[Federal Register Volume 85, Number 33 (Wednesday, February 19, 2020)]
[Notices]
[Pages 9494-9503]
[FR Doc No: 2020-03176]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88175; File No. SR-CboeBZX-2019-057]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing of Amendment No. 2 and Order Granting Accelerated Approval of a
Proposed Rule Change, as Modified by Amendment No. 2 thereto, To List
and Trade Shares of the American Century Focused Dynamic Growth ETF and
American Century Focused Large Cap Value ETF Under BZX Rule 14.11(k)

February 12, 2020.

I. Introduction

    On June 6, 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'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to list and trade shares (``Shares'') of the
American Century Focused Dynamic Growth ETF and American Century
Focused Large Cap Value ETF (each a ``Fund'' and, collectively, the
``Funds'') under BZX Rule 14.11(k) (Managed Portfolio Shares).\3\ The
proposed rule change was published for comment in the Federal Register
on June 25, 2019.\4\ On August 2, 2019, pursuant to Section 19(b)(2) of
the Act,\5\ 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.\6\ On September 23, 2019, the Commission
instituted proceedings under Section 19(b)(2)(B) of the Act \7\ to
determine whether to approve or disapprove the proposed rule change.\8\
On December 17, 2019, the Exchange filed Amendment No. 1 to the
proposed rule change, which replaced and superseded the proposed rule
change as originally filed.\9\ On December 17, 2019, the Commission
designated a longer period for action on the proposed rule change.\10\
On February 11, 2020, the Exchange filed Amendment No. 2 to the
proposed rule change, which replaced and superseded the proposed rule
change as modified by Amendment No. 1.\11\ The Commission has received
no comments on the proposed rule change. The Commission is publishing
this notice to solicit comments on Amendment No. 2 from interested
persons, and is approving the proposed rule change, as modified by
Amendment No. 2, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Commission recently approved the Exchange's proposed
rule change to adopt BZX Rule 14.11(k) to permit the listing and
trading of Managed Portfolio Shares. See Securities Exchange Act
Release No. 87759 (December 16, 2019), 84 FR 70223 (December 20,
2019) (SR-CboeBZX-2019-047) (``Managed Portfolio Shares Order'').
    \4\ See Securities Exchange Act Release No. 86155 (June 19,
2019), 84 FR 29912 (``Notice'').
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 86557, 84 FR 39024
(August 8, 2019). The Commission designated September 23, 2019, as
the date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 87059, 84 FR 51215
(September 27, 2019).
    \9\ Amendment No. 1 is available on the Commission's website at
https://www.sec.gov/comments/sr-cboebzx-2019-057/srcboebzx2019057-6555831-200931.pdf.
    \10\ See Securities Exchange Act Release No. 87769, 84 FR 70589
(December 23, 2019). The Commission designated February 20, 2020, as
the date by which the Commission must either approve or disapprove
the proposed rule change.
    \11\ Amendment No. 2 is available on the Commission's website at
https://www.sec.gov/comments/sr-cboebzx-2019-057/srcboebzx2019057.htm.
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II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change, as Modified by Amendment
No. 2

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

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

1. Purpose
    This Amendment No. 2 to SR-CboeBZX-2019-057 amends and replaces in
its entirety Amendment No. 1 to the proposal, originally submitted on
December 17, 2019, which amended and replaced in its entirety the
proposal as originally submitted on June 5, 2019. The Exchange submits
this Amendment No. 2 in order to clarify certain points and add
additional details to the proposal.
    The Exchange received approval to add new Rule 14.11(k) for the
purpose of permitting the listing and trading of Managed Portfolio
Shares, which are securities issued by an actively managed open-end
management investment company,\12\ on December 16, 2019.\13\ Rule
14.11(k)(2)(A) requires the Exchange to file separate proposals

under Section 19(b) of the Act before listing and trading any series of
Managed Portfolio Shares on the Exchange. As such, the Exchange is
submitting this proposal in order to list and trade shares of the
American Century Focused Dynamic Growth ETF and the American Century
Focused Large Cap Value ETF under Rule 14.11(k).
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    \12\ As defined in Rule 14.11(k)(3)(A), the term ``Managed
Portfolio Share'' means a security that (a) represents an interest
in an investment company registered under the Investment Company Act
of 1940 (``Investment Company'') organized as an open-end management
investment company, that invests in a portfolio of securities
selected by the Investment Company's investment adviser consistent
with the Investment Company's investment objectives and policies;
(b) is issued in a Creation Unit (as defined below), or multiples
thereof, in return for a designated portfolio of instruments (and/or
an amount of cash) with a value equal to the next determined net
asset value and delivered to the Authorized Participant (as defined
in the Investment Company's Form N-1A filed with the Commission)
through a Confidential Account; (c) when aggregated into a
Redemption Unit (as defined below), or multiples thereof, may be
redeemed for a designated portfolio of instruments (and/or an amount
of cash) with a value equal to the next determined net asset value
delivered to the Confidential Account (as defined below) for the
benefit of the Authorized Participant; and (d) the portfolio
holdings for which are disclosed within at least 60 days following
the end of every fiscal quarter.
    \13\ See Securities Exchange Act Release No. 87759 (December 16,
2019), 84 FR 70223 (December 20, 2019) (SR-CboeBZX-2019-047).
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Description of the Funds and the Trust
    The shares of each Fund (the ``Shares'') will be issued by American
Century ETF Trust (the ``Trust''), a statutory trust organized under
the laws of the State of Delaware and registered with the Commission as
an open-end management investment company.\14\ The investment adviser
to each Fund will be American Century Investment Management, Inc. (the
``Adviser''). Foreside Fund Services, LLC (the ``Distributor'') will
serve as the distributor of each of the Fund's Shares. All statements
and representations made in this filing regarding the description of
the portfolio or reference assets, limitations on portfolio holdings or
reference assets, dissemination and availability of the Verified
Intraday Indicative Value (``VIIV''),\15\ reference assets, and
intraday indicative values, and the applicability of Exchange rules
shall constitute continued listing requirements for listing the Shares
on the Exchange, as provided under Rule 14.11(a).
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    \14\ The Trust is registered under the 1940 Act. On June 18,
2018, the Trust filed a registration statement on Form N-1A relating
to the Funds (File No. 811-23305) (the ``Registration Statement'').
The Exchange notes that the names of the Funds have been changed
since the Registration Statement was filed and that such names will
be updated in a subsequent filing. The Commission issued an order
granting exemptive relief to the Trust (``Exemptive Order'') under
the 1940 Act on September 10, 2019 (Investment Company Act Release
No. 33620). The Exemptive Order was granted with respect to the
Trust's application for exemptive relief (the ``Exemptive
Application'') (File No. 812-15035). Investments made by the Funds
will comply with the conditions set forth in the Exemptive Order.
The description of the operation of the Trust and the Funds herein
is based, in part, on the Registration Statement. The Exemptive
Order specifically notes that ``granting the requested exemptions is
appropriate in and consistent with the public interest and
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act. It is further
found that the terms of the proposed transactions, including the
consideration to be paid or received, are reasonable and fair and do
not involve overreaching on the part of any person concerned, and
that the proposed transactions are consistent with the policy of
each registered investment company concerned and with the general
purposes of the Act.'' The Exchange notes that the Exemptive
Application incorporates by reference the terms and conditions of
the exemptive order granted to Precidian ETFs Trust, et al. See
Investment Company Act Release Nos. 33440, April 8, 2019 (notice)
and 33477, May 20, 2019 (order).
    \15\ Rule 14.11(k)(3)(B) defines the term VIIV as the indicative
value of a Managed Portfolio Share based on all of the holdings of a
series of Managed Portfolio Shares as of the close of business on
the prior business day and, for corporate actions, based on the
applicable holdings as of the opening of business on the current
business day, priced and disseminated in one second intervals during
Regular Trading Hours (as defined in Rule 1.5(w)) by the Reporting
Authority, as defined below.
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    Rule 14.11(k)(2)(D) provides that if the investment adviser to the
Investment Company issuing Managed Portfolio Shares is registered as a
broker-dealer or is affiliated with a broker-dealer, such investment
adviser will erect and maintain a ``fire wall'' between the investment
adviser and personnel of the broker-dealer or broker-dealer affiliate,
as applicable, with respect to access to information concerning the
composition of and/or changes to such Investment Company portfolio and/
or the Creation Basket.\16\ Any person related to the investment
adviser or Investment Company who makes decisions pertaining to the
Investment Company's portfolio composition or has access to information
regarding the Investment Company's portfolio composition or changes
thereto or the Creation Basket must be subject to procedures designed
to prevent the use and dissemination of material nonpublic information
regarding the applicable Investment Company portfolio or changes
thereto or the Creation Basket.\17\ Rule 14.11(k)(2)(D) is similar to
Rule 14.11(c)(5)(A)(i), related to Index Fund Shares, except that Rule
14.11(k)(2)(D) relates to the establishment of a ``fire wall'' between
the investment adviser and the broker-dealer as applicable to an
Investment Company's portfolio and/or Creation Basket, not an
underlying benchmark index, as is the case with index-based funds. Rule
14.11(k)(2)(D) is also similar to Rule 14.11(i)(7), related to Managed
Fund Shares, except that Rule 14.11(k)(2)(D) relates to the
establishment of a ``fire wall'' between the investment adviser and the
broker-dealer as applicable to an Investment Company's portfolio and
Creation Basket, and not just the underlying portfolio, as is the case
with Managed Fund Shares. The Adviser is not registered as a broker-
dealer, but is affiliated with a broker-dealer and has implemented and
will maintain a ``fire wall'' with respect to such broker-dealer
regarding access to information concerning the composition of and
changes to a Fund's portfolio and/or Creation Basket.
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    \16\ Rule 14.11(k)(3)(E) defines the term ``Creation Basket'' as
on any given business day the names and quantities of the specified
instruments (and/or an amount of cash) that are required for an AP
Representative (as defined below) to deposit in-kind on behalf of an
Authorized Participant in exchange for a Creation Unit and the names
and quantities of the specified instruments (and/or an amount of
cash) that will be transferred in-kind to an AP Representative on
behalf of an Authorized Participant in exchange for a Redemption
Unit, which will be identical and will be transmitted to each AP
Representative before the commencement of trading.
    \17\ An investment adviser to an open-end fund is required to be
registered under the Investment Advisers Act of 1940 (the ``Advisers
Act''). As a result, the Adviser and its related personnel will be
subject to the provisions of Rule 204A-1 under the Advisers Act
relating to codes of ethics. This Rule requires investment advisers
to adopt a code of ethics that reflects its fiduciary obligations as
well as compliance with other applicable securities laws.
Accordingly, procedures designed to prevent the communication and
misuse of non-public information by an investment adviser must be
consistent with Rule 204A-1 under the Advisers Act. In addition,
Rule 206(4)-7 under the Advisers Act makes it unlawful for an
investment adviser to provide investment advice to clients unless
such investment adviser (i) adopts and implements written policies
and procedures reasonably designed to prevent violations, by the
investment adviser and its supervised persons, of the Advisers Act
and the Commission rules adopted thereunder; (ii) reviews, at least
annually, the adequacy of the policies and procedures established
pursuant to subparagraph (i) above and the effectiveness of their
implementation; and (iii) designates an individual (who is a
supervised person) responsible for administering the policies and
procedures adopted under subparagraph (i) above. The Funds will also
comply with the requirements of Regulation Fair Disclosure, as
provided in the Exemptive Application.
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    In the event (a) the Adviser becomes registered as a broker-dealer
or becomes newly affiliated with a broker-dealer, or (b) any new
adviser or sub-adviser is a registered broker-dealer or becomes
affiliated with a broker-dealer, it will implement and maintain a fire
wall with respect to its relevant personnel or its broker-dealer
affiliate regarding access to information concerning the composition
and/or changes to the portfolio and/or Creation Basket. Any person
related to the Adviser or the Trust who makes decisions pertaining to a
Fund's portfolio composition or that has access to information
regarding a Fund's portfolio or changes thereto or the Creation Basket
will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio or changes thereto and the Creation Basket.
    Further, Rule 14.11(k)(2)(E) requires that any person or entity,
including an AP Representative, custodian, Reporting Authority,
distributor, or administrator, who has access to information regarding
the Investment Company's portfolio composition or changes thereto or
the Creation Basket, must be subject to procedures designed to prevent
the use and dissemination of material nonpublic information regarding
the applicable Investment Company

portfolio or changes thereto or the Creation Basket. Moreover, if any
such person or entity is registered as a broker-dealer or affiliated
with a broker-dealer, such person or entity will erect and maintain a
``fire wall'' between the person or entity and the broker-dealer with
respect to access to information concerning the composition and/or
changes to such Investment Company portfolio or Creation Basket. Any
person or entity who has access to information regarding a Fund's
portfolio composition or changes thereto or the Creation Basket will be
subject to procedures designed to prevent the use and dissemination of
material nonpublic information regarding the portfolio composition or
changes thereto or the Creation Basket.
Description of the Funds
American Century Focused Dynamic Growth ETF
    The Fund's holdings will conform to the permissible investments as
set forth in the Exemptive Application and Exemptive Order and the
holdings will be consistent with all requirements in the Exemptive
Application and Exemptive Order.\18\
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    \18\ Pursuant to the Exemptive Order, the permissible
investments include only the following instruments that trade on a
U.S. exchange contemporaneously with the Shares: ETFs and exchange-
traded notes, common stocks, preferred stocks, American depositary
receipts, real estate investment trusts, commodity pools, metals
trusts, currency trusts, and futures for which the reference asset
the Fund may invest in directly or, in the case of an index future,
based on an index of a type of asset that the Fund could invest in
directly; as well as cash and cash equivalents (short-term U.S.
Treasury securities, government money market funds and repurchase
agreements).
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    The Fund seeks long-term capital growth. The portfolio managers
look for stocks of companies they believe will increase in value over
time.
American Century Focused Large Cap Value ETF
    The Fund's holdings will conform to the permissible investments as
set forth in the Exemptive Application and Exemptive Order and the
holdings will be consistent with all requirements in the Exemptive
Application and Exemptive Order.\19\
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    \19\ Pursuant to the Exemptive Order, the permissible
investments include only the following instruments that trade on a
U.S. exchange contemporaneously with the Shares: ETFs and exchange-
traded notes, common stocks, preferred stocks, American depositary
receipts, real estate investment trusts, commodity pools, metals
trusts, currency trusts, and futures for which the reference asset
the Fund may invest in directly or, in the case of an index future,
based on an index of a type of asset that the Fund could invest in
directly; as well as cash and cash equivalents (short-term U.S.
Treasury securities, government money market funds and repurchase
agreements).
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    The Fund seeks long-term capital growth. In selecting stocks for
the Fund, the portfolio managers look for companies whose stock price
may not reflect the company's value, by looking for companies that are
temporarily out of favor in, or whose value is not yet recognized by,
the market.
Investment Restrictions
    The Funds will not purchase any securities that are illiquid
investments at the time of purchase and each Fund's holdings will be
consistent with all requirements described in the Exemptive Application
and Exemptive Order.
    The Shares of each Fund will conform to the initial and continued
listing criteria under Rule 14.11(k). The Funds' holdings will be
limited to and consistent with what is permissible under the Exemptive
Order and described herein.
    Each Fund's investments will be consistent with its investment
objective and will not be used to enhance leverage.
Creations and Redemptions of Shares
    Creations and redemptions of the Shares will occur as described in
Rule 14.11(k). More specifically, in connection with the creation and
redemption of Creation Units \20\ and Redemption Units,\21\ the
delivery or receipt of any portfolio securities in-kind will be
required to be effected through a separate confidential brokerage
account (a ``Confidential Account'').\22\ Authorized Participants (as
defined in the applicable Form N-1A filed with the Commission, ``AP'')
will sign an agreement with an AP Representative \23\ establishing the
Confidential Account for the benefit of the AP. AP Representatives will
be broker-dealers. An AP must be a Depository Trust Company (``DTC'')
Participant that has executed a ``Participant Agreement'' with the
Distributor with respect to the creation and redemption of Creation
Units and Redemption Units and formed a Confidential Account for its
benefit in accordance with the terms of the Participant Agreement. For
purposes of creations or redemptions, all transactions will be effected
through the respective AP's Confidential Account, for the benefit of
the AP, without disclosing the identity of such securities to the AP.
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    \20\ Rule 14.11(k)(3)(F) defines the term ``Creation Unit'' as a
specified minimum number of Managed Portfolio Shares issued by an
Investment Company at the request of an Authorized Participant in
return for a designated portfolio of instruments and/or cash.
    \21\ Rule 14.11(k)(3)(G) defines the term ``Redemption Unit'' as
a specified minimum number of Managed Portfolio Shares that may be
redeemed to an Investment Company at the request of an Authorized
Participant in return for a portfolio of instruments and/or cash.
    \22\ Rule 14.11(k)(3)(D) defines the term ``Confidential
Account'' as an account owned by an Authorized Participant and held
with an AP Representative on behalf of the Authorized Participant.
The account will be established and governed by contractual
agreement between the AP Representative and the Authorized
Participant solely for the purposes of creation and redemption,
while keeping confidential the Creation Basket constituents of each
series of Managed Portfolio Shares, including from the Authorized
Participant. The books and records of the Confidential Account will
be maintained by the AP Representative on behalf of the Authorized
Participant.
    \23\ Rule 14.11(k)(3)(C) defines the term ``AP Representative''
as an unaffiliated broker-dealer, with which an Authorized
Participant has signed an agreement to establish a Confidential
Account for the benefit of such Authorized Participant, that will
deliver or receive, on behalf of the Authorized Participant, all
consideration to or from the Investment Company in a creation or
redemption. An AP Representative will not be permitted to disclose
the Creation Basket to any person, including the Authorized
Participants.
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    Each AP Representative will be given, before the commencement of
trading each Business Day (defined below), the Creation Basket (as
described below) for that day. This information will permit an AP that
has established a Confidential Account with an AP Representative, to
instruct the AP Representative to buy and sell positions in the
portfolio securities to permit creation and redemption of Creation
Units and Redemption Units. Shares of each Fund will be issued and
redeemed in Creation Units and Redemption Units of 5,000 or more
Shares. The Funds will offer and redeem Creation Units and Redemption
Units on a continuous basis at the net asset value (``NAV'') per share
next determined after receipt of an order in proper form. The NAV per
share of each Fund will be determined as of the close of regular
trading on the Exchange on each day that the Exchange is open (a
``Business Day''). The Funds will sell and redeem Creation Units and
Redemption Units only on Business Days.
    To keep costs low and permit each Fund to be as fully invested as
possible, Shares will be purchased and redeemed in Creation Units and
Redemption Units and generally on an in-kind basis. Accordingly, except
where the purchase or redemption will include cash under the
circumstances described in the Exemptive Application, APs will be
required to purchase Creation Units by making an in-kind deposit of
specified instruments (``Deposit Instruments''), and APs redeeming
their Shares will receive an in-kind transfer of specified instruments
(``Redemption

Instruments'') through the AP Representative in their Confidential
Account.\24\ On any given Business Day, the names and quantities of the
instruments that constitute the Deposit Instruments and the names and
quantities of the instruments that constitute the Redemption
Instruments will be identical, and these instruments may be referred
to, in the case of either a purchase or a redemption, as the ``Creation
Basket.''
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    \24\ The Funds must comply with the federal securities laws in
accepting Deposit Instruments and satisfying redemptions with
Redemption Instruments, including that the Deposit Instruments and
Redemption Instruments are sold in transactions that would be exempt
from registration under the 1933 Act.
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Placement of Purchase Orders
    Each Fund will issue Shares through the Distributor on a continuous
basis at NAV. The Exchange represents that the issuance of Shares will
operate in a manner similar to that of other ETFs. Each Fund will issue
Shares only at the NAV per share next determined after an order in
proper form is received.
    In the case of a creation, the AP would enter an irrevocable
creation order with the applicable Fund and direct the AP
Representative to purchase the Deposit Instruments. The AP
Representative would then purchase the necessary securities in the
Confidential Account. In purchasing the necessary securities, the AP
Representative will use methods, such as breaking the transaction into
multiple transactions and transacting in multiple marketplaces, to
avoid revealing the composition of the Creation Basket. Once the
Deposit Instruments have been acquired in the Confidential Account, the
AP Representative would contribute the Deposit Instruments in-kind to
the Fund.
    The Distributor will furnish acknowledgements to those placing such
orders that the orders have been accepted, but the Distributor may
reject any order which is not submitted in proper form, as described in
a Fund's prospectus or Statement of Additional Information (``SAI'').
The NAV of each Fund is expected to be determined once each Business
Day at a time determined by the Trust's Board of Trustees (``Board''),
currently anticipated to be as of the close of the regular trading
session on the Exchange (ordinarily 4:00 p.m. E.T.) (the ``Valuation
Time''). Each Fund will establish a cut-off time (``Order Cut-Off
Time'') for purchase orders in proper form. Such Order Cut-Off Time
will be provided in the Registration Statement. To initiate a purchase
of Shares, an AP must submit to the Distributor an irrevocable order to
purchase such Shares after the most recent prior Valuation Time. All
orders to purchase Creation Units must be received by the Distributor
no later than the Order Cut-Off Time in each case on the date such
order is placed (``Transmittal Date'') for the AP to receive the NAV
per share determined on the Transmittal Date. As with all existing
ETFs, if there is a difference between the NAV attributable to a
Creation Unit and the aggregate market value of the Creation Basket
exchanged for the Creation Unit, the party conveying instruments with
the lower value will also pay to the other an amount in cash equal to
that difference (the ``Balancing Amount'').
    Purchases of Shares will be settled in-kind and/or cash for an
amount equal to the applicable NAV per share purchased plus applicable
transaction fees.\25\ Other than the Balancing Amount, a Fund will
substitute cash only under exceptional circumstances and as set forth
under that Fund's policies and procedures governing the composition of
Creation Baskets.
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    \25\ To the extent that a Fund allows creations or redemptions
to be conducted in cash, such transactions will be effected in the
same manner for all APs transacting in cash.
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Authorized Participant Redemption
    The Shares may be redeemed to a Fund in Redemption Unit size or
multiples thereof as described below. Redemption orders of Redemption
Units must be placed by an AP (``AP Redemption Order''). Each Fund will
establish in its Registration Statement an Order Cut-Off Time for
redemption orders of Redemption Units in proper form. Redemption Units
of the applicable Fund will be redeemable at their NAV per share next
determined after receipt of a request for redemption by the Trust in
the manner specified below before the Order Cut-Off Time. A transaction
fee may also be imposed on redemption orders. To initiate an AP
Redemption Order, an AP must submit to the Distributor an irrevocable
order to redeem such Redemption Unit after the most recent prior
Valuation Time, but not later than the Order Cut-Off Time.
    In the case of a redemption, the AP would enter into an irrevocable
redemption order, and then the applicable Fund would instruct its
custodian to deliver the Redemption Instruments to the appropriate
Confidential Account. The Authorized Participant would direct the AP
Representative on when that day to liquidate those securities. As with
the purchase of securities, the AP Representative will use methods,
such as breaking the transaction into multiple transactions and
transacting in multiple marketplaces, to avoid revealing the
composition of the Creation Basket.
    Consistent with the provisions of Section 22(e) of the 1940 Act and
Rule 22e-2 thereunder, the right to redeem will not be suspended, nor
payment upon redemption delayed, except for: (1) Any period during
which the Exchange is closed other than customary weekend and holiday
closings, (2) any period during which trading on the Exchange is
restricted, (3) any period during which an emergency exists as a result
of which disposal by a Fund of securities owned by it is not reasonably
practicable or it is not reasonably practicable for a Fund to determine
its NAV, and (4) for such other periods as the Commission may by order
permit for the protection of shareholders.
    Redemptions will occur primarily in-kind, although redemption
payments may also be made partly or wholly in cash.\26\ The Participant
Agreement signed by each AP will require establishment of a
Confidential Account to receive distributions of securities in-kind
upon redemption. Each AP will be required to open a Confidential
Account with an AP Representative in order to facilitate orderly
processing of redemptions. Other than the Balancing Amount, a Fund will
substitute cash only under exceptional circumstances and as set forth
under that Fund's policies and procedures governing the composition of
Creation Baskets.\27\
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    \26\ The value of any positions not susceptible to in-kind
settlement may be paid in cash.
    \27\ To the extent that a Fund allows creations or redemptions
to be conducted in cash, such transactions will be effected in the
same manner for all APs transacting in cash.
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Net Asset Value
    The NAV per share of a Fund will be computed by dividing the value
of the net assets of a Fund (i.e., the value of its total assets less
total liabilities) by the total number of Shares of a Fund outstanding,
rounded to the nearest cent. Expenses and fees, including, without
limitation, the management, administration and distribution fees, will
be accrued daily and taken into account for purposes of determining
NAV. Interest and investment income on a Fund's assets accrue daily and
will be included in the Fund's total assets. The NAV per share for a
Fund will be calculated by a Fund's administrator and determined as of
the close of the regular trading session on the Exchange (ordinarily 4
p.m., E.T.) on each day that the Exchange is open.

    Exchange-traded instruments will be valued at market value, which
will generally be determined using the last reported official closing
or last trading price on the exchange or market on which the securities
are primarily traded at the time of valuation. Other holdings of the
Funds will generally be valued on the basis of independent pricing
services, quotes obtained from brokers and dealers or price quotations
or other equivalent indications of value provided by a third-party
pricing service, reported net asset value, or at cost.
Availability of Information
    The Funds' website (www.americancenturyetfs.com), which will be
publicly available prior to the listing and trading of Shares, will
include a form of the prospectus for each Fund that may be downloaded.
The Funds' website will include additional quantitative information
updated on a daily basis, including, for each Fund, the prior Business
Day's NAV, market closing price or mid-point of the bid/ask spread at
the time of calculation of such NAV (the ``Bid/Ask Price''),\28\ and a
calculation of the premium and discount of the market closing price or
Bid/Ask Price against the NAV. In addition, the Funds will provide any
other information on their website regarding premiums/discounts that
ETFs registered under the 1940 Act are required to provide or that are
otherwise required under the Exemptive Order. The website and
information will be publicly available at no charge.
---------------------------------------------------------------------------

    \28\ The Bid/Ask Price of a Fund will be determined using the
mid-point between the current NBB and NBO as of the time of
calculation of a Fund's NAV. The records relating to Bid/Ask Prices
will be retained by each Fund and/or its service providers.
---------------------------------------------------------------------------

    Each Fund's SAI and shareholder reports will be available free upon
request from the Trust. These documents and forms may be viewed on-
screen or downloaded from the Commission's website at www.sec.gov.
    Information regarding market price and trading volume of the Shares
will be continually available on a real-time basis throughout the day
on brokers' computer screens and other electronic services. Quotation
and last sale information for the Shares will be available via the
Consolidated Tape Association (``CTA'') high-speed line. In addition,
the VIIV, as defined in Rule 14.11(k)(3)(B) and as described further
below, will be widely disseminated by the Reporting Authority \29\ and/
or one or more major market data vendors in one-second intervals during
Regular Trading Hours.
---------------------------------------------------------------------------

    \29\ Rule 14.11(k)(3)(H) defines the term ``Reporting
Authority'' in respect of a particular series of Managed Portfolio
Shares as the Exchange, the exchange that lists a particular series
of Managed Portfolio Shares (if the Exchange is trading such series
pursuant to unlisted trading privileges), an institution, or a
reporting service designated by the Investment Company as the
official source for calculating and reporting information relating
to such series, including, the net asset value, the Verified
Intraday Indicative Value, or other information relating to the
issuance, redemption or trading of Managed Portfolio Shares. A
series of Managed Portfolio Shares may have more than one Reporting
Authority, each having different functions.
---------------------------------------------------------------------------

Dissemination of the VIIV
    With respect to trading of the Shares, the ability of market
participants to buy and sell Shares at prices near the VIIV is
dependent upon their assessment that the VIIV is a reliable, indicative
real-time value for a Fund's underlying holdings. Market participants
are expected to accept the VIIV as a reliable, indicative real-time
value because (1) the VIIV will be calculated and disseminated based on
a Fund's actual portfolio holdings, (2) the securities in which a Fund
plans to invest are generally highly liquid and actively traded and
trade at the same time as the Funds and therefore generally have
accurate real time pricing available, and (3) market participants will
have a daily opportunity to evaluate whether the VIIV at or near the
close of trading is indeed predictive of the actual NAV. The VIIV for
each Fund will be disseminated by the Reporting Authority and/or one or
more major market data vendors in one-second intervals during Regular
Trading Hours. For purposes of the VIIV, securities held by a Fund will
be valued throughout the day based on the mid-point between the
disseminated current NBB and NBO. If the Adviser determines that a
portfolio security does not have a readily available market quotation,
that fact along with the identity and weighting of that security in a
Fund's VIIV calculation will be publicly disclosed on the Fund's
website.
Trading Halts
    With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares of a Fund. The Exchange will halt trading in the
Shares under the conditions specified in BZX Rule 11.18. Trading may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable, including whether
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present. Trading in the Shares also will be
subject to Rule 14.11(k)(4)(B)(iii)(a) and (b), which set forth
circumstances under which trading in the Shares of the Funds will be
halted.
    Specifically, Rule 14.11(k)(4)(B)(iii)(a) provides that the
Exchange may consider all relevant factors in exercising its discretion
to halt trading in a series of Managed Portfolio Shares. Trading may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the series of Managed Portfolio Shares
inadvisable. These may include: (i) The extent to which trading is not
occurring in the securities and/or the financial instruments composing
the portfolio; or (ii) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present.\30\ The Adviser has represented to the Exchange
that it will provide the Exchange with prompt notification upon the
existence of any such condition or set of conditions.
---------------------------------------------------------------------------

    \30\ The Exemptive Application provides that the Investment
Company or their agent will request that the Exchange halt trading
in the applicable series of Managed Portfolio Shares where: (i) The
intraday indicative values calculated by the calculation engines
differ by more than 25 basis points for 60 seconds in connection
with pricing of the Verified Intraday Indicative Value; or (ii)
holdings representing 10% or more of a series of Managed Portfolio
Shares' portfolio have become subject to a trading halt or otherwise
do not have readily available market quotations. Any such requests
will be one of many factors considered in order to determine whether
to halt trading in a series of Managed Portfolio Shares and the
Exchange retains sole discretion in determining whether trading
should be halted. As provided in the Exemptive Application, each
series of Managed Portfolio Shares would employ a pricing
verification agent to continuously compare two intraday indicative
values during Regular Trading Hours in order to ensure the accuracy
of the Verified Intraday Indicative Value.
---------------------------------------------------------------------------

    Rule 14.11(k)(4)(B)(iii)(b) provides that, if the Exchange becomes
aware that: (i) The Verified Intraday Indicative Value of a series of
Managed Portfolio Shares is not being calculated or disseminated in one
second intervals, as required; (ii) the net asset value with respect to
a series of Managed Portfolio Shares is not disseminated to all market
participants at the same time; (iii) the holdings of a series of
Managed Portfolio Shares are not made available on at least a quarterly
basis as required under the 1940 Act; or (iv) such holdings are not
made available to all market participants at the same time, (except as
otherwise permitted under the currently applicable exemptive order or
no-action relief granted by the Commission or Commission staff to the
Investment Company with respect to the

series of Managed Portfolio Shares), it will halt trading in such
series until such time as the Verified Intraday Indicative Value, the
net asset value, or the holdings are available, as required.
Trading Rules
    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Shares will trade on
the Exchange only during Regular Trading Hours as provided in Rule
14.11(k)(2)(B). The Exchange has appropriate rules in place to
facilitate trading during all trading sessions in which the Shares will
trade. As provided in BZX Rule 11.11(a), the minimum price variation
for quoting and entry of orders in securities traded on the Exchange is
$0.01, with the exception of securities that are priced less than
$1.00, for which the minimum price variation for order entry is
$0.0001.
    The Shares will conform to the initial and continued listing
criteria under Rule 14.11(k) as well as all terms in the Exemptive
Order. The Exchange represents that, for initial and/or continued
listing, each Fund will be in compliance with Rule 10A-3 under the
Act.\31\ A minimum of 100,000 Shares of each Fund will be outstanding
at the commencement of trading on the Exchange. The Exchange has
obtained a representation from the issuer of the Shares of each Fund
that the NAV per share of each Fund will be calculated daily and will
be made available to all market participants at the same time.
---------------------------------------------------------------------------

    \31\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Surveillance
    The Exchange believes that its surveillance procedures are adequate
to properly monitor the trading of the Shares on the Exchange during
all trading sessions and to deter and detect violations of Exchange
rules and the applicable federal securities laws. Trading of the Shares
through the Exchange will be subject to the Exchange's surveillance
procedures for derivative products, including Managed Portfolio Shares.
As part of these surveillance procedures and consistent with Rule
14.11(k)(2)(C), the Adviser will upon request make available to the
Exchange and/or FINRA, on behalf of the Exchange, the daily portfolio
holdings of a Fund. The issuer has represented to the Exchange that it
will advise the Exchange of any failure by a Fund to comply with the
continued listing requirements, and, pursuant to its obligations under
Section 19(g)(1) of the Exchange Act, the Exchange will surveil for
compliance with the continued listing requirements. If a Fund is not in
compliance with the applicable listing requirements, the Exchange will
commence delisting procedures under Exchange Rule 14.12.
    The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed regarding trading in the Shares and the
underlying exchange-traded instruments with other markets and other
entities that are members of the Intermarket Surveillance Group
(``ISG''), and the Exchange or FINRA, on behalf of the Exchange, or
both, may obtain trading information regarding trading such securities
from such markets and other entities. In addition, the Exchange may
obtain information regarding trading in the Shares and the underlying
exchange-traded instruments from markets and other entities that are
members of ISG or with which the Exchange has in place a comprehensive
surveillance sharing agreement.\32\
---------------------------------------------------------------------------

    \32\ For a list of the current members of ISG, see
www.isgportal.org.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the
distribution of material, non-public information by its employees.
Information Circular
    Prior to the commencement of trading, the Exchange will inform its
members in an Information Circular (``Circular'') of the special
characteristics and risks associated with trading the Shares.
Specifically, the Circular will discuss the following: (1) The
procedures for purchases and redemptions of Shares; (2) BZX Rule 3.7,
which imposes suitability obligations on Exchange members with respect
to recommending transactions in the Shares to customers; (3) how
information regarding the VIIV is disseminated; (4) the requirement
that members deliver a prospectus to investors purchasing newly issued
Shares prior to or concurrently with the confirmation of a transaction;
(5) trading information; and (6) that the portfolio holdings will be
disclosed within at least 60 days following the end of every fiscal
quarter.
    In addition, the Circular will reference that the Funds are subject
to various fees and expenses described in the Registration Statement.
The Circular will discuss any exemptive, no-action, and interpretive
relief granted by the Commission from any rules under the Act. The
Circular will also disclose that the NAV for the Shares will be
calculated after 4 p.m., E.T. each trading day.
2. Statutory Basis
    The Exchange believes that this proposal is consistent with Section
6(b) of the Act \33\ in general and Section 6(b)(5) of the Act \34\ 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.
---------------------------------------------------------------------------

    \33\ 15 U.S.C. 78f.
    \34\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that this proposed rule change is designed to
prevent fraudulent and manipulative acts and practices in that the
Funds would meet each of the rules relating to listing and trading of
Managed Portfolio Shares and, to the extent that a Fund is not in
compliance with such rules, the Exchange would either prevent that Fund
from listing and trading if it hadn't started trading on the Exchange
or would commence delisting procedures under Exchange Rule 14.12. More
specifically, the Exchange will consider the suspension of trading in,
and will commence delisting proceedings under Rule 14.12 for, a Fund
under any of the following circumstances: (a) If, following the initial
twelve-month period after commencement of trading on the Exchange,
there are fewer than 50 beneficial holders of the Fund for 30 or more
consecutive trading days; (b) if the Exchange has halted trading in a
Fund because the VIIV is interrupted pursuant to Rule
14.11(k)(4)(B)(iii)(b) and such interruption persists past the trading
day in which it occurred or is no longer available; (c) if the Exchange
has halted trading in a Fund because the net asset value with respect
to such Fund is not disseminated to all market participants at the same
time, the holdings of such Fund are not made available on at least a
quarterly basis as required under the 1940 Act, or such holdings are
not made available to all market participants at the same time pursuant
to Rule 14.11(k)(4)(B)(iii)(b) and such issue persists past the trading
day in which it occurred; (d) if the Exchange has halted trading in the
Fund pursuant to Rule 14.11(k)(4)(B)(iii)(a) and such issue persists
past the trading day in which it occurred; (e) if the Fund has failed
to file any filings required by the Commission or if the Exchange is
aware that the Fund is not in compliance with the conditions of any
currently

applicable exemptive order or no-action relief granted by the
Commission or Commission staff with respect to the Fund; (f) if any of
the continued listing requirements set forth in Rule 14.11(k) are not
continuously maintained; (g) if any of the applicable Continued Listing
Representations, as defined in Rule 14.11(a), for the Fund are not
continuously met; or (h) if such other event shall occur or condition
exists which, in the opinion of the Exchange, makes further dealings on
the Exchange inadvisable.
    The Adviser is not registered as a broker-dealer, but is affiliated
with a broker-dealer and has implemented and will maintain a ``fire
wall'' with respect to such affiliate broker-dealer regarding access to
information concerning the composition and/or changes to a Fund's
portfolio and Creation Basket.
    In the event (a) the Adviser becomes registered as a broker-dealer
or becomes newly affiliated with a broker-dealer, or (b) any new
adviser or sub-adviser is a registered broker-dealer or becomes
affiliated with a broker-dealer, it will implement and maintain a fire
wall with respect to its relevant personnel or its broker-dealer
affiliate regarding access to information concerning the composition
and/or changes to the portfolio and/or Creation Basket. Any person
related to the Adviser or the Trust who makes decisions pertaining to a
Fund's portfolio composition or that has access to information
regarding a Fund's portfolio or changes thereto or the Creation Basket
will be subject to procedures designed to prevent the use and
dissemination of material non-public information regarding such
portfolio or changes thereto and the Creation Basket.
    Further, Rule 14.11(k)(2)(E) requires that any person or entity,
including an AP Representative, custodian, Reporting Authority,
distributor, or administrator, who has access to information regarding
the Investment Company's portfolio composition or changes thereto or
the Creation Basket, must be subject to procedures designed to prevent
the use and dissemination of material nonpublic information regarding
the applicable Investment Company portfolio or changes thereto or the
Creation Basket. Moreover, if any such person or entity is registered
as a broker-dealer or affiliated with a broker-dealer, such person or
entity will erect and maintain a ``fire wall'' between the person or
entity and the broker-dealer with respect to access to information
concerning the composition and/or changes to such Investment Company
portfolio or Creation Basket. Any person or entity who has access to
information regarding a Fund's portfolio composition or changes thereto
or the Creation Basket will be subject to procedures designed to
prevent the use and dissemination of material nonpublic information
regarding the portfolio or changes thereto or the Creation Basket.
    The Exchange further believes that Rule 14.11(k) is designed to
prevent fraudulent and manipulative acts and practices related to the
listing and trading of Managed Portfolio Shares because it provides
meaningful requirements about both the data that will be made publicly
available about the Shares as well as the information that will only be
available to certain parties and the controls on such information.
Specifically, the Exchange believes that the requirements related to
information protection enumerated under Rule 14.11(k)(2)(E) will act as
a strong safeguard against misuse and improper dissemination of
information related to a Fund's portfolio composition or changes
thereto or the Creation Basket. The requirement that any person or
entity implement procedures to prevent the use and dissemination of
material nonpublic information regarding the portfolio or Creation
Basket will act to prevent any individual or entity from sharing such
information externally and the internal ``fire wall'' requirements
applicable where an entity is a registered broker-dealer or affiliated
with a broker-dealer will act to make sure that no entity will be able
to misuse the data for their own purposes. As such, the Exchange
believes that this proposal is designed to prevent fraudulent and
manipulative acts and practices.
    The Exchange further believes that the proposal is designed to
prevent fraudulent and manipulative acts and practices related to the
listing and trading of Managed Portfolio Shares and to promote just and
equitable principles of trade and to protect investors and the public
interest in that the Exchange would halt trading under certain
circumstances under which trading in the Shares of a Fund may be
inadvisable. Specifically, trading in the Shares will be subject to
Rule 14.11(k)(4)(B)(iii)(a), which provides that the Exchange may
consider all relevant factors in exercising its discretion to halt
trading in a series of Managed Portfolio Shares. Trading may be halted
because of market conditions or for reasons that, in the view of the
Exchange, make trading in the series of Managed Portfolio Shares
inadvisable. These may include: (i) the extent to which trading is not
occurring in the securities and/or the financial instruments composing
the portfolio; or (ii) whether other unusual conditions or
circumstances detrimental to the maintenance of a fair and orderly
market are present.\35\ The Adviser has represented to the Exchange
that it will provide the Exchange with prompt notification upon the
existence of any such condition or set of conditions. Trading in the
Shares will also be subject to Rule 14.11(k)(4)(B)(iii)(b), which
provides that if the Exchange becomes aware that: (i) The Verified
Intraday Indicative Value of a series of Managed Portfolio Shares is
not being calculated or disseminated in one second intervals, as
required; (ii) the net asset value with respect to a series of Managed
Portfolio Shares is not disseminated to all market participants at the
same time; (iii) the holdings of a series of Managed Portfolio Shares
are not made available on at least a quarterly basis as required under
the 1940 Act; or (iv) such holdings are not made available to all
market participants at the same time, (except as otherwise permitted
under the currently applicable exemptive order or no-action relief
granted by the Commission or Commission staff to the Investment Company
with respect to the series of Managed Portfolio Shares), it will halt
trading in such series until such time as the Verified Intraday
Indicative Value, the net asset value, or the holdings are available,
as required.
---------------------------------------------------------------------------

    \35\ See supra note 30.
---------------------------------------------------------------------------

    With respect to the proposed listing and trading of Shares of the
Funds, the Exchange believes that the proposed rule change is designed
to prevent fraudulent and manipulative acts and practices in that the
Shares will be listed and traded on the Exchange pursuant to the
initial and continued listing criteria in Rule 14.11(k). Each Fund's
holdings will conform to the permissible investments as set forth in
the Exemptive Application and Exemptive Order. The Exchange or FINRA,
on behalf of the Exchange, or both, will communicate as needed
regarding trading in the Shares and the underlying exchange-traded
instruments with other markets and other entities that are members of
the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both,
may obtain trading information regarding trading such instruments from
such markets and other entities. In addition, the Exchange may obtain
information regarding trading in the Shares and the underlying
exchange-traded instruments from markets and other entities that are
members of ISG or with which the

Exchange has in place a comprehensive surveillance sharing agreement.
    With respect to trading of Shares of the Funds, the ability of
market participants to buy and sell Shares at prices near the VIIV is
dependent upon their assessment that the VIIV is a reliable, indicative
real-time value for a Fund's underlying holdings. Market participants
are expected to accept the VIIV as a reliable, indicative real-time
value because (1) the VIIV will be calculated and disseminated based on
a Fund's actual portfolio holdings, (2) the securities in which the
Funds plan to invest are generally highly liquid and actively traded
and trade at the same time as the Funds and therefore generally have
accurate real time pricing available, and (3) market participants will
have a daily opportunity to evaluate whether the VIIV at or near the
close of trading is indeed predictive of the actual NAV.
    The proposed rule change is designed to promote just and equitable
principles of trade and to protect investors and the public interest in
that the Exchange will obtain a representation that the NAV per share
of the Funds will be calculated daily and that the NAV will be made
available to all market participants at the same time. Investors can
also obtain a Fund's SAI, shareholder reports, Form N-CSR, and Form N-
PORT. A Fund's SAI and shareholder reports will be available free upon
request from the applicable fund, and those documents and the Form N-
CSR and Form N-PORT may be viewed on-screen or downloaded from the
Commission's website. In addition, with respect to the Funds, a large
amount of information will be publicly available regarding the Funds
and the Shares, thereby promoting market transparency. Quotation and
last sale information for the Shares will be available via the CTA
high-speed line. Information regarding the VIIV will be widely
disseminated every second throughout Regular Trading Hours by the
Reporting Authority and/or one or more major market data vendors. The
website for the Funds will include a prospectus for the Funds that may
be downloaded, and additional data relating to NAV and other applicable
quantitative information, updated on a daily basis.
    Moreover, prior to the commencement of trading, the Exchange will
inform its members in a Circular of the special characteristics and
risks associated with trading the Shares. The Exchange will halt
trading in the Shares under the conditions specified in BZX Rule 11.18
or for reasons that, in the view of the Exchange, make trading in the
Shares inadvisable. Trading in the Shares will be subject to Rule
14.11(k)(4)(B)(iii)(a) and (b), which set forth circumstances under
which Shares of a Fund will be halted.
    In addition, as noted above, investors will have ready access to
the VIIV, and quotation and last sale information for the Shares. The
Shares will conform to the initial and continued listing criteria under
Rule 14.11(k). Each Fund's holdings will be limited to and consistent
with what is permissible under the Exemptive Order. Each Fund's
investments will be consistent with its investment objective and will
not be used to enhance leverage.
    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
actively-managed exchange-traded products that will enhance competition
among market participants, to the benefit of investors and the
marketplace. As noted above, the Exchange has in place surveillance
procedures relating to trading in the Shares and may obtain information
via ISG from other exchanges that are members of ISG or with which the
Exchange has entered into a comprehensive surveillance sharing
agreement. In addition, as noted above, investors will have ready
access to information regarding the VIIV and quotation and last sale
information for the Shares.
    For the above reasons, the Exchange believes that the proposed rule
change is consistent with the requirements of Section 6(b)(5) of the
Act.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purpose of the Act. The Exchange notes that the
proposed rule change, rather will facilitate the listing and trading of
actively-managed exchange-traded products that will enhance competition
among both market participants and listing venues, to the benefit of
investors and the marketplace.

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

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

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change, as modified by Amendment No. 2, is consistent with the Act and
rules and regulations thereunder applicable to a national securities
exchange.\36\ In particular, the Commission finds that the proposed
rule change, as modified by Amendment No. 2, is consistent with Section
6(b)(5) of the Act,\37\ which requires, among other things, that the
Exchange's rules be 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.
---------------------------------------------------------------------------

    \36\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Commission believes that the proposal is reasonably designed to
promote fair disclosure of information that may be necessary to price
the Shares appropriately and to prevent trading in the Shares when a
reasonable degree of certain pricing transparency cannot be assured. As
such, the Commission believes the proposal is reasonably designed to
maintain a fair and orderly market for trading the Shares. The
Commission also finds that the proposal is consistent with Section
11A(a)(1)(C)(iii) of the Act, which sets forth Congress's finding that
it is in the public interest and appropriate for the protection of
investors and the maintenance of fair and orderly markets to assure the
availability to brokers, dealers, and investors of information with
respect to quotations for, and transactions in, securities.
    Specifically, the Commission notes that the Exchange has obtained a
representation from the issuer that the NAV per Share of each Fund will
be calculated daily and will be made available to all market
participants at the same time.\38\ Information regarding market price
and trading volume of the Shares will be continually available on a
real-time basis throughout the day on brokers' computer screens and
other electronic services. Quotation and last sale information for the
Shares will be available via the Consolidated Tape Association high-
speed line. In addition, the VIIV will be widely disseminated by the
Reporting Authority and/or one or more major market data vendors in
one-second intervals during Regular Trading Hours, and must be
disseminated to all market

participants at the same time.\39\ Moreover, the Funds' website will
include a form of the prospectus and additional data relating to NAV
and other applicable quantitative information for each Fund, including
any information regarding premiums/discounts that ETFs registered under
the 1940 Act are required to provide or that are otherwise required
under the Exemptive Order. Such website and information will be
publicly available at no charge.
---------------------------------------------------------------------------

    \38\ See BZX Rule 14.11(k)(4)(A)(ii).
    \39\ See BZX Rule 14.11(k)(4)(B)(i).
---------------------------------------------------------------------------

    The Commission also notes that the Exchange's rules regarding
trading halts help to ensure the maintenance of fair and orderly
markets for the Shares. Specifically, pursuant to its rules, the
Exchange may consider all relevant factors in exercising its discretion
to halt trading in the Shares and will halt trading in the Shares under
the conditions specified in BZX Rule 11.18. Trading may be halted
because of market conditions or for reasons that, in the view of the
Exchange, make trading in the Shares inadvisable, including (1) the
extent to which trading is not occurring in the securities and/or the
financial instruments composing the portfolio; or (2) whether other
unusual conditions or circumstances detrimental to the maintenance of a
fair and orderly market are present.\40\ Trading in the Shares also
will be subject to BZX Rule 14.11(k)(4)(B)(iii)(b), which sets forth
additional circumstances under which trading in the Shares will be
halted.
---------------------------------------------------------------------------

    \40\ See BZX Rule 14.11(k)(4)(B)(iii)(a).
---------------------------------------------------------------------------

    The Commission also believes that the proposal is reasonably
designed to help prevent fraudulent and manipulative acts and
practices. The Exchange represents that it has a general policy
prohibiting the distribution of material, non-public information by its
employees. The Exchange states that the Adviser is not registered as a
broker-dealer, but is affiliated with a broker-dealer and has
implemented and will maintain a ``fire wall'' with respect to its
broker-dealer affiliate regarding access to information concerning the
composition of and/or changes to the Funds' portfolios and Creation
Baskets. Further, the Commission notes that any person related to the
Funds' investment adviser or to the Trust who makes decisions
pertaining to a Fund's portfolio composition or has access to
information regarding the Fund's portfolio composition or changes
thereto or the Creation Basket must be subject to procedures designed
to prevent the use and dissemination of material nonpublic information
regarding the applicable Fund portfolio or changes thereto or the
Creation Basket.\41\ In addition, any person or entity, including an AP
Representative, custodian, Reporting Authority, distributor, or
administrator, who has access to information regarding a Fund's
portfolio composition or changes thereto or its Creation Basket, must
be subject to procedures designed to prevent the use and dissemination
of material nonpublic information regarding the applicable Fund
portfolio or changes thereto or the Creation Basket.\42\ Moreover, if
any such person or entity is registered as a broker-dealer or
affiliated with a broker-dealer, such person or entity must erect and
maintain a ``fire wall'' between the person or entity and the broker-
dealer with respect to access to information concerning the composition
of and/or changes to such Fund's portfolio and/or Creation Basket.\43\
Finally, the Exchange represents that trading of the Shares through the
Exchange will be subject to the Exchange's surveillance procedures for
derivative products, including Managed Portfolio Shares,\44\ and that
its surveillance procedures are adequate to properly monitor the
trading of the Shares on the Exchange during all trading sessions and
to deter and detect violations of Exchange rules and the applicable
federal securities laws.
---------------------------------------------------------------------------

    \41\ See BZX Rule 14.11(k)(2)(D). The Exchange represents that
any person related to the Adviser or the Trust who makes decisions
pertaining to a Fund's portfolio composition or that has access to
information regarding a Fund's portfolio or changes thereto or the
Creation Basket will be subject to procedures designed to prevent
the use and dissemination of material non-public information
regarding such portfolio or changes thereto and the Creation Basket.
    \42\ See BZX Rule 14.11(k)(2)(E).
    \43\ See id. The Exchange represents that any person or entity
who has access to information regarding a Fund's portfolio
composition or changes thereto or the Creation Basket will be
subject to procedures designed to prevent the use and dissemination
of material nonpublic information regarding the portfolio
composition or changes thereto or the Creation Basket.
    \44\ See BZX Rule 14.11(k)(2)(C), which requires, as part of the
surveillance procedures for Managed Portfolio Shares, the Funds'
investment adviser to, upon request by the Exchange or the Financial
Industry Regulatory Authority (``FINRA''), on behalf of the
Exchange, make available to the Exchange or FINRA the daily
portfolio holdings of each series of Managed Portfolio Shares.
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    The Exchange deems the Shares to be equity securities, thus
rendering trading in the Shares subject to the Exchange's existing
rules governing the trading of equity securities. Moreover, prior to
the commencement of trading, the Exchange will inform its members in a
Circular of the special characteristics and risks associated with
trading the Shares.\45\
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    \45\ The Exchange represents that the Circular will discuss the
following: (1) Procedures for purchases and redemptions of Shares;
(2) BZX Rule 3.7, which imposes suitability obligations on Exchange
members with respect to recommending transactions in the Shares to
customers; (3) how information regarding the VIIV is disseminated;
(4) the requirement that members deliver a prospectus to investors
purchasing newly issued shares prior to or concurrently with the
confirmation of a transaction; (5) trading information; and (6) that
the portfolio holdings will be disclosed within at least 60 days
following the end of every fiscal quarter.
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    In support of this proposal, the Exchange represents that:
    (1) The Shares will conform to the initial and continued listing
criteria under BZX Rule 14.11(k).
    (2) A minimum of 100,000 Shares of each Fund will be outstanding at
the commencement of trading on the Exchange.
    (3) The Exchange or FINRA, on behalf of the Exchange, or both, will
communicate as needed, and may obtain trading information, regarding
trading in the Shares and the underlying exchange-traded instruments
with other markets and other entities that are members of the ISG. In
addition, the Exchange may obtain information regarding trading in the
Shares and the underlying exchange-traded instruments from markets and
other entities with which the Exchange has in place a comprehensive
surveillance sharing agreement.
    (4) The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions in which the Shares trade.
    (5) For initial and continued listing, each Fund will be in
compliance with Rule 10A-3 under the Act.\46\
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    \46\ See 17 CFR 240.10A-3.
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    (6) Each Fund's holdings will conform to the permissible
investments as set forth in the Exemptive Application and Exemptive
Order, and investments made by the Funds will be consistent with all
requirements set forth in the Exemptive Application and Exemptive
Order. Each Fund's investments will be consistent with its investment
objective and will not be used to enhance leverage.
    The Exchange represents that all statements and representations
made in the filing regarding: (1) The description of the portfolio or
reference assets; (2) limitations on portfolio holdings or reference
assets; (3) dissemination and availability of the VIIV, reference
assets, and intraday indicative values; and (4) the applicability of
Exchange rules constitute continued listing requirements for listing
the Shares on the Exchange. In addition, the Exchange represents that
the issuer will advise the Exchange of any failure by a Fund to comply
with the continued listing requirements and, pursuant to its
obligations under Section 19(g)(1) of the

Act, the Exchange will surveil for compliance with the continued
listing requirements. If a Fund is not in compliance with the
applicable listing requirements, the Exchange will commence delisting
procedures under BZX Rule 14.12.

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

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-CboeBZX-2019-057 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CboeBZX-2019-057. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of the filing also will be available for inspection and
copying at the principal office of the Exchange. All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-CboeBZX-2019-057, and should be
submitted on or before March 11, 2020.

V. Accelerated Approval of Proposed Rule Change, as Modified by
Amendment No. 2

    The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 2, prior to the thirtieth day
after the date of publication of notice of the filing of Amendment No.
2 in the Federal Register. In Amendment No. 2, the Exchange modified
the description of each Fund's investments and conformed the
description of BZX Rule 14.11(k) to the final rule approved in the
Managed Portfolio Shares Order. Amendment No. 2 also provides other
clarifications and additional information to the proposed rule
change.\47\ The changes and additional information in Amendment No. 2
assist the Commission in finding that the proposal is consistent with
the Exchange Act. Accordingly, the Commission finds good cause,
pursuant to Section 19(b)(2) of the Exchange Act,\48\ to approve the
proposed rule change, as modified by Amendment No. 2, on an accelerated
basis.
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    \47\ See Amendment No. 2, supra note 11.
    \48\ 15 U.S.C. 78s(b)(2).
    \49\ 15 U.S.C. 78s(b)(2).
    \50\ 17 CFR 200.30-3(a)(12).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\49\ that the proposed rule change (SR-CboeBZX-2019-057), as modified
by Amendment No. 2, be, and hereby is, approved on an accelerated
basis.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\50\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-03176 Filed 2-18-20; 8:45 am]
 BILLING CODE 8011-01-P