a
written description with any sales material relating to a series of ETF
Shares that is provided to customers or the public. Any other written
materials provided by a member to customers or the public making
specific reference to a series of ETF Shares as an investment vehicle
must include a statement in substantially the following form: ``A
circular describing the terms and characteristics of (the series of ETF
Shares) has been prepared by the (open-end management investment
company name) and is available from your broker. It is recommended that
you obtain and review such circular before purchasing (the series of
ETF Shares).'' A member carrying an omnibus account for a non-member
broker-dealer is required to inform such non-member that execution of
an order to purchase a series of ETF Shares for such omnibus account
will be deemed to constitute agreement by the non-member to make such
written description available to its customers on the same terms as are
directly applicable to members under this rule. Upon request of a
customer, a member shall also provide a prospectus for the particular
series of ETF Shares.
    Proposed Rule 14.11(l)(7) provides that a security that has
previously been approved for listing on the Exchange pursuant to the
generic listing requirements specified in Rule 14.11(c) or Rule
14.11(i), or pursuant to the approval of a proposed rule change or
subject to a notice of effectiveness by the Commission, may be
considered for listing solely under this Rule 14.11(l) if such security
is eligible to operate in reliance on Rule 6c-11 under the 1940 Act. At
the time of listing of such security under this Rule 14.11(l), the
continued listing requirements applicable to such previously-listed
security will be those specified in paragraph (b) of this Rule
14.11(l). Any requirements for listing as specified in Rule 14.11(c) or
Rule 14.11(i), or an approval order or notice of effectiveness of a
separate proposed rule change, that differ from the requirements of
this Rule 14.11(l) will no longer be applicable to such security.
    The Exchange is also proposing to make two corresponding amendments
to include ETF Shares in other Exchange rules. Specifically, the
Exchange is also proposing: (i) To amend Rule 14.10(e)(1)(E) and
Interpretation and Policy .13 to Rule 14.10 in order to add ETF Shares
to a list of product types listed on the Exchange, including Index Fund
Shares, Managed Fund Shares, and Managed Portfolio Shares, that are
exempted from the Audit Committee requirements set forth in Rule

14.10(c)(3), except for the applicable requirements of SEC Rule 10A-3;
and (ii) to amend Rule 14.11(c)(3)(A)(i)(a) in order to include ETF
Shares in the definition of Derivative Securities Products.
Discussion
    Proposed Rule 14.11(l) is based in large part on Rules 14.11(c) and
(i) related to the listing and trading of Index Fund Shares and Managed
Fund Shares on the Exchange, respectively, both of which are issued
under the 1940 Act and would qualify as ETF Shares after Rule 6c-11 is
effective. Rule 14.11(c) and 14.11(i) are very similar, their primary
difference being that Index Fund Shares are designed to track an
underlying index and Managed Fund Shares are based on an actively
managed portfolio that is not designed to track an index. As such, the
Exchange believes that using Rules 14.11(c) and (i) (collectively, the
``Current ETF Standards'') as the basis for proposed Rule 14.11(l) is
appropriate because they are generally designed to address the issues
associated with ETF Shares. The only substantial differences between
proposed Rule 14.11(l) and the Current ETF Standards that are not
otherwise required under Rule 6c-11 are as follows: (i) Proposed Rule
14.11(l) does not include the quantitative standards applicable to a
fund or an index that are included in the Current ETF Standards; and
(ii) proposed Rule 14.11(l) does not include any requirements related
to the dissemination of a fund's Intraday Indicative Value.\14\ These
differences are discussed below.
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    \14\ For purposes of this filing, the term ``Intraday Indicative
Value'' or ``IIV'' shall mean an intraday estimate of the value of a
share of each series of either Index Fund Shares or Managed Fund
Shares.
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Quantitative Standards
    The Exchange believes that the proposal is designed to prevent
fraudulent and manipulative acts and practices because the Exchange
will perform ongoing surveillance of ETF Shares listed on the Exchange
in order to ensure compliance with Rule 6c-11 and the 1940 Act on an
ongoing basis. While proposed Rule 14.11(l) does not include the
quantitative requirements applicable to an ETF or an ETF's holdings or
underlying index that are included in Rules 14.(c) and 14.11(i),\15\
the Exchange believes that the manipulation concerns that such
standards are intended to address are otherwise mitigated by a
combination of the Exchange's surveillance procedures, the Exchange's
ability to halt trading under the proposed Rule 14.11(l)(4)(B)(ii), and
the Exchange's ability to suspend trading and commence delisting
proceedings under proposed Rule 14.11(l)(4)(B)(i). The Exchange will
also halt trading in ETFs under the conditions specified in Rule 11.18,
``Trading Halts Due to Extraordinary Market Volatility.'' The Exchange
also believes that such concerns are further mitigated by enhancements
to the arbitrage mechanism that will come from Rule 6c-11, specifically
the additional flexibility provided to issuers of ETF Shares through
the use of custom baskets for creations and redemptions and the
additional information made available to the public through the
additional Disclosure Obligations.\16\ The Exchange believes that the
combination of these factors will act to keep ETF Shares trading near
the value of their underlying holdings and further mitigate concerns
around manipulation of ETF Shares on the Exchange without the inclusion
of quantitative standards.\17\ The Exchange will monitor for compliance
with the 1940 Act generally as well as Rule 6c-11 specifically in order
to ensure that the continued listing standards are being met.
Specifically, the Exchange plans to review the website of series of ETF
Shares in order to ensure that the disclosure requirements of Rule 6c-
11 are being met and to review the portfolio underlying series of ETF
Shares listed on the Exchange in order to ensure that certain
investment requirements and limitations under the 1940 Act are being
met. The Exchange will also employ numerous intraday alerts that will
notify Exchange personnel of trading activity throughout the day that
is potentially indicative of certain disclosures not being made
accurately or the presence of other unusual conditions or circumstances
that could be detrimental to the maintenance of a fair and orderly
market. As a backstop to the surveillances described above, the
Exchange also notes that Rule 14.11(a) and proposed Rule
14.11(l)(4)(A)(ii) would require an issuer of ETF Shares to notify the
Exchange of any failure to comply with Rule 6c-11 or the 1940 Act.
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    \15\ The Exchange notes that Rules 14.11(c) and (i) include
certain quantitative standards related to the size, trading volume,
concentration, and diversity of the holdings of a series of Index
Fund Shares or Managed Fund Shares (the ``Holdings Standards'') as
well as related to the minimum number of beneficial holders of a
fund (the ``Distribution Standards''). The Exchange believes that to
the extent that manipulation concerns are mitigated based on the
factors described herein, such concerns are mitigated both as it
relates to the Holdings Standards and the Distribution Standards.
    \16\ The Exchange notes that the Commission came to a similar
conclusion in several places in the Rule 6c-11 Release. See Rule 6c-
11 Release at 15-18; 60-61; 69-70; 78-79; 82-84; and 95-96.
    \17\ The Exchange believes that this applies to all quantitative
standards, whether applicable to the portfolio holdings of a series
of ETF Shares or the distribution of the ETF Shares.
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    The Exchange may suspend trading in and commence delisting
proceedings for a series of ETF Shares where such series is not in
compliance with the applicable listing standards or where the Exchange
believes that further dealings on the Exchange are inadvisable.\18\
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    \18\ Specifically, proposed Rule 14.11(l)(4)(B) provides that
each series of ETF Shares will be listed and traded on the Exchange
subject to application of the Proposed Rule 14.11(l)(4)(B)(i) and
(ii). Proposed Rule 14.11(l)(4)(B)(i) provides that the Exchange
will consider the suspension of trading in, and will commence
delisting proceedings under Rule 14.12 for, a series of ETF Shares
under any of the following circumstances: (a) If the Exchange
becomes aware that the issuer of the ETF Shares is no longer
eligible to operate in reliance on Rule 6c-11 under the Investment
Company Act of 1940; (b) if any of the other listing requirements
set forth in this Rule 14.11(l) are not continuously maintained; (c)
if, following the initial twelve month period after commencement of
trading on the Exchange of a series of ETF Shares, there are fewer
than 50 beneficial holders of the series of ETF Shares for 30 or
more consecutive trading days; or (d) if such other event shall
occur or condition exists which, in the opinion of the Exchange,
makes further dealings on the Exchange inadvisable. Proposed Rule
14.11(l)(4)(B)(ii) provides that upon termination of an investment
company, the Exchange requires that ETF Shares issued in connection
with such entity be removed from Exchange listing.
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    Further, the Exchange also represents that its surveillance
procedures are adequate to properly monitor the trading of the ETF
Shares in all trading sessions and to deter and detect violations of
Exchange rules and applicable federal securities laws. Specifically,
the Exchange intends to utilize its existing surveillance procedures
applicable to derivative products, which are currently applicable to
Index Fund Shares and Managed Fund Shares, among other product types,
to monitor trading in ETF Shares. The Exchange or the Financial
Industry Regulatory Authority, Inc. (``FINRA''), on behalf of the
Exchange, will communicate as needed regarding trading in ETF Shares
and certain of their applicable underlying components with other
markets that are members of the Intermarket Surveillance Group
(``ISG'') or with which the Exchange has in place a comprehensive
surveillance sharing agreement. In addition, the Exchange may obtain
information regarding trading in ETF Shares and certain of their
applicable underlying components from markets and other entities that
are members of ISG or with which the Exchange has in place a
comprehensive surveillance sharing

agreement. Additionally, FINRA, on behalf of the Exchange, is able to
access, as needed, trade information for certain fixed income
securities that may be held by a series of ETF Shares reported to
FINRA's Trade Reporting and Compliance Engine (``TRACE''). FINRA also
can access data obtained from the Municipal Securities Rulemaking
Board's (``MSRB'') Electronic Municipal Market Access (``EMMA'') system
relating to municipal bond trading activity for surveillance purposes
in connection with trading in a series of ETF Shares, to the extent
that a series of ETF Shares holds municipal securities. Finally, as
noted above, the issuer of a series of ETF Shares will be required to
comply with Rule 10A-3 under the Act for the initial and continued
listing of Exchange-Traded Fund Shares, as provided under Rule
14.10(e)(1)(E) and Interpretation and Policy .13 to Rule 14.10.
Intraday Indicative Value
    As described above, proposed Rule 14.11(l) does not include any
requirements related to the dissemination of an Intraday Indicative
Value. Both Rule 14.11(c) and Rule 14.11(i) include the requirement
that a series of Index Fund Shares and Managed Fund Shares,
respectively, disseminate and update an Intraday Indicative Value at
least every 15 seconds.\19\ Historically (and theoretically), the IIV
could provide valuable information about an ETF that would not
otherwise be available or easily calculable. However, as consistently
highlighted in the Rule 6c-11 Release, that is not reflective of the
current marketplace and the Commission has expressed concerns regarding
the accuracy of IIV estimates for certain ETFs. Specifically, the
Commission noted that an IIV may not accurately reflect the value of an
ETF that holds securities that trade less frequently as such IIV can be
stale or inaccurate.\20\ Additionally, the Commission indicated that
even in circumstances when an IIV may be reliable, retail investors do
not have easy access to free, publicly available IIV information.\21\
Further, in instances when IIV may be free and publicly available, it
can be delayed by up to 45 minutes.\22\
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    \19\ See Rules 14.11(c)(3)(C), 14.11(c)(6)(A), and
14.11(c)(9)(B)(e) related to Index Fund Shares and Rules
14.11(i)(3)(C), 14.11(i)(4)(B)(i), 14.11(i)(4)(B)(iii)(b), and
14.11(i)(4)(B)(iv) related to Managed Fund Shares.
    \20\ See Rule 6c-11 Release at 62.
    \21\ See Id., at 66.
    \22\ See Id.
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    Aside from the fact that the disseminated IIV may provide investors
with stale or misleading data, the Commission also stated that market
makers and authorized participants typically calculate their own
intraday value of an ETF's portfolio with proprietary algorithms that
use an ETF's daily portfolio disclosure and available pricing
information.\23\ Such information allows those market participants to
support the arbitrage mechanism for ETFs. Therefore, as market
participants who engage in arbitrage typically calculate their own
intraday value of an ETF's portfolio based on the ETF's daily portfolio
disclosure and pricing information and use an IIV only as a secondary
check to their own calculation,\24\ the Commission noted that IIV was
not necessary to support the arbitrage mechanism.\25\ Given this,
combined with potential shortcomings of the IIV noted above, the
Commission concluded that ETFs will not be required to disseminate an
IIV under Rule 6c-11.\26\
---------------------------------------------------------------------------

    \23\ See Id., at 63.
    \24\ See Id., at 63.
    \25\ See Id., at 65.
    \26\ See Id., at 61.
---------------------------------------------------------------------------

    The Exchange generally agrees with the limitations and shortcomings
of IIV described in the Rule 6c-11 Release. The Exchange further agrees
with the conclusion of the Adopting Release that the ``IIV is not
necessary to support the arbitrage mechanism for ETFs that provide
daily portfolio holdings disclosure.'' The transparency that comes from
daily portfolio holdings disclosure as required under Rule 6c-11
provides market participants with sufficient information to facilitate
the intraday valuation of ETF Shares. The Exchange notes that it is not
proposing to prohibit the dissemination of an IIV for a series of ETF
Shares and believes that there are certain instances in which the
dissemination of an IIV could provide valuable information to the
investing public. The Exchange is simply not proposing to require the
dissemination of such information.
    As such, the Exchange believes that it is appropriate and
consistent with the Act to not include a requirement for the
dissemination of an IIV for a series of ETF Shares to be listed on the
Exchange.
Discontinuing Quarterly Reporting for Managed Fund Shares
    Finally, the Exchange is proposing to eliminate certain quarterly
reporting obligations related to the listing and trading of Managed
Fund Shares on the Exchange. In the order approving the Exchange's
proposal to adopt generic listing standards for Managed Fund
Shares,\27\ the Commission noted that the Exchange had represented that
``on a quarterly basis, the Exchange will provide a report to the
Commission staff that contains, for each ETF whose shares are
generically listed and traded under BATS Rule 14.11(i): (a) Symbol and
date of listing; (b) the number of active authorized participants
(``APs'') and a description of any failure by either a fund or an AP to
deliver promised baskets of shares, cash, or cash and instruments in
connection with creation or redemption orders; and (c) a description of
any failure by an ETF to comply with BATS Rule 14.11(i).'' \28\ This
reporting requirement is not specifically enumerated in Rule 14.11(i).
---------------------------------------------------------------------------

    \27\ See Securities Exchange Act Release No. 78396 (July 22,
2016), 81 FR 49698 (July 28, 2016) (SR-BATS-2015-100) (the ``MFS
Approval Order'').
    \28\ See MFS Approval Order at footnote 14.
---------------------------------------------------------------------------

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

    \29\ 15 U.S.C. 78f.
    \30\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 14.11(l) is designed to
prevent

fraudulent and manipulative acts and practices in that the proposed
rules relating to listing and trading ETF Shares on the Exchange
provide specific initial and continued listing criteria required to be
met by such securities. Proposed Rule 14.11(l)(4) sets forth initial
and continued listing criteria applicable to ETF Shares, specifically
providing that the Exchange may approve a series of ETF Shares for
listing and/or trading (including pursuant to unlisted trading
privileges) on the Exchange pursuant to Rule 19b-4(e) under the Act,
provided such series of ETF Shares is eligible to operate in reliance
on Rule 6c-11 under the Investment Company Act of 1940 and must satisfy
the requirements of this Rule 14.11(l) on an initial and continued
listing basis. The Exchange will submit a Form 19b-4(e) for all series
of ETF Shares upon being listed pursuant to Rule 14.11(l), including
those series of ETF Shares that are listed under Rule 14.11(l) pursuant
to proposed Rule 14.11(l)(7).
    Proposed Rule 14.11(l)(4)(B) provides that each series of ETF
Shares will be listed and traded on the Exchange subject to application
of the Proposed Rule 14.11(l)(4)(B)(i) and (ii). Proposed Rule
14.11(l)(4)(B)(i) provides that the Exchange will consider the
suspension of trading in, and will commence delisting proceedings under
Rule 14.12 for, a series of ETF Shares under any of the following
circumstances: (a) If the Exchange becomes aware that the issuer of the
ETF Shares is no longer eligible to operate in reliance on Rule 6c-11
under the Investment Company Act of 1940; (b) if any of the other
listing requirements set forth in this Rule 14.11(l) are not
continuously maintained; (c) if, following the initial twelve month
period after commencement of trading on the Exchange of a series of ETF
Shares, there are fewer than 50 beneficial holders of the series of ETF
Shares for 30 or more consecutive trading days; or (d) if such other
event shall occur or condition exists which, in the opinion of the
Exchange, makes further dealings on the Exchange inadvisable. Proposed
Rule 14.11(l)(4)(B)(ii) provides that upon termination of an investment
company, the Exchange requires that ETF Shares issued in connection
with such entity be removed from Exchange listing.
    The Exchange further believes that proposed Rule 14.11(l) is
designed to prevent fraudulent and manipulative acts and practices
because of the robust surveillances in place on the Exchange as
required under proposed Rule 14.11(l)(2)(C) along with the similarities
of proposed Rule 14.11(l) to the rules related to other securities that
are already listed and traded on the Exchange and which would qualify
as ETF Shares. Proposed Rule 14.11(l) is based in large part on Rules
14.11(c) and (i) related to the listing and trading of Index Fund
Shares and Managed Fund Shares on the Exchange, respectively, both of
which are issued under the 1940 Act and would qualify as ETF Shares
after Rule 6c-11 is effective. Rule 14.11(c) and 14.11(i) are very
similar, their primary difference being that Index Fund Shares are
designed to track an underlying index and Managed Fund Shares are based
on an actively managed portfolio that is not designed to track an
index. As such, the Exchange believes that using the Current ETF
Standards as the basis for proposed Rule 14.11(l) is appropriate
because they are generally designed to address the issues associated
with ETF Shares. The only substantial differences between proposed Rule
14.11(l) and the Current ETF Standards that are not otherwise required
under Rule 6c-11 are as follows: (i) Proposed Rule 14.11(l) does not
include the quantitative standards applicable to a fund or an index
that are included in the Current ETF Standards; and (ii) proposed Rule
14.11(l) does not include any requirements related to the dissemination
of a fund's Intraday Indicative Value.
Quantitative Standards
    The Exchange believes that the proposal is consistent with Section
6(b)(1) of the Act \31\ in that, in addition to being designed to
prevent fraudulent and manipulative acts and practices, the Exchange
has the capacity to enforce proposed Rule 14.11(l) by performing
ongoing surveillance of ETF Shares listed on the Exchange in order to
ensure compliance with Rule 6c-11 and the 1940 Act on an ongoing basis.
While proposed Rule 14.11(l) does not include the quantitative
requirements applicable to a fund and a fund's holdings or underlying
index that are included in Rules 14.(c) and 14.11(i),\32\ the Exchange
believes that the manipulation concerns that such standards are
intended to address are otherwise mitigated by a combination of the
Exchange's surveillance procedures, the Exchange's ability to halt
trading under the proposed Rule 14.11(l)(4)(B)(ii), and the Exchange's
ability to suspend trading and commence delisting proceedings under
proposed Rule 14.11(l)(4)(B)(i). The Exchange also believes that such
concerns are further mitigated by enhancements to the arbitrage
mechanism that will come from Rule 6c-11, specifically the additional
flexibility provided to issuers of ETF Shares through the use of custom
baskets for creations and redemptions and the additional information
made available to the public through the additional Disclosure
Obligations.\33\ The Exchange believes that the combination of these
factors will act to keep ETF Shares trading near the value of their
underlying holdings and further mitigate concerns around manipulation
of ETF Shares on the Exchange without the inclusion of quantitative
standards.\34\ The Exchange will monitor for compliance with Rule 6c-11
in order to ensure that the continued listing standards are being met.
Specifically, the Exchange plans to review the website of series of ETF
Shares in order to ensure that the disclosure requirements of Rule 6c-
11 are being met and to review the portfolio underlying series of ETF
Shares listed on the Exchange in order to ensure that certain
investment requirements and limitations under the 1940 Act are being
met. The Exchange will also employ numerous intraday alerts that will
notify Exchange personnel of trading activity throughout the day that
is potentially indicative of certain disclosures not being made
accurately or the presence of other unusual conditions or circumstances
that could be detrimental to the maintenance of a fair and orderly
market. As a backstop to the surveillances described above, the
Exchange also notes that Rule 14.11(a) and proposed Rule
14.11(l)(4)(A)(ii) would require an issuer of ETF Shares to notify the
Exchange of any failure to comply with Rule 6c-11 or the 1940 Act.
---------------------------------------------------------------------------

    \31\ 15 U.S.C. 78f(b)(1).
    \32\ The Exchange notes that Rules 14.11(c) and (i) include
certain quantitative standards related to the size, trading volume,
concentration, and diversity of the holdings of a series of Index
Fund Shares or Managed Fund Shares (the ``Holdings Standards'') as
well as related to the minimum number of beneficial holders of a
fund (the ``Distribution Standards''). The Exchange believes that to
the extent that manipulation concerns are mitigated based on the
factors described herein, such concerns are mitigated both as it
relates to the Holdings Standards and the Distribution Standards.
    \33\ The Exchange notes that the Commission came to a similar
conclusion in several places in the Rule 6c-11 Release. See Rule 6c-
11 Release at 15-18; 60-61; 69-70; 78-79; 82-84; and 95-96.
    \34\ The Exchange believes that this applies to all quantitative
standards, whether applicable to the portfolio holdings of a series
of ETF Shares or the distribution of the ETF Shares.
---------------------------------------------------------------------------

    To the extent that any of the requirements under Rule 6c-11 or the
1940 Act are not being met, the Exchange may halt trading in a series
of ETF Shares as provided in proposed Rule 14.11(l)(4)(B)(ii). Further,
the

Exchange may also suspend trading in and commence delisting proceedings
for a series of ETF Shares where such series is not in compliance with
the applicable listing standards or where the Exchange believes that
further dealings on the Exchange are inadvisable.\35\
---------------------------------------------------------------------------

    \35\ Specifically, proposed Rule 14.11(l)(4)(B) provides that
each series of ETF Shares will be listed and traded on the Exchange
subject to application of the Proposed Rule 14.11(l)(4)(B)(i) and
(ii). Proposed Rule 14.11(l)(4)(B)(i) provides that the Exchange
will consider the suspension of trading in, and will commence
delisting proceedings under Rule 14.12 for, a series of ETF Shares
under any of the following circumstances: (a) if the Exchange
becomes aware that the issuer of the ETF Shares is no longer
eligible to operate in reliance on Rule 6c-11 under the Investment
Company Act of 1940; (b) if any of the other listing requirements
set forth in this Rule 14.11(l) are not continuously maintained; (c)
if, following the initial twelve month period after commencement of
trading on the Exchange of a series of ETF Shares, there are fewer
than 50 beneficial holders of the series of ETF Shares for 30 or
more consecutive trading days; or (d) if such other event shall
occur or condition exists which, in the opinion of the Exchange,
makes further dealings on the Exchange inadvisable. Proposed Rule
14.11(l)(4)(B)(ii) provides that upon termination of an investment
company, the Exchange requires that ETF Shares issued in connection
with such entity be removed from Exchange listing.
---------------------------------------------------------------------------

    Further, the Exchange also represents that its surveillance
procedures are adequate to properly monitor the trading of the ETF
Shares in all trading sessions and to deter and detect violations of
Exchange rules. Specifically, the Exchange intends to utilize its
existing surveillance procedures applicable to derivative products,
which are currently applicable to Index Fund Shares and Managed Fund
Shares, among other product types, to monitor trading in ETF Shares.
The Exchange or FINRA, on behalf of the Exchange, will communicate as
needed regarding trading in ETF Shares and certain of their applicable
underlying components with other markets that are members of the ISG or
with which the Exchange has in place a comprehensive surveillance
sharing agreement. In addition, the Exchange may obtain information
regarding trading in ETF Shares and certain of their applicable
underlying components from markets and other entities that are members
of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement. Additionally, FINRA, on behalf of the
Exchange, is able to access, as needed, trade information for certain
fixed income securities that may be held by a series of ETF Shares
reported to FINRA's TRACE. FINRA also can access data obtained from the
MSRB's EMMA system relating to municipal bond trading activity for
surveillance purposes in connection with trading in a series of ETF
Shares, to the extent that a series of ETF Shares holds municipal
securities. Finally, as noted above, the issuer of a series of ETF
Shares will be required to comply with Rule 10A-3 under the Act for the
initial and continued listing of Exchange-Traded Fund Shares, as
provided under Rule 14.10(e)(1)(E) and Interpretation and Policy .13 to
Rule 14.10.
Intraday Indicative Value
    As described above, proposed Rule 14.11(l) does not include any
requirements related to the dissemination of an Intraday Indicative
Value. Both Rule 14.11(c) and Rule 14.11(i) include the requirement
that a series of Index Fund Shares and Managed Fund Shares,
respectively, disseminate and update an Intraday Indicative Value at
least every 15 seconds.\36\ Historically (and theoretically), the IIV
could provide valuable information about an ETF that would not
otherwise be available or easily calculable. However, as consistently
highlighted in the Rule 6c-11 Release, that is not reflective of the
current marketplace and the Commission has expressed concerns regarding
the accuracy of IIV estimates for certain ETFs. Specifically, the
Commission noted that an IIV may not accurately reflect the value of an
ETF that holds securities that trade less frequently as such IIV can be
stale or inaccurate.\37\ Additionally, the Commission indicated that
even in circumstances when an IIV may be reliable, retail investors do
not have easy access to free, publicly available IIV information.\38\
Further, in instances when IIV may be free and publicly available, it
can be delayed by up to 45 minutes.\39\
---------------------------------------------------------------------------

    \36\ See Rules 14.11(c)(3)(C), 14.11(c)(6)(A), and
14.11(c)(9)(B)(e) related to Index Fund Shares and Rules
14.11(i)(3)(C), 14.11(i)(4)(B)(i), 14.11(i)(4)(B)(iii)(b), and
14.11(i)(4)(B)(iv) related to Managed Fund Shares.
    \37\ See Rule 6c-11 Release at 62.
    \38\ See Id., at 66.
    \39\ See Id.
---------------------------------------------------------------------------

    Aside from the fact that the disseminated IIV may provide investors
with stale or misleading data, the Commission also stated that market
makers and authorized participants typically calculate their own
intraday value of an ETF's portfolio with proprietary algorithms that
use an ETF's daily portfolio disclosure and available pricing
information.\40\ Such information allows those market participants to
support the arbitrage mechanism for ETFs. Therefore, as market
participants who engage in arbitrage typically calculate their own
intraday value of an ETF's portfolio based on the ETF's daily portfolio
disclosure and pricing information and use an IIV only as a secondary
check to their own calculation,\41\ the Commission noted that IIV was
not necessary to support the arbitrage mechanism.\42\ Given this,
combined with potential shortcomings of the IIV noted above, the
Commission concluded that ETFs will not be required to disseminate an
IIV under Rule 6c-11.\43\
---------------------------------------------------------------------------

    \40\ See Id., at 63.
    \41\ See Id., at 63.
    \42\ See Id., at 65.
    \43\ See Id., at 61.
---------------------------------------------------------------------------

    The Exchange generally agrees with the limitations and shortcomings
of IIV described in the Rule 6c-11 Release. The Exchange further agrees
with the conclusion of the Adopting Release that the ``IIV is not
necessary to support the arbitrage mechanism for ETFs that provide
daily portfolio holdings disclosure.'' The transparency that comes from
daily portfolio holdings disclosure as required under Rule 6c-11
provides market participants with sufficient information to facilitate
the intraday valuation of ETF Shares. The Exchange notes that it is not
proposing to prohibit the dissemination of an IIV for a series of ETF
Shares and believes that there are certain instances in which the
dissemination of an IIV could provide valuable information to the
investing public. The Exchange is simply not proposing to require the
dissemination of such information.
    As such, the Exchange believes that it is appropriate and
consistent with the Act to not include a requirement for the
dissemination of an IIV for a series of ETF Shares to be listed on the
Exchange.
    The Exchange also believes that the proposed rule change is
designed to promote just and equitable principles of trade and to
protect investors and the public interest in that a large amount of
information will be publicly available regarding the Funds and the
Shares, thereby promoting market transparency. Quotation and last sale
information for ETF Shares will be available via the CTA high-speed
line. The website for each series of ETF Shares will include a form of
the prospectus for the Fund that may be downloaded, and additional data
relating to NAV and other applicable quantitative information, updated
on a daily basis. Moreover, prior to the commencement of trading, the
Exchange will inform its members in a circular of the special
characteristics and risks associated with trading in the series of ETF
Shares. As noted above, series of ETF Shares will not be required to
publicly disseminate an IIV. The

Exchange continues to believe that this proposal is consistent with the
Act and is designed to promote just and equitable principles of trade
and to protect investors and the public interest because the
transparency that comes from daily portfolio holdings disclosure as
required under Rule 6c-11 provides market participants with sufficient
information to facilitate the intraday valuation of ETF Shares,
rendering the dissemination of the IIV unnecessary.
    The Exchange notes that it is not proposing to prohibit the
dissemination of an IIV for a series of ETF Shares and believes that
there could be certain instances in which the dissemination of an IIV
could provide valuable information to the investing public. The
Exchange proposes to leave that decision to an issuer of ETF Shares and
is simply not proposing to require the dissemination of an IIV.
    Based on the foregoing discussion regarding proposed Rule 14.11(l)
and its similarities to and differences between the Current ETF
Standards, the Exchange believes that the proposal is consistent with
the Act and is designed to prevent fraudulent and manipulative
transactions and that the manipulation concerns that the quantitative
standards and the IIV requirements are designed to address are
otherwise mitigated by the proposal and the new Disclosure Obligations
and flexibility under Rule 6c-11.
    The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest in that it will facilitate the listing and trading of
ETF Shares in a manner that will enhance competition among market
participants, to the benefit of investors and the marketplace. The
Exchange believes that approval of this proposal will streamline
current procedures, reduce the costs and timeline associated with
bringing ETFs to market, and provide significantly greater regulatory
certainty to potential issuers considering bringing ETF Shares to
market, thereby enhancing competition among ETF issuers and reducing
costs for investors.\44\
---------------------------------------------------------------------------

    \44\ In approving the rule, the Commission stated that the
``rule will modernize the regulatory framework for ETFs to reflect
our more than two decades of experience with these investment
products. The rule is designed to further important Commission
objectives, including establishing a consistent, transparent, and
efficient regulatory framework for ETFs and facilitating greater
competition and innovation among ETFs.'' Rule 6c-11 Release, at
57163. The Commission also stated the following regarding the rule's
impact: ``We believe rule 6c-11 will establish a regulatory
framework that: (1) Reduces the expense and delay currently
associated with forming and operating certain ETFs unable to rely on
existing orders; and (2) creates a level playing field for ETFs that
can rely on the rule. As such, the rule will enable increased
product competition among certain ETF providers, which can lead to
lower fees for investors, encourage financial innovation, and
increase investor choice in the ETF market.'' Rule 6c-11 Release, at
57204
---------------------------------------------------------------------------

    The Exchange also believes that the corresponding change to amend
Rule 14.10(e)(1)(E) and Interpretation and Policy .13 to Rule 14.10 in
order to add ETF Shares to a list of product types listed on the
Exchange, including Index Fund Shares, Managed Fund Shares, and Managed
Portfolio Shares, that are exempted from the Audit Committee
requirements set forth in Rule 14.10(c)(3), except for the applicable
requirements of SEC Rule 10A-3 because it is a non-substantive change
meant only to subject ETF Shares to the same corporate governance
requirements currently applicable to Index Fund Shares and Managed Fund
Shares. All other corporate governance requirements that ETF Shares are
not specifically exempted from will otherwise apply. The Exchange also
believes that the non-substantive change to amend Rule
14.11(c)(3)(A)(i)(a) in order to include ETF Shares in the definition
of Derivative Securities Products is also a non-substantive change
because it is just intended to add ETF Shares to a definition that
includes Index Fund Shares and Managed Fund Shares in order to make
sure that ETF Shares are treated consistently with Index Fund Shares
and Managed Fund Shares throughout the Exchange's rules.
    Finally, the Exchange believes that eliminating the quarterly
reporting requirement for Managed Fund Shares is designed to prevent
fraudulent and manipulative acts and practices and, in general, to
protect investors and the public interest because the report no longer
serves the purpose for which it was originally intended. The type of
information provided in the reports was created to provide a window
into the creation and redemption process for Managed Fund Shares in
order to ensure that the arbitrage mechanism would work as expected for
products that were listed pursuant to the newly approved generic
listing standards. In the Rule 6c-11 Release, the Commission concluded
that ``the arbitrage mechanism for existing actively managed ETFs has
worked effectively with small deviations between market price and NAV
per share.'' \45\ The Exchange generally agrees with this conclusion
and, while such quarterly reports were useful when Managed Fund Shares
were first able to be listed pursuant to generic listing standards, the
Exchange believes that such a window into the creation and redemption
process for Managed Fund Shares no longer provides useful information
related to the prevention of manipulation or protection of investors
which it was originally designed to provide. Further, because the same
general types of information provided in those reports will be made
available under Rule 6c-11 directly from the issuers of such securities
the Exchange also believes that it is consistent with the Act to remove
this reporting obligation because it will be duplicative and no longer
necessary.
---------------------------------------------------------------------------

    \45\ See Rule 6c-11 Release at 23.
---------------------------------------------------------------------------

    For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. To the contrary, the Exchange
believes that the proposed rule change would enhance competition by
streamlining current procedures, reducing the costs and timeline
associated with bringing ETFs to market, and providing significantly
greater regulatory certainty to potential issuers considering bringing
ETF Shares to market, all of which the Exchange believes would enhance
competition among ETF issuers and reduce costs for investors. The
Exchange also believes that the proposed change would make enhance
competition among ETF Shares by ensuring the application of uniform
listing standards.

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

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

III. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeBZX-2019-097, as Modified by Amendment No. 1, and Grounds for
Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \46\ to determine whether the proposed rule
change, as modified by Amendment No. 1, should be approved or
disapproved. Institution of such proceedings is appropriate at this
time in view of the legal and policy

issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the issues involved. Rather, as described below, the
Commission seeks and encourages interested persons to provide comments
on the proposed rule change.
---------------------------------------------------------------------------

    \46\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Act,\47\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposed rule change's consistency with Section 6(b)(5)
of the Act, which requires, among other things, that the rules of a
national securities exchange be ``designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade,'' and ``to protect investors and the public
interest.'' \48\
---------------------------------------------------------------------------

    \47\ Id.
    \48\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, or
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\49\
---------------------------------------------------------------------------

    \49\ Section 19(b)(2) of the Act, as amended by the Securities
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Act Amendments of 1975, Senate Comm. on
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by March 12, 2020. Any person who wishes to file a rebuttal
to any other person's submission must file that rebuttal by March 26,
2020. The Commission asks that commenters address the sufficiency of
the Exchange's statements in support of the proposal, which are set
forth in Amendment No. 1,\50\ in addition to any other comments they
may wish to submit about the proposed rule change. In particular, the
Commission seeks comment on the following questions and asks commenters
to submit data where appropriate to support their views:
---------------------------------------------------------------------------

    \50\ See supra note 6.
---------------------------------------------------------------------------

    1. The Exchange's proposed generic listing requirements would
require that, for the Exchange to list and trade ETF Shares, the
requirements of Rule 6c-11 must be satisfied on a continued listing
basis. The Exchange states that it will monitor for compliance with the
1940 Act, generally, as well as with Rule 6c-11, specifically, in order
to ensure that the continued listing standards are being met. The
Exchange states that it plans to review the website of series of ETF
Shares to ensure that the disclosure requirements of Rule 6c-11 are
being met and to review the portfolios underlying each series of ETF
Shares listed on the Exchange to ensure that certain investment
requirements and limitations under the 1940 Act are being met. The
Exchange also states that it will employ numerous intraday alerts that
will notify Exchange personnel of trading activity throughout the day
that is potentially indicative of certain disclosures not being made
accurately or the presence of other unusual conditions or circumstances
that could be detrimental to the maintenance of a fair and orderly
market. As a backstop to the surveillances, the Exchange notes that
current BZX rules require, and BZX's proposed rules would require, an
issuer of ETF Shares to notify the Exchange of any failure to comply
with Rule 6c-11 under the 1940 Act. What are commenters' views on
whether the Exchange's surveillance procedures are adequate to monitor
for non-compliance with respect to the proposed continued listing
requirements? Do commenters believe that the Exchange should adopt
other procedures or employ additional measures to ensure that it is
capable of adequately monitoring for non-compliance with the proposed
listing rule?
    2. Under the proposal, the Exchange describes its discretion to
halt trading in ETF Shares in its proposed listing rule. For ETF Shares
that are based on an underlying index, what are commenters' views on
whether the Exchange should consider halting trading if there is an
interruption or disruption in the calculation and dissemination of the
underlying index value? What are commenters' views on whether the
Exchange should consider halting trading in the event of an
interruption or disruption in the calculation and dissemination of the
intraday indicative value, to the extent such value is calculated and
publicly disseminated for an Exchange-Traded Fund? Do commenters
believe there are other circumstances in which the Exchange ought to
consider halting trading in ETF Shares listed under the proposed rule?
    3. What are commenters' views on whether the proposed rule change
is sufficiently clear regarding Exchange members' obligations with
respect to disclosures to ETF Share purchasers? More generally, what
are commenters' views on whether the proposal provides sufficient
clarity for members' obligations with respect to transactions in ETF
Shares on the Exchange?
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CboeBZX-2019-097 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-CboeBZX-2019-097. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change.

Persons submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-CboeBZX-2019-097 and should
be submitted by March 12, 2020. Rebuttal comments should be submitted
by March 26, 2020.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\51\
---------------------------------------------------------------------------

    \51\ 17 CFR 200.30-3(a)(12) & 17 CFR 200.30-3(a)(57).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03328 Filed 2-19-20; 8:45 am]
 BILLING CODE 8011-01-P


[Federal Register: January 27, 2006 (Volume 71, Number 18)]
[Notices]
[Page 4576-4577]
[DOCID:fr27ja06-46]

=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OECA-2005-0026; FRL-8025-7]

Agency Information Collection Activities; Submission for OMB
Review and Approval; Comment Request; NSPS for Grain Elevators
(Renewal), ICR Number 1130.08, OMB Number 2060-0082

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: In compliance with the Paperwork Reduction Act, this document
announces that an Information Collection Request (ICR) has been
forwarded to the Office of Management and Budget (OMB) for review and
approval. This is a request to renew an existing approved collection.
This ICR is scheduled to expire on April 30, 2006. Under OMB
regulations, the Agency may continue to conduct or sponsor the
collection of information while this submission is pending at OMB. This
ICR describes the nature of the information collection and its
estimated burden and cost.

DATES: Additional comments may be submitted on or before February 27,
2006.

ADDRESSES: Submit your comments, referencing docket ID number EPA-HQ-
OECA-2005-0026, to (1) EPA online using http://www.regulations.gov (our preferred method), by email to<EMAIL_ADDRESS>or by mail to: EPA

Docket Center (EPA/DC), Environmental Protection Agency, Enforcement
and Compliance Docket and Information Center, Mail Code 2201T, 1200
Pennsylvania Avenue, NW., Washington, DC 20460, and (2) OMB at: Office
of Information and Regulatory Affairs, Office of Management and Budget
(OMB), Attention: Desk Officer for EPA, 725 17th Street, NW.,
Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: Learia Williams, Compliance Assessment
and Media Programs Division, Office of Compliance, (Mail Code 2223A),
Environmental Protection Agency, 1200 Pennsylvania Avenue, NW.,
Washington, DC 20460; telephone number:<PHONE_NUMBER>; fax number:
(202) 564-0050; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: EPA has submitted the following ICR to OMB
for review and approval according to the procedures prescribed in 5 CFR
1320.12. On May 6, 2005 (70 FR 24020), EPA sought comments on this ICR
pursuant to 5 CFR 1320.8(d). EPA received no comments.
    EPA has established a public docket for this ICR under Docket ID
No. EPA-HQ-OECA 2005-0026, which is available for public viewing at the
Enforcement and Compliance Docket and Information Center in the EPA
Docket Center (EPA/DC), EPA West, Room B102, 1301 Constitution Avenue,
NW., Washington, DC. The EPA Docket Center Public Reading Room is open
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal
holidays. The telephone number for the Reading Room is<PHONE_NUMBER>,
and the telephone number for the Enforcement and Compliance Docket and
Information Center Docket is:<PHONE_NUMBER>. An electronic version of
the public docket is available at http://www.regulations.gov. Use

http://www.regulations.gov to submit or view public comments, access

the index listing of the contents of the public docket, and to access
those documents in the public docket that are available electronically.
When in the system, select ``search,'' then key in the docket ID number
identified above.
    Any comments related to this ICR should be submitted to EPA and OMB
within 30 days of this notice. EPA's policy is that public comments,
whether submitted electronically or in paper, will be made available
for public viewing in http://www.regulations.gov as EPA receives them

and without change, unless the comment contains copyrighted material,
Confidential Business Information (CBI), or other information whose
public disclosure is restricted by statute. When EPA identifies a
comment containing copyrighted material, EPA will provide a reference
to that material in the version of the comment that is placed in http://www.regulations.gov.
 The entire printed comment, including the

copyrighted material, will be available in the public docket. Although
identified as an item in the official docket, information claimed as
CBI, or whose disclosure is otherwise restricted by statute, is not
included in the official public docket, and will not be available for
public viewing in http://www.regulations.gov For further information about the electronic docket, go to http://www.regulations.gov.

    Title: NSPS for Grain Elevators (Renewal).
    Abstract: The New Source Performance Standards (NSPS) for grain
elevators were proposed on January 18, 1977 and promulgated on August
3, 1978. These standards apply to each affected facility at any grain
terminal elevator or any grain storage elevator. The facilities are
each truck unloading station, truck loading station, barge and ship
loading station, railcar loading station, railcar unloading station,
grain dryer and all grain handling operations that commenced
construction, modification or reconstruction after August 3, 1978.
    Owners or operators of the affected facilities must make the
following one-time-only reports: notification of the date of
construction or reconstruction; notification of the actual date of
startup; notification of any physical or operational change to an
existing facility that may increase the rate of emission of the
regulated pollutant; notification of initial performance test; and
results of initial performance test. Owners or operators are also
required to maintain records of the occurrence and duration of any
startup, shutdown, or malfunction, or any period during which the
monitoring system is inoperative. Performance tests are the Agency's
records of a source's initial capability to comply with emissions

standards and not the operating conditions under which compliance was
achieved. An annual summary report is also required.
    Any owner or operator subject to the provisions of this subpart
must maintain a file of these measurements, and retain the file for at
least two years following the collection of such measurements,
maintenance reports, and records. All reports are sent to the delegated
state or local authority. In the event that there is no such delegated
authority, the reports are sent directly to the EPA regional office.
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB Control Number. The OMB Control Numbers for EPA's
regulations are listed in 40 CFR part 9 and 48 CFR chapter 15, and are
identified on the form and/or instrument, if applicable.
    Burden Statement: The annual public reporting and recordkeeping
burden for this collection of information is estimated to average 10.35
hours per response. Burden means the total time, effort, or financial
resources expended by persons to generate, maintain, retain, or
disclose or provide information to or for a Federal agency. This
includes the time needed to review instructions; develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information, processing and
maintaining information, and disclosing and providing information;
adjust the existing ways to comply with any previously applicable
instructions and requirements; train personnel to be able to respond to
a collection of information; search data sources; complete and review
the collection of information; and transmit or otherwise disclose the
information.
    Respondents/Affected Entities: Owners or operators of each grain
terminal elevator or any grain storage elevator.
    Estimated Number of Respondents: 200.
    Frequency of Response: On occasion, initially and annually.
    Estimated Total Annual Hour Burden: 2,070 hours.
    Estimated Total Annual Costs: $167,108, which includes $0 Capital/
startup expense, $0 Operations and Maintenance costs, and $167,108
Respondent Labor costs.
    Changes in the Estimates: There was an increase of 1,811 hours in
the total estimated burden currently identified in the OMB Inventory of
Approved ICR Burdens. The increase in burden hours from the most
recently approved ICR is due primarily to a more accurate accounting of
existing sources, an annual summary report that was inadvertently left
out, a revised labor rate, and the fact that we are presently
accounting for management and clerical person hours per year, which was
not shown in the previous ICR.
    After a thorough analysis by the National Grain and Feed
Association, they arrived at two hundred as the number of sources that
are subject to subpart DD, as compared to one hundred and thirty-two in
the previous ICR.
    There are no capital or operations and maintenance costs since
there is no continuous monitoring.

    Dated: December 5, 2005.
Oscar Morales,
Director, Collection Strategies Division.
[FR Doc. E6-1041 Filed 1-26-06; 8:45 am]

BILLING CODE 6560-50-P


[Federal Register Volume 82, Number 37 (Monday, February 27, 2017)]
[Notices]
[Page 11911]
[FR Doc No: 2017-03761]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #1

    Take notice that the Commission received the following electric
corporate filings:

    Docket Numbers: EC17-83-000.
    Applicants: Chambersburg Energy, LLC, Gans Energy, LLC, Hunlock
Energy, LLC, Springdale Energy, LLC, Bath County Energy, LLC, Allegheny
Energy Supply Company, LLC, Allegheny Generating Company.
    Description: Joint Application for Approval Under Section 203 of
the Federal Power Act and Request for a Shortened Comment Period of
Chambersburg Energy, LLC, et al.
    Filed Date: 2/17/17.
    Accession Number: 20170217-5252.
    Comments Due: 5 p.m. ET 3/10/17.

    Take notice that the Commission received the following electric
rate filings:

    Docket Numbers: ER16-2654-002.
    Applicants: City Point Energy Center, LLC.
    Description: Notice of Non-Material Change in Status of City Point
Energy Center, LLC.
    Filed Date: 2/17/17.
    Accession Number: 20170217-5248.
    Comments Due: 5 p.m. ET 3/10/17.

    Docket Numbers: ER17-985-001.
    Applicants: Midcontinent Independent System Operator, Inc.
    Description: Tariff Amendment: 2017-02-17_Amendment to SA 2907
RockGen-ATC Amended GIA J382/J384 to be effective 2/2/2017.
    Filed Date: 2/17/17.
    Accession Number: 20170217-5206.
    Comments Due: 5 p.m. ET 3/10/17.

    Docket Numbers: ER17-1001-000.
    Applicants: Midcontinent Independent System Operator, Inc.
    Description: Sec.  205(d) Rate Filing: 2017-02-17_SA 2492 MSCPA-
METC Project 1 GIA Termination to be effective 6/1/2016.
    Filed Date: 2/17/17.
    Accession Number: 20170217-5209.
    Comments Due: 5 p.m. ET 3/10/17.

    Docket Numbers: ER17-1002-000.
    Applicants: Optimum Power Investments, LLC.
    Description: Baseline eTariff Filing: Baseline new to be effective
3/31/2017.
    Filed Date: 2/17/17.
    Accession Number: 20170217-5210.
    Comments Due: 5 p.m. ET 3/10/17.

    Docket Numbers: ER17-1003-000.
    Applicants: Tampa Electric Company.
    Description: Tariff Cancellation: Termination of Rate Schedule 95
w_Progress Energy Florida-Phillips Agreement to be effective 2/23/2017.
    Filed Date: 2/21/17.
    Accession Number: 20170221-5128.
    Comments Due: 5 p.m. ET 3/14/17.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified comment date. Protests may be
considered, but intervention is necessary to become a party to the
proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: February 21, 2017.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2017-03761 Filed 2-24-17; 8:45 am]
 BILLING CODE 6717-01-P


[Federal Register: February 17, 2006 (Volume 71, Number 33)]
[Notices]
[Page 8628-8629]
[DOCID:fr17fe06-123]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53267; File No. SR-OCC-2005-25]

Self-Regulatory Organizations; The Options Clearing Corporation;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
Relating to Adjustment Panels

February 9, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on December 23, 2005, The
Options Clearing Corporation (``OCC'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change as
described in Items I, II, and III below, which items have been prepared
primarily by OCC. OCC filed the proposed rule change pursuant to
Section 19(b)(3)(A) of the Act \2\ whereby the proposal was effective
upon filing with the Commission. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The proposed rule change amends certain By-Law provisions in order
to consolidate common policies and procedures relevant to adjustment
panels that act from time to time on behalf of OCC to adjust the terms
of outstanding cleared contracts to reflect events affecting the issuer
of the instrument underlying the relevant contract.

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

    In its filing with the Commission, OCC 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. OCC has prepared summaries, set forth in sections (A),
(B), and (C) below, of the most significant aspects of such
statements.\3\
---------------------------------------------------------------------------

    \3\ The Commission has modified parts of these statements.
---------------------------------------------------------------------------

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

    As currently in effect, Article VI (Clearance of Exchange
Transactions) Section 11 (Adjustments Panel Policies and Procedures)
paragraph (b) of OCC's By-Laws provides that adjustments are to be made
by OCC's Securities Committee and describes factors to be taken into
account by the Securities Committee in making adjustments. Under
Article VI, Section 11(k), also as currently in effect, the authority
of the Securities Committee to make adjustment determinations in
particular cases is delegated to adjustment panels whose actions are
deemed to constitute actions by the Securities Committee. Article VI,
Section 11(k) sets forth procedures governing matters such as
adjustment panel composition and voting. Several other articles of the
By-Laws that are applicable to specific products other than stock
options also provide for adjustment panels and incorporate certain
provisions of the current Article VI, Section 11(k) by reference.
Specifically, these other articles and the relevant sections are:
Article XV (Foreign Currency Options), Section 4; Article XVII (Index
Options), Section 3; Article XX (Cross-Rate Foreign Currency Options),
Section 4; Article XXII (Cash-Settled Foreign Currency Options),
Section 3; Article XXIII (Flexibly Structured Index Options), Section
4; and Article XXIV (BOUNDs), Section 6. These adjustment provisions,
which are generally duplicative of those in Article VI, Section 11(k),
inadvertently omit the conflict of interest provision of Article VI,
Section 11(k) that prohibits persons with a financial interest in the
adjustment from serving on an adjustment panel. Although the adjustment
provisions governing products other than stock options incorporate by
reference some policies and procedures from Article VI, Section 11,
they repeat other provisions.
    In order to correct the inadvertent exclusion of the conflict of
interest provision and to eliminate repetitive language, thereby
decreasing the potential for inadvertent inconsistencies between the
adjustment provisions of the various articles of the By-Laws if one or
more of such provisions were amended in the future, OCC proposes to
revise Section 11 of Article VI to be generally applicable to all
adjustment panels regardless of the product type and to insert cross-
references to Section 11 in the other articles where appropriate. In
addition, OCC is proposing to add Section 11A to Article VI that will
preserve those paragraphs of the existing Section 11 that apply
specifically to stock options.
    Proposed Section 11(a)-(c) of Article VI is largely a restatement
of policies and procedures currently applicable to the Securities
Committee and adjustment panels acting on its behalf as found in
existing Sections 11(b) and (k) of Article VI. In proposed Article VI,
Section 11(a), the list of factors which the Securities Committee may
consider in making an adjustment determination is a comprehensive list
of such factors, some of which may not be applicable to a particular
cleared contract. In proposed Article VI, Section 11(c), the term
``cleared contracts'' replaces references to ``option contracts and
BOUNDs'' in the corresponding sentences of existing Section 11(k).
    Proposed Section 11A of Article VI is a restatement of existing
Section 11(a) and (c)-(j) of Article VI except for revisions to reflect
proper references to Section 11A or Section 11, as applicable.
    To preserve stockholder prerogatives, Article XI (Amendment of the
By-Laws and Rules), Section 1, which requires stockholder approval for
amendments to

specified By-Law provisions, including existing Article VI, Section 11,
is revised to include new Section 11A as well.
    Minor technical changes are made to Article XII, Section 3(a). OCC
is also proposing to delete references to ECU-based foreign currency
options and their treatment by the adjustment panel in Article XV
(Foreign Currency Options), Section 4 and Interpretation .02
thereunder; Article XX, Section 4 and Interpretation .02 thereunder;
and Article XXII, Section 3 because the transition from ECUs to the
euro, which does not have constituent currencies, is complete and
because references to ECUs and EMUs are obsolete.
    OCC believes that the proposed rule change is consistent with the
purposes and requirements of Section 17A of the Act because it is
designed to ensure uniform standards and procedures to the extent
possible for adjustments to the terms of outstanding contracts cleared
by OCC and therefore to promote the prompt and accurate clearance and
settlement of securities transactions. The proposed rule change is not
inconsistent with the rules of OCC, including any rules proposed to be
amended.\4\
---------------------------------------------------------------------------

    \4\ OCC intends to file an amendment to File SR-OCC-2004-21,
which proposes to add a new Article XIV to OCC's By-Laws in
connection with the proposed trading of fixed return options, to
make conforming changes to the adjustment provisions of new Article
XIV.
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    OCC does not believe that the proposed rule change would impose any
burden on competition.

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

    Written comments were not and are not intended to be solicited with
respect to the proposed rule change, and none have been received.

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

    The foregoing proposed rule change has become effective pursuant to
Section 19(b)(3)(A)(iii) of the Act \5\ and Rule 19b-4(f)(4) \6\
thereunder because it effects a change in an existing service of a
registered clearing agency that (i) does not adversely affect the
safeguarding of securities or funds in the custody or control of the
clearing agency or for which it is responsible; and (ii) does not
significantly affect the respective rights or obligations of the
clearing agency or persons using the service. At any time within 60
days of the filing of the proposed rule change, the Commission may
summarily abrogate 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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \6\ 17 CFR 240.19b-4(f)(4).
---------------------------------------------------------------------------

VI. 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 e-mail to<EMAIL_ADDRESS>Please include

File Number SR-OCC-2005-25 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-OCC-2005-25. This file
number should be included on the subject line if e-mail 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 Web site (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 inspection and
copying in the Commission's Public Reference Section, 100 F Street,
NE., Washington, DC 20549. Copies of such filing also will be available
for inspection and copying at the principal office of OCC and on OCC's
Web site at http://www.optionsclearing.com. All comments received will be

posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-OCC-2005-25 and should be submitted on
or before March 10, 2006.

    For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-2298 Filed 2-16-06; 8:45 am]

BILLING CODE 8010-01-P