Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 67741 

27 15 U.S.C. 78s(b)(3)(A)(iii). 

28 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires a self-regulatory organization to 

give the Commission written notice of its intent to 

file the proposed rule change, along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this requirement. 

29 17 CFR 240.19b–4(f)(6). 

30 17 CFR 240.19b–4(f)(6)(iii). 

31For purposes only of waiving the 30-day 

operative delay, the Commission has also 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

32 17 CFR 200.30–3(a)(12). 

1 15 U.S.C.78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

investors will have ready access to 

information regarding the IIV and 

quotation and last sale information for 

the Shares. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. The Exchange 

notes that the proposed rule change, 

rather will facilitate the transfer from 

Arca and listing of additional exchangetraded products on the Exchange, which 

will enhance competition among listing 

venues, to the benefit of issuers, 

investors, and the marketplace more 

broadly. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change does not: (i) Significantly affect 

the protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)(iii) of the Act 27 and 

subparagraph (f)(6) of Rule 19b–4 

thereunder.28

A proposed rule change filed under 

Rule 19b–4(f)(6) 29 normally does not 

become operative prior to 30 days after 

the date of the filing. However, Rule 

19b–4(f)(6)(iii) 30 permits the 

Commission to designate a shorter time 

if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Exchange states that such 

waiver will allow the Fund to transfer 

listing to the Exchange as soon as is 

practicable, and will minimize the 

amount of time that the Fund listing 

venue will be in transition. 

Additionally, the Exchange states that 

waiver will allow the Fund to be listed 

on the Exchange in December 2018, 

which will allow the Fund to have 

lower listing fees on a going forward 

basis, and to avoid paying Arca’s listing 

fees for 2019, which will be applied at 

the beginning of January 2019. For these 

reasons, the Commission believes that 

waiver of the 30-day operative delay is 

consistent with the protection of 

investors and the public interest. 

Accordingly, the Commission hereby 

waives the operative delay and 

designates the proposed rule change as 

operative upon filing.31

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is: (i) Necessary or appropriate in 

the public interest; (ii) for the protection 

of investors; or (iii) otherwise in 

furtherance of the purposes of the Act. 

If the Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

CboeBZX–2018–094 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–2018–094. 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–2018–094 and 

should be submitted on or before 

January 22, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28381 Filed 12–28–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84931; File No. SR– 

NYSEArca–2018–83] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Changes Regarding Investments 

of the iShares Bloomberg Roll Select 

Commodity Strategy ETF 

December 21, 2018. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on December 

19, 2018, NYSE Arca, Inc. (‘‘Exchange’’ 

or ‘‘NYSE Arca’’) 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 


khammond on DSK30JT082PROD with NOTICES
67742 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 

4A Managed Fund Share is a security that 

represents an interest in an investment company 

registered under the Investment Company Act of 

1940 (15 U.S.C. 80a–1) (‘‘1940 Act’’) organized as 

an open-end investment company or similar entity 

that invests in a portfolio of securities selected by 

its investment adviser consistent with its 

investment objectives and policies. In contrast, an 

open-end investment company that issues 

Investment Company Units, listed and traded on 

the Exchange under NYSE Arca Rule 5.2–E(j)(3), 

seeks to provide investment results that correspond 

generally to the price and yield performance of a 

specific foreign or domestic stock index, fixed 

income securities index or combination thereof. 

5The Trust is registered under the 1940 Act. On 

February 21, 2018, the Trust filed with the 

Securities and Exchange Commission (‘‘SEC’’ or 

Commission’’) its registration statement on Form N– 

1A under the Securities Act of 1933 (15 U.S.C. 77a), 

and under the 1940 Act relating to the Fund (File 

Nos. 333–179904 and 811–22649) (‘‘Registration 

Statement’’). The description of the operation of the 

Trust and the Fund herein is based, in part, on the 

Registration Statement. In addition, the 

Commission has issued an order upon which the 

Trust may rely, granting certain exemptive relief 

under the 1940 Act. See Investment Company Act 

Release No. 29571 (January 24, 2011) (File No. 812– 

13601). 

6The Fund is currently in compliance with the 

provisions of Commentary.01(b) to NYSE Arca Rule 

8.600–E. The Trust will not implement the changes 

proposed herein until this proposed rule change is 

approved by the Commission. 

7An 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 are 

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 the fiduciary nature of the 

relationship to clients 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 has 

(i) adopted and implemented written policies and 

procedures reasonably designed to prevent 

violation, by the investment adviser and its 

supervised persons, of the Advisers Act and the 

Commission rules adopted thereunder; (ii) 

implemented, at a minimum, an annual review 

regarding the adequacy of the policies and 

procedures established pursuant to subparagraph (i) 

above and the effectiveness of their 

implementation; and (iii) designated an individual 

(who is a supervised person) responsible for 

administering the policies and procedures adopted 

under subparagraph (i) above. 

8The Fund’s investment objective is also 

achieved by investing in cash, cash equivalents, 

Commodity Investments, Fixed Income Securities 

and Short-Term Fixed Income Securities (each as 

defined or described below). 

9The term ‘‘normal market conditions’’ is defined 

in NYSE Arca Rule 8.600–E(c)(5). 

10The Bloomberg Roll Select Commodity Index is 

a version of the Bloomberg Commodity Index 

(‘‘BCOM’’) that aims to mitigate the effects of 

contango on index performance (as described 

further below). For each commodity, the index rolls 

into the futures contract showing the most 

backwardation or least contango, selecting from 

those contracts with nine months or fewer until 

expiration. (Source: Bloomberg) 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes certain 

changes regarding investments of the 

iShares Bloomberg Roll Select 

Commodity Strategy ETF, shares of 

which are currently listed and traded on 

the Exchange under NYSE Arca Rule 

8.600–E (‘‘Managed Fund Shares’’). The 

proposed change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, 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 

self-regulatory organization 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 those 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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes certain 

changes regarding investments of the 

iShares Bloomberg Roll Select 

Commodity Strategy ETF (‘‘Fund’’), 

shares (‘‘Shares’’) of which are currently 

listed and traded on the Exchange under 

NYSE Arca Rule 8.600–E, which 

governs the listing and trading of 

Managed Fund Shares 4 on the 

Exchange. Shares of the Fund 

commenced listing and trading on the 

Exchange on April 5, 2018 under 

Commentary.01(b) to NYSE Arca Rule 

8.600–E. 

The Shares are offered by iShares U.S. 

ETF Trust (the ‘‘Trust’’), which is 

registered with the Commission as an 

open-end management investment 

company.5 The Fund is a series of the 

Trust.6

BlackRock Fund Advisors (‘‘BFA’’ or 

‘‘Adviser’’) is the investment adviser for 

the Fund. BlackRock Investments, LLC 

is the distributor (‘‘Distributor’’) for the 

Fund’s Shares. State Street Bank and 

Trust Company serves as the 

administrator, custodian and transfer 

agent (‘‘Custodian’’ or ‘‘Transfer Agent’’) 

for the Fund. 

Commentary .06 to Rule 8.600–E 

provides that, if the investment adviser 

to the investment company issuing 

Managed Fund 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.7 In addition, 

Commentary .06 further requires that 

personnel who make decisions on the 

open-end fund’s portfolio composition 

must be subject to procedures designed 

to prevent the use and dissemination of 

material nonpublic information 

regarding the open-end fund’s portfolio. 

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 and/or changes to the 

portfolio. In the event (a) the Adviser 

becomes registered as a broker-dealer or 

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 will be subject to 

procedures designed to prevent the use 

and dissemination of material nonpublic information regarding such 

portfolio. 

iShares Bloomberg Roll Select 

Commodity Strategy ETF 

Fund Investments 

According to the Registration 

Statement, the Fund’s investment 

objective is to seek to provide exposure, 

on a total return basis, to a diversified 

group of commodities. The Fund is 

actively managed and seeks to achieve 

its investment objective in part 8 by, 

under normal market conditions,9

investing in listed and over-the-counter 

(‘‘OTC’’) swaps referencing the 

Bloomberg Roll Select Commodity 

Index (the ‘‘Reference Benchmark’’).10

In connection with investments in 

swaps on the Reference Benchmark, the 

Fund is expected to establish new 

swaps contracts on an ongoing basis and 


khammond on DSK30JT082PROD with NOTICES
Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 67743 

11Swaps on the Reference Benchmark are 

included in ‘‘Commodity Investments’’ as defined 

below. 12For purposes of this filing, cash equivalents are 

the short-term instruments enumerated in 

Commentary .01(c) to Rule 8.600–E. 

13 In order to maintain exposure to a futures 

contract on a particular commodity, an investor 

must sell the position in the expiring contract and 

buy a new position in a contract with a later 

delivery month, which is referred to as ‘‘rolling.’’ 

If the price for the new futures contract is less than 

the price of the expiring contract, then the market 

for the commodity is said to be in ‘‘backwardation.’’ 

In these markets, roll returns are positive, which is 

referred to as ‘‘positive carry.’’ The term ‘‘contango’’ 

is used to describe a market in which the price for 

a new futures contract is more than the price of the 

expiring contract. In these markets, roll returns are 

negative, which is referred to as ‘‘negative carry.’’ 

The Reference Benchmark seeks to employ a 

positive carry strategy that emphasizes commodities 

and futures contract months with the greatest 

degree of backwardation and lowest degree of 

contango, resulting in net gains through positive 

roll returns. 

14Examples of Listed Derivatives the Fund may 

invest in include exchange traded futures contracts 

similar to those found in the Reference Benchmark, 

exchange traded futures contracts on the Reference 

Benchmark, swaps on commodity futures contracts 

similar to those found in the Reference Benchmark, 

as well as futures and options that correlate to the 

investment returns of commodities without 

investing directly in physical commodities. 

15Examples of OTC Derivatives the Fund may 

invest in include swaps on commodity futures 

contracts similar to those found in the Reference 

Benchmark, options that correlate to the investment 

returns of commodities without investing directly 

in physical commodities, OTC commodity-linked 

instruments such as OTC commodity-linked notes, 

forward contracts and OTC options. 

16As discussed below under ‘‘Application of 

Generic Listing Requirements’’ below, the Fund’s 

and the Subsidiary’s holdings in OTC derivatives 

will not comply with the criteria in Commentary 

.01(e) of NYSE Arca Rule 8.600–E. 

17All statements included in this application 

related to the Fund’s investments and restrictions 

are applicable to the Fund and Subsidiary 

collectively. 

18As discussed under ‘‘Application of Generic 

Listing Requirements’’ below, the Exchange 

proposes that such Short-Term Fixed Income 

Securities be excluded from the requirements of 

Commentary .01(b)(1)–(4) to NYSE Arca Rule 

8.600–E. 

19To the extent that the Fund and the Subsidiary 

invest in cash and Short-Term Fixed Income 

Securities that are cash equivalents (i.e., that have 

maturities of less than 3 months) as specified in 

Commentary .01(c) to NYSE Arca Rule 8.600–E, 

such investments will comply with Commentary 

.01(c) and may be held without limitation. Nonconvertible corporate debt securities and sovereign 

obligations are not included as cash equivalents in 

Commentary .01(c). 

replace expiring contracts.11 Swaps 

subsequently entered into by the Fund 

may have terms that differ from the 

swaps the Fund currently holds. The 

Fund expects generally to pay a fixed 

payment rate and certain swap related 

fees to the swap counterparty and 

receive the total return of the Reference 

Benchmark, including in the event of 

negative performance by the Reference 

Benchmark, negative return (i.e., a 

payment from the Fund to the swap 

counterparty). In seeking total return, 

the Fund additionally aims to generate 

interest income and capital appreciation 

through a cash management strategy 

consisting primarily of cash, cash 

equivalents,12 and fixed income 

securities other than cash equivalents, 

as described below. 

The Fund’s investment strategy seeks 

to maximize correlation with the 

Reference Benchmark, which is 

composed of 22 futures contracts across 

20 physical agricultural, energy, 

precious metals and industrial metals 

commodities. The Reference Benchmark 

reflects the returns from these 

commodities and provides broad-based 

exposure to commodities as an asset 

class by using liquidity and sector caps 

to avoid overconcentration in any single 

commodity or commodity sector. The 

Reference Benchmark employs a 

contract roll strategy intended to 

minimize the effects of contango and 

maximize the effects of 

backwardation.13

The Fund will invest in financial 

instruments described below that 

provide exposure to commodities and 

not in the physical commodities 

themselves. 

The Fund (through its Subsidiary (as 

defined below)) may hold the following 

listed derivative instruments: Futures, 

forwards, options and swaps (including 

swaps referencing the Reference 

Benchmark) on commodities, currencies 

and financial instruments (e.g., stocks, 

fixed income, interest rates, U.S. 

Treasuries, and volatility) or a basket or 

index of any of the foregoing 

(collectively, ‘‘Listed Derivatives’’).14

Listed Derivatives will comply with the 

criteria in Commentary .01(d) of NYSE 

Arca Rule 8.600–E. 

The Fund (through its Subsidiary (as 

defined below)) may hold the following 

over-the-counter (‘‘OTC’’) derivative 

instruments: Forwards, options and 

swaps (including swaps referencing the 

Reference Benchmark) on commodities, 

currencies and financial instruments 

(e.g., stocks, fixed income, interest rates, 

and volatility) or a basket or index of 

any of the foregoing (collectively, ‘‘OTC 

Derivatives’’,15 and together with Listed 

Derivatives, ‘‘Commodity 

Investments’’).16

The Fund’s exposure to Commodity 

Investments is obtained by investing 

through a wholly-owned subsidiary 

organized in the Cayman Islands (the 

‘‘Subsidiary’’).17 The Subsidiary is 

advised by BFA and has the same 

investment objective as the Fund. 

In compliance with the requirements 

of Sub-Chapter M of the Internal 

Revenue Code of 1986, the Fund may 

invest up to 25% of its total assets in the 

Subsidiary. The Fund’s Commodity 

Investments held in the Subsidiary are 

intended to provide the Fund with 

exposure to broad commodities. 

The Fund may hold cash, cash 

equivalents and fixed income securities 

other than cash equivalents, as 

described further below. 

Specifically, the Fund may invest in 

Short-Term Fixed Income Securities (as 

defined below) other than cash 

equivalents on an ongoing basis to 

provide liquidity or for other reasons.18

Short-Term Fixed Income Securities 

will have a maturity of no longer than 

397 days and include the following: (i) 

Money market instruments; (ii) 

obligations issued or guaranteed by the 

U.S. government, its agencies or 

instrumentalities (including 

government-sponsored enterprises); (iii) 

negotiable certificates of deposit, 

bankers’ acceptances, fixed-time 

deposits and other obligations of U.S. 

and non-U.S. banks (including non-U.S. 

branches) and similar institutions; (iv) 

commercial paper; (v) non-convertible 

corporate debt securities (e.g., bonds 

and debentures); (vi) repurchase 

agreements; (vii) short-term U.S. dollardenominated obligations of non-U.S. 

banks (including U.S. branches) that, in 

the opinion of BFA, are of comparable 

quality to obligations of U. S. banks that 

may be purchased by the Fund; (viii) 

and sovereign obligations (collectively, 

‘‘Short-Term Fixed Income Securities’’). 

Any of these securities may be 

purchased on a current or forwardsettled basis.19

The Fund also may invest in fixed 

income securities as defined in 

Commentary .01(b) to NYSE Arca Rule 

8.600–E, other than cash equivalents 

and Short-Term Fixed Income 

Securities, with remaining maturities 

longer than 397 days (‘‘Fixed Income 

Securities’’). Such Fixed Income 

Securities will comply with 

requirements of Commentary .01(b) to 

NYSE Arca Rule 8.600–E. 

The Subsidiary may hold cash and 

cash equivalents. 

The Fund will seek to gain exposure 

to swaps and other Commodity 

Investments by investing in its 

Subsidiary. The Fund wholly owns and 

controls the Subsidiary, and the Fund 

and the Subsidiary are managed by 

BFA. The Subsidiary is not an 

investment company registered under 

the 1940 Act and is a company 

organized under the laws of the Cayman 

Islands. 

The Trust’s Board of Trustees has 

oversight responsibility for the 

investment activities of the Fund, 


khammond on DSK30JT082PROD with NOTICES
67744 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 

including its investment in the 

Subsidiary and the Fund’s role as sole 

shareholder of the Subsidiary. 

The Fund and the Subsidiary will not 

invest in securities or other financial 

instruments that have not been 

described in this proposed rule change. 

Other Restrictions 

The Fund’s investments, including 

derivatives, will be consistent with the 

Fund’s investment objective and will 

not be used to enhance leverage 

(although certain derivatives and other 

investments may result in leverage). 

That is, the Fund’s investments will not 

be used to seek performance that is the 

multiple or inverse multiple (e.g., 2X or 

¥3X) of the Fund’s Reference 

Benchmark. 

Use of Derivatives by the Fund 

The Fund may invest in the types of 

derivatives described in the ‘‘Principal 

Investments’’ section above for the 

purposes described in that section. 

Investments in derivative instruments 

will be made in accordance with the 

Fund’s investment objective and 

policies. 

To limit the potential risk associated 

with such transactions, the Fund will 

enter into offsetting transactions or 

segregate or ‘‘earmark’’ assets 

determined to be liquid by the Adviser 

in accordance with procedures 

established by the Trust’s Board of 

Trustees (the ‘‘Board’’). In addition, the 

Fund has included appropriate risk 

disclosure in its offering documents, 

including leveraging risk. Leveraging 

risk is the risk that certain transactions 

of the Fund, including the Fund’s use of 

derivatives, may give rise to leverage, 

causing the Fund to be more volatile 

than if it had not been leveraged. 

Impact on Arbitrage Mechanism 

The Adviser believes there will be 

minimal, if any, impact to the arbitrage 

mechanism as a result of the Fund’s use 

of derivatives. The Adviser understands 

that market makers and participants 

should be able to value derivatives as 

long as the positions are disclosed with 

relevant information. The Adviser 

believes that the price at which Shares 

of the Fund trade will continue to be 

disciplined by arbitrage opportunities 

created by the ability to purchase or 

redeem Shares of the Fund at their net 

asset value (‘‘NAV’’), which should 

ensure that Shares of the Fund will not 

trade at a material discount or premium 

in relation to their NAV. 

The Adviser does not believe there 

will be any significant impacts to the 

settlement or operational aspects of the 

Fund’s arbitrage mechanism due to the 

use of derivatives. 

Creation and Redemption of Shares 

According to the Registration 

Statement, the Trust will issue and sell 

Shares of the Fund only in Creation 

Units on a continuous basis through the 

Distributor or its agent at a price based 

on the Fund’s NAV next determined 

after receipt, on any business day of an 

order received by the Distributor or its 

agent in proper form. The size of a 

Creation Unit is 50,000 Shares. The 

Trust may increase or decrease the 

number of the Fund’s Shares that 

constitute a Creation Unit. 

The consideration for purchase of 

Creation Units of the Fund is generally 

cash (which may include the currency 

in which the underlying securities are 

denominated). However, in some cases 

the consideration consists of an in-kind 

deposit of a designated portfolio of 

securities (‘‘Deposit Securities’’) and the 

Cash Component computed as described 

below. Together, the Deposit Securities 

and the Cash Component constitute the 

‘‘Fund Deposit,’’ which, when 

combined with the Fund’s portfolio 

securities, is designed to generate 

performance that has a collective 

investment profile similar to that of the 

Reference Benchmark. The Fund 

Deposit represents the minimum initial 

and subsequent investment amount for 

a Creation Unit of the Fund. 

The ‘‘Cash Component’’ is an amount 

equal to the difference between the NAV 

of the shares (per Creation Unit) and the 

‘‘Deposit Amount,’’ which is an amount 

equal to the market value of the Deposit 

Securities, and serves to compensate for 

any differences between the NAV per 

Creation Unit and the Deposit Amount. 

The Fund’s current policy is to accept 

cash in substitution for the Deposit 

Securities it might otherwise accept as 

in-kind consideration for the purchase 

of Creation Units. The Fund may, at 

times, elect to receive Deposit Securities 

(i.e., the in-kind deposit of a designated 

portfolio of securities) and a Cash 

Component as consideration for the 

purchase of Creation Units. If the Fund 

elects to accept Deposit Securities, a 

purchaser’s delivery of the Deposit 

Securities together with the Cash 

Component will constitute the ‘‘Fund 

Deposit,’’ which will represent the 

consideration for a Creation Unit of the 

Fund. 

The Fund reserves the right to permit 

or require the substitution of a ‘‘cash in 

lieu’’ amount to be added to the Cash 

Component to replace any Deposit 

Security that may not be available in 

sufficient quantity for delivery or that 

may not be eligible for transfer through 

the Depository Trust Company (‘‘DTC’’) 

or the clearing process (as discussed 

below) or that the ‘‘Authorized 

Participant’’ as defined below, is not 

able to trade due to a trading restriction, 

during times the Fund has elected to 

receive Deposit Securities. The Fund 

also reserves the right to permit or 

require a ‘‘cash in lieu’’ amount in 

certain circumstances. 

To be eligible to place orders with the 

Distributor and to create a Creation Unit 

of the Fund, an entity must be: (i) A 

‘‘Participating Party,’’ i.e., a brokerdealer or other participant in the 

clearing process through the Continuous 

Net Settlement System of the National 

Securities Clearing Corporation 

(‘‘NSCC’’) (the ‘‘Clearing Process’’), a 

clearing agency that is registered with 

the SEC, or (ii) a DTC Participant, and 

must have executed an agreement with 

the Distributor, with respect to creations 

and redemptions of Creation Units 

(‘‘Authorized Participant Agreement’’) 

(discussed below). A Participating Party 

or DTC Participant who has executed an 

Authorized Participant Agreement is 

referred to as an ‘‘Authorized 

Participant. 

To initiate an order for a Creation 

Unit, an Authorized Participant must 

submit to the Distributor or its agent an 

irrevocable order to purchase shares of 

the Fund, in proper form, generally 

before 4:00 p.m., Eastern time on any 

business day to receive that day’s NAV. 

Shares of the Fund may be redeemed 

by only in Creation Units at their NAV 

next determined after receipt of a 

redemption request in proper form by 

the Distributor or its agent and only on 

a business day. The Fund generally 

redeems Creation Units solely for cash 

(which may include the currency in 

which the underlying securities are 

denominated). 

BFA makes available through the 

NSCC, prior to the opening of business 

on the Exchange on each business day, 

the designated portfolio of securities 

(including any portion of such securities 

for which cash may be substituted) that 

will be applicable (subject to possible 

amendment or correction) to 

redemption requests received in proper 

form (as defined below) on that day 

(‘‘Fund Securities’’), and an amount of 

cash (the ‘‘Cash Amount,’’ as described 

below). Such Fund Securities and the 

corresponding Cash Amount (each 

subject to possible amendment or 

correction) are applicable, in order to 

effect redemptions of Creation Units of 

the Fund until such time as the next 

announced composition of the Fund 

Securities and Cash Amount is made 

available. Where redemptions are 

permitted in-kind, Fund Securities 


khammond on DSK30JT082PROD with NOTICES
Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 67745 

20Commentary .01(b)(1)–(4) to NYSE Arca Rule 

8.600–E provides as follows: 

‘‘(b) Fixed Income—Fixed income securities are 

debt securities that are notes, bonds, debentures or 

evidence of indebtedness that include, but are not 

limited to, U.S. Department of Treasury securities 

(‘‘Treasury Securities’’), government-sponsored 

entity securities (‘‘GSE Securities’’), municipal 

securities, trust preferred securities, supranational 

debt and debt of a foreign country or a subdivision 

thereof, investment grade and high yield corporate 

debt, bank loans, mortgage and asset backed 

securities, and commercial paper. To the extent that 

a portfolio includes convertible securities, the fixed 

income security into which such security is 

converted shall meet the criteria of this 

Commentary .01(b) after converting. The 

components of the fixed income portion of a 

portfolio shall meet the following criteria initially 

and on a continuing basis: 

(1) Components that in the aggregate account for 

at least 75% of the fixed income weight of the 

portfolio each shall have a minimum original 

principal amount outstanding of $100 million or 

more; 

(2) No component fixed-income security 

(excluding Treasury Securities and GSE Securities) 

shall represent more than 30% of the fixed income 

weight of the portfolio, and the five most heavily 

weighted component fixed income securities in the 

portfolio (excluding Treasury Securities and GSE 

Securities) shall not in the aggregate account for 

more than 65% of the fixed income weight of the 

portfolio; 

(3) An underlying portfolio (excluding exempted 

securities) that includes fixed income securities 

shall include a minimum of 13 non-affiliated 

issuers, provided, however, that there shall be no 

minimum number of non-affiliated issuers required 

for fixed income securities if at least 70% of the 

weight of the portfolio consists of equity securities 

as described in Commentary .01(a) above; 

(4) Component securities that in aggregate 

account for at least 90% of the fixed income weight 

of the portfolio must be either (a) from issuers that 

are required to file reports pursuant to Sections 13 

and 15(d) of the Securities Exchange Act of 1934; 

(b) from issuers that have a worldwide market value 

of its outstanding common equity held by nonaffiliates of $700 million or more; (c) from issuers 

that have outstanding securities that are notes, 

bonds debentures, or evidence of indebtedness 

having a total remaining principal amount of at 

least $1 billion; (d) exempted securities as defined 

in Section 3(a)(12) of the Securities Exchange Act 

of 1934; or (e) from issuers that are a government 

of a foreign country or a political subdivision of a 

foreign country’’. 

21Commentary .01(e) of NYSE Arca Rule 8.600– 

E provides as follows: ‘‘The portfolio may hold OTC 

derivatives, including forwards, options and swaps 

on commodities, currencies and financial 

instruments (e.g., stocks, fixed income, interest 

rates, and volatility) or a basket or index of any of 

the foregoing; however, on both an initial and 

continuing basis, no more than 20% of the assets 

in the portfolio may be invested in OTC derivatives. 

For purposes of calculating this limitation, a 

portfolio’s investment in OTC derivatives will be 

calculated as the aggregate gross notional value of 

the OTC derivatives.’’ 

received on redemption may not be 

identical to Deposit Securities that are 

applicable to creations of Creation 

Units. Procedures and requirements 

governing redemption transactions are 

set forth in the handbook for Authorized 

Participants and may change from time 

to time. 

The Trust may, in its sole discretion, 

substitute a ‘‘cash in lieu’’ amount to 

replace any Fund Security. The Trust 

also reserves the right to permit or 

require a ‘‘cash in lieu’’ amount in 

certain circumstances. The amount of 

cash paid out in such cases will be 

equivalent to the value of the 

substituted security listed as a Fund 

Security. In the event that the Fund 

Securities have a value greater than the 

NAV of the shares, a compensating cash 

payment equal to the difference is 

required to be made by or through an 

Authorized Participant by the 

redeeming shareholder. The Fund 

generally redeems Creation Units for 

cash. 

Redemption requests for Creation 

Units of the Fund must be submitted to 

the Distributor or its agent by or through 

an Authorized Participant. An 

Authorized Participant must submit an 

irrevocable request to redeem shares of 

the Fund generally before 4:00 p.m., 

Eastern time on any business day in 

order to receive that day’s NAV. 

Application of Generic Listing 

Requirements 

The Exchange is submitting this 

proposed rule change because the 

portfolio for the Fund will not meet all 

of the ‘‘generic’’ listing requirements of 

Commentary .01 to NYSE Arca Rule 

8.600–E applicable to the listing of 

Managed Fund Shares. The Fund’s 

portfolio will meet all such 

requirements except for those set forth 

in Commentary .01 (b)(1)–(4) (with 

respect to Short-Term Fixed Income 

Securities) and (e) (with respect to OTC 

Derivatives), as described below. 

The Fund’s Short-Term Fixed Income 

Securities will not comply with the 

requirements set forth in Commentary 

.01(b)(1)–(4) to NYSE Arca Rule 8.600– 

E.20 While the requirements set forth in 

Commentary .01(b)(1)–(4) include rules 

intended to ensure that the fixed income 

securities included in a fund’s portfolio 

are sufficiently large and diverse and 

have sufficient publicly available 

information regarding the issuances, the 

Exchange believes that any concerns 

related to non-compliance are mitigated 

by the types of instruments that the 

Fund would hold. The Fund’s ShortTerm Fixed Income Securities primarily 

will include those instruments that are 

included in the definition of cash and 

cash equivalents, but are not considered 

cash and cash equivalents because they 

have maturities of three months or 

longer. The Exchange believes, however, 

that, because all Short-Term Fixed 

Income Securities, including nonconvertible corporate debt securities 

and sovereign obligations (which are not 

cash equivalents as enumerated in 

Commentary .01(c) to Rule 8.600–E), are 

highly liquid, they are less susceptible 

than other types of fixed income 

instruments both to price manipulation 

and volatility and that the holdings as 

proposed are generally consistent with 

the policy concerns which Commentary 

.01(b)(1)–(4) is intended to address. 

Because the Short-Term Fixed Income 

Securities will consist of high-quality 

fixed income securities described above, 

the Exchange believes that the policy 

concerns that Commentary .01(b)(1)–(4) 

is intended to address are otherwise 

mitigated and that the Fund should be 

permitted to hold these securities in a 

manner that may not comply with 

Commentary .01(b)(1)–(4). 

The Fund’s portfolio also will not 

comply with the requirements set forth 

in Commentary .01(e) (with respect to 

OTC Derivatives) to NYSE Arca Rule 

8.600–E.21 Specifically, the Fund’s 

investments in OTC Derivatives may 

exceed 20% of Fund assets, calculated 

as the aggregate gross notional value of 

such OTC Derivatives. The Exchange 

proposes that up to 60% of the Fund’s 

assets (calculated as the aggregate gross 

notional value) may be invested in OTC 

Derivatives. The Adviser believes that it 

is important to provide the Fund with 

additional flexibility to manage risk 

associated with its investments. 

Depending on market conditions, it may 

be critical that the Fund be able to 

utilize available OTC Derivatives to 

efficiently gain exposure to the multiple 

commodities that underlie the Reference 

Benchmark, as well as commodity 

futures contracts similar to those found 

in the Reference Benchmark. 

OTC Derivatives can be tailored to 

provide specific exposure to the Fund’s 

Reference Benchmark, as well as 

commodity futures contracts similar to 

those found in the Reference 

Benchmark,, allowing the Fund to more 

efficiently meet its investment objective. 

For example, the Reference Benchmark 

is composed of 22 futures contracts 

across 20 physical commodities, which 

may not be sufficiently liquid and 

would not provide the commodity 

exposure the Fund requires to meet its 

investment objective if the Fund were to 

invest in the futures directly. A total 

return swap can be structured to 

provide exposure to the same futures 

contracts as exist in the Reference 

Benchmark, as well as commodity 

futures contracts similar to those found 

in the Reference Benchmark, while 

providing sufficient efficiency to allow 

the Fund to more easily meet its 

investment objective. 


khammond on DSK30JT082PROD with NOTICES
67746 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 

22Commentary .01(d)(2) to Rule 8.600–E provides 

that, with respect to a fund’s portfolio, the aggregate 

gross notional value of listed derivatives based on 

any five or fewer underlying reference assets shall 

not exceed 65% of the weight of the portfolio 

(including gross notional exposures), and the 

aggregate gross notional value of listed derivatives 

based on any single underlying reference asset shall 

not exceed 30% of the weight of the portfolio 

(including gross notional exposures). 

23The Bid/Ask Price of the Fund’s Shares will be 

determined using the mid-point of the highest bid 

and the lowest offer on the Exchange as of the time 

of calculation of the Fund’s NAV. The records 

relating to Bid/Ask Prices will be retained by the 

Fund and its service providers. 

24Under accounting procedures followed by the 

Fund, trades made on the prior business day (‘‘T’’) 

will be booked and reflected in NAV on the current 

business day (‘‘T+1’’). Accordingly, the Fund will 

be able to disclose at the beginning of the business 

day the portfolio that will form the basis for the 

NAV calculation at the end of the business day. 

25Broker-dealers that are FINRA member firms 

have an obligation to report transactions in 

specified debt securities to TRACE to the extent 

required under applicable FINRA rules. Generally, 

such debt securities will have at issuance a maturity 

that exceeds one calendar year. For fixed income 

securities that are not reported to TRACE, (i) 

intraday price quotations will generally be available 

from broker-dealers and trading platforms (as 

applicable) and (ii) price information will be 

available from feeds from market data vendors, 

published or other public sources, or online 

information services, as described above. 

26See NYSE Arca Rule 7.12–E. 

In addition, if the Fund were to gain 

commodity exposure exclusively 

through the use of listed futures, the 

Fund’s holdings in Listed Derivatives 

would be subject to position limits and 

accountability levels established by an 

exchange. Such limitations would 

restrict the Fund’s ability to gain 

efficient exposure to the commodities in 

the Reference Benchmark, or futures 

contracts similar to those found in the 

Reference Benchmark, thereby impeding 

the Fund’s ability to satisfy its 

investment objective. 

The Adviser represents that the basket 

or index on which much of the Fund’s 

OTC Derivatives will be based will 

satisfy the criteria applicable to 

holdings in Listed Derivatives in 

Commentary .01(d)(2) on an initial and 

continued listing basis.22 With respect 

to the Fund’s holdings in OTC 

Derivatives, the aggregate gross notional 

value of OTC Derivatives based on any 

five or fewer underlying reference assets 

will not exceed 65% of the weight of the 

portfolio (including gross notional 

exposures), and the aggregate gross 

notional value of OTC Derivatives based 

on any single underlying reference asset 

will not exceed 30% of the weight of the 

portfolio (including gross notional 

exposures). In addition, the Adviser 

represents that futures on all 

commodities in the Reference 

Benchmark are traded on futures 

exchanges that are members of the 

Intermarket Surveillance Group (‘‘ISG’’). 

The Exchange notes that, other than 

Commentary .01(b)(1)–(4) (with respect 

to Short-Term Fixed Income Securities) 

and .01(e)(with respect to OTC 

Derivatives) to Rule 8.600–E, as 

described above, the Fund’s portfolio 

will meet all other requirements of Rule 

8.600–E. 

Availability of Information 

The Fund’s website 

(www.iShares.com) will include the 

prospectus for the Fund that may be 

downloaded. The Fund’s website will 

include additional quantitative 

information updated on a daily basis 

including, for the Fund, (1) daily trading 

volume, the prior business day’s 

reported closing price, NAV and 

midpoint of the bid/ask spread at the 

time of calculation of such NAV (the 

‘‘Bid/Ask Price’’),23 and a calculation of 

the premium and discount of the Bid/ 

Ask Price against the NAV, and (2) data 

in chart format displaying the frequency 

distribution of discounts and premiums 

of the daily Bid/Ask Price against the 

NAV, within appropriate ranges, for 

each of the four previous calendar 

quarters. On each business day, before 

commencement of trading in Shares in 

the Core Trading Session on the 

Exchange, the Fund will disclose on its 

website the Disclosed Portfolio as 

defined in NYSE Arca Rule 8.600– 

E(c)(2) that forms the basis for the 

Fund’s calculation of NAV at the end of 

the business day.24

On a daily basis, the Fund will 

disclose the information required under 

NYSE Arca Rule 8.600–E(c)(2) to the 

extent applicable. The website 

information will be publicly available at 

no charge. 

In addition, a basket composition file, 

which includes the asset names and 

share quantities, if applicable, required 

to be delivered in exchange for the 

Fund’s Shares, together with estimates 

and actual cash components, will be 

publicly disseminated daily prior to the 

opening of the Exchange via the NSCC. 

The basket represents one Creation Unit 

of the Fund. Authorized Participants 

may refer to the basket composition file 

for information regarding financial 

instruments that may comprise the 

Fund’s basket on a given day. 

Investors can also obtain the Trust’s 

Statement of Additional Information 

(‘‘SAI’’), the Fund’s Shareholder 

Reports, and the Fund’s Forms N–CSR 

and Forms N–SAR, filed twice a year. 

The Fund’s SAI and Shareholder 

Reports will be available free upon 

request from the Trust, and those 

documents and the Form N–CSR, Form 

N–PX and Form N–SAR may be viewed 

on-screen or downloaded from the 

Commission’s website at www.sec.gov. 

Intra-day and closing price 

information regarding futures and other 

Listed Derivatives will be available from 

the exchange on which such 

instruments are traded and from major 

market data vendors. Price information 

regarding OTC Derivatives, cash 

equivalents, Commodity Investments, 

Short-Term Fixed Income Securities, 

and Fixed Income Securities also will be 

available from major market data 

vendors. Additionally, the Trade 

Reporting and Compliance Engine 

(‘‘TRACE’’) of the Financial Industry 

Regulatory Authority (‘‘FINRA’’) will be 

a source of price information for certain 

fixed income securities to the extent 

transactions in such securities are 

reported to TRACE.25 Price information 

regarding U.S. government securities 

and other cash equivalents generally 

may be obtained from brokers and 

dealers who make markets in such 

securities or through nationally 

recognized pricing services through 

subscription agreements. The BCOM 

index methodology, constituent list, and 

index price are available via Bloomberg. 

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. Information regarding the 

previous day’s closing price and trading 

volume information for the Shares will 

be published daily in the financial 

section of newspapers. 

Quotation and last sale information 

for the Shares will be available via the 

Consolidated Tape Association (‘‘CTA’’) 

high-speed line. Exchange-traded 

options quotation and last sale 

information for options cleared via the 

Options Clearing Corporation are 

available via the Options Price 

Reporting Authority. In addition, the 

Portfolio Indicative Value (‘‘PIV’’), as 

defined in NYSE Arca Rule 8.600– 

E(c)(3), will be widely disseminated by 

one or more major market data vendors 

at least every 15 seconds during the 

Core Trading Session. 

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 

the Fund.26 Trading in Shares of the 

Fund will be halted if the circuit breaker 

parameters in NYSE Arca Rule 7.12–E 

have been reached. Trading also may be 

halted because of market conditions or 


khammond on DSK30JT082PROD with NOTICES
Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 67747 

27 17 CFR 240.10A–3. 

28FINRA conducts cross-market surveillances on 

behalf of the Exchange pursuant to a regulatory 

services agreement. The Exchange is responsible for 

FINRA’s performance under this regulatory services 

agreement. 

29For a list of the current members of ISG, see 

www.isgportal.org. The Exchange notes that not all 

components of the Disclosed Portfolio may trade on 

markets that are members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement. 30 15 U.S.C. 78f(b)(5). 

for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. Trading in the Fund’s 

Shares also will be subject to Rule 

8.600–E(d)(2)(D) (‘‘Trading Halts’’). 

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 NYSE Arca Marketplace from 4 a.m. 

to 8 p.m., E.T. in accordance with NYSE 

Arca Rule 7.34–E (Early, Core, and Late 

Trading Sessions). The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. As provided in NYSE 

Arca Rule 7.6–E, the minimum price 

variation (‘‘MPV’’) for quoting and entry 

of orders in equity securities traded on 

the NYSE Arca Marketplace is $0.01, 

with the exception of securities that are 

priced less than $1.00 for which the 

MPV for order entry is $0.0001. 

With the exception of the 

requirements of Commentary .01(b)(1)– 

(4) (with respect to Short-Term Fixed 

Income Securities) and (e) (with respect 

to OTC Derivatives) to Rule 8.600–E as 

described above in ‘‘Application of 

Generic Listing Requirements,’’ the 

Shares of the Fund will conform to the 

initial and continued listing criteria 

under NYSE Arca Rule 8.600–E. 

Consistent with NYSE Arca Rule 8.600– 

E(d)(2)(B)(ii), the Adviser will 

implement and maintain, or be subject 

to, procedures designed to prevent the 

use and dissemination of material nonpublic information regarding the actual 

components of the Fund’s portfolio. The 

Exchange represents that, for initial and 

continued listing, the Fund will be in 

compliance with Rule 10A–3 27 under 

the Act, as provided by NYSE Arca Rule 

5.3–E. A minimum of 100,000 Shares 

will be outstanding at the 

commencement of trading on the 

Exchange. The Exchange will obtain a 

representation from the issuer of the 

Shares that the NAV per Share will be 

calculated daily and that the NAV and 

the Disclosed Portfolio will be made 

available to all market participants at 

the same time. The Fund’s investments 

will be consistent with its investment 

goal and will not be used to provide 

multiple returns of a benchmark or to 

produce leveraged returns. 

Surveillance 

The Exchange represents that trading 

in the Shares will be subject to the 

existing trading surveillances, 

administered by FINRA on behalf of the 

Exchange, or by regulatory staff of the 

Exchange, which are designed to detect 

violations of Exchange rules and 

applicable federal securities laws. The 

Exchange represents that these 

procedures are adequate to properly 

monitor Exchange trading of the Shares 

in all trading sessions and to deter and 

detect violations of Exchange rules and 

federal securities laws applicable to 

trading on the Exchange.28

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares, futures, and 

certain listed options with other markets 

and other entities that are members of 

the ISG, and the Exchange or FINRA, on 

behalf of the Exchange, or both, may 

obtain trading information regarding 

trading in such securities and financial 

instruments from such markets and 

other entities.29 In addition, the 

Exchange may obtain information 

regarding trading in such securities and 

financial instruments from markets and 

other entities that are members of ISG or 

with which the Exchange has in place 

a comprehensive surveillance sharing 

agreement. In addition, FINRA, on 

behalf of the Exchange, is able to access, 

as needed, trade information for certain 

fixed income securities held by the 

Fund reported to FINRA’s TRACE. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

All statements and representations 

made in this filing regarding (a) the 

description of the portfolio or reference 

assets, (b) limitations on portfolio 

holdings or reference assets, or (c) the 

applicability of Exchange listing rules 

specified in this rule filing shall 

constitute continued listing 

requirements for listing the Shares of 

the Fund on the Exchange. 

The issuer must notify the Exchange 

of any failure by the Fund to comply 

with the continued listing requirements, 

and, pursuant to its obligations under 

Section 19(g)(1) of the Act, the Exchange 

will monitor for compliance with the 

continued listing requirements. If the 

Fund is not in compliance with the 

applicable listing requirements, the 

Exchange will commence delisting 

procedures under NYSE Arca Rule 5.5– 

E (m). 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

Equity Trading Permit Holders in an 

Information Bulletin (‘‘Bulletin’’) of the 

special characteristics and risks 

associated with trading the Shares. 

Specifically, the Bulletin will discuss 

the following: (1) The procedures for 

purchases and redemptions of Shares in 

Creation Unit aggregations (and that 

Shares are not individually redeemable); 

(2) NYSE Arca Rule 9.2–E(a), which 

imposes a duty of due diligence on its 

Equity Trading Permit Holders to learn 

the essential facts relating to every 

customer prior to trading the Shares; (3) 

the risks involved in trading the Shares 

during the Early and Late Trading 

Sessions when an updated PIV will not 

be calculated or publicly disseminated; 

(4) how information regarding the PIV 

and the Disclosed Portfolio is 

disseminated; (5) the requirement that 

Equity Trading Permit Holders deliver a 

prospectus to investors purchasing 

newly issued Shares prior to or 

concurrently with the confirmation of a 

transaction; and (6) trading information. 

In addition, the Bulletin will 

reference that the Fund is subject to 

various fees and expenses described in 

the Registration Statement. The Bulletin 

will discuss any exemptive, no-action, 

and interpretive relief granted by the 

Commission from any rules under the 

Act. The Bulletin will also disclose that 

the NAV for the Shares will be 

calculated after 4:00 p.m., Eastern time 

each trading day. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 30 that an 

exchange have rules that are 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, in general, to protect investors and 

the public interest. 


khammond on DSK30JT082PROD with NOTICES
67748 Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 

31See note 20, supra. 

32See note 21, supra. 

33The Commission has previously approved an 

exception from requirements set forth in 

Commentary .01(e) relating to investments in OTC 

derivatives similar to that proposed with respect to 

the Fund in Securities Exchange Act Release No. 

80657 (May 11, 2017), 82 FR 22702 (May 17, 2017) 

(SR–NYSEArca–2017–09) (Notice of Filing of 

Amendment No. 2 and Order Granting Accelerated 

Approval of a Proposed Rule Change, as Modified 

by Amendment No. 2, Regarding Investments of the 

Janus Short Duration Income ETF Listed Under 

NYSE Arca Equities Rule 8.600). 

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 NYSE Arca Rule 

8.600–E. The Exchange has in place 

surveillance procedures that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. The Exchange or FINRA, on behalf 

of the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares, futures, and 

certain listed options with other markets 

and other entities that are members of 

the ISG, and the Exchange or FINRA, on 

behalf of the Exchange, or both, may 

obtain trading information regarding 

trading in such securities and financial 

instruments from such markets and 

other entities. In addition, the Exchange 

may obtain information regarding 

trading in such securities and financial 

instruments from markets and other 

entities that are members of ISG or with 

which the Exchange has in place a 

comprehensive surveillance sharing 

agreement. In addition, FINRA, on 

behalf of the Exchange, is able to access, 

as needed, trade information for certain 

fixed income securities held by the 

Fund reported to FINRA’s TRACE. The 

Adviser is not registered as a brokerdealer, but is affiliated with 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 and/or 

changes to the portfolio. 

The Exchange notes that, other than 

Commentary .01(b)(1)–(4) (with respect 

to Short-Term Fixed Income Securities) 

and .01(e) (with respect to OTC 

Derivatives) to Rule 8.600–E, as 

described above, the Fund’s portfolio 

will meet all other requirements of Rule 

8.600–E. 

The proposed rule change is designed 

to promote just and equitable principles 

of trade and to protect investors and the 

public interest in that the Exchange will 

obtain a representation from the issuer 

of the Shares that the NAV per Share 

will be calculated daily and that the 

NAV and the Disclosed Portfolio will be 

made available to all market 

participants at the same time. In 

addition, a large amount of information 

will be publicly available regarding the 

Fund and the Shares, thereby promoting 

market transparency. Quotation and last 

sale information for the Shares will be 

available via the CTA high-speed line. 

Prior to the commencement of trading, 

the Exchange will inform its Equity 

Trading Permit Holders in an 

Information Bulletin of the special 

characteristics and risks associated with 

trading the Shares. Trading in Shares of 

the Fund will be halted if the circuit 

breaker parameters in NYSE Arca Rule 

7.12–E have been reached or because of 

market conditions or for reasons that, in 

the view of the Exchange, make trading 

in the Shares inadvisable. Trading in the 

Shares will be subject to NYSE Arca 

Rule 8.600–E (d)(2)(D), which sets forth 

circumstances under which Shares of 

the Fund may be halted. In addition, as 

noted above, investors will have ready 

access to information regarding the 

Fund’s holdings, NAV, the PIV, the 

Disclosed Portfolio, and quotation and 

last sale information for the Shares. 

With respect to the Fund’s proposed 

non-compliance with Commentary 

.01(b)(1)–(4) (with respect to Short-Term 

Fixed Income Securities),31

Commentary.01(b) include rules 

intended to ensure that the fixed income 

securities included in a fund’s portfolio 

are sufficiently large and diverse and 

have sufficient publicly available 

information regarding the issuances, the 

Exchange believes that any concerns 

related to non-compliance are mitigated 

by the types of instruments that the 

Fund would hold. The Fund’s ShortTerm Fixed Income Securities primarily 

will include those instruments that are 

included in the definition of cash and 

cash equivalents, but are not considered 

cash and cash equivalents because they 

have maturities of three months or 

longer. Short-Term Fixed Income 

Securities that are cash equivalents 

under Commentary .01(c) to Rule 8.600– 

E (that is, short-term instruments with 

maturities of less than three months, as 

described in Commentary .01(c)(2)) 

would comply with Commentary .01(c) 

and could be held without limit. The 

Exchange believes, however, that 

because all Short-Term Fixed Income 

Securities, including non-convertible 

corporate debt securities and sovereign 

obligations, are high-quality instruments 

and are highly liquid they are less 

susceptible than other types of fixed 

income instruments both to price 

manipulation and volatility, and that 

the holdings as proposed are generally 

consistent with the policy concerns 

which Commentary .01(b) is intended to 

address. Because of these factors, the 

Exchange believes that the policy 

concerns that Commentary .01(b) is 

intended to address are otherwise 

mitigated and that the Fund should be 

permitted to hold these securities in a 

manner that may not comply with 

Commentary .01(b). 

With respect to the Fund’s proposed 

non-compliance with the requirements 

set forth in Commentary .01(e) (with 

respect to OTC Derivatives) to NYSE 

Arca Rule 8.600–E,32 specifically the 

proposal that up to 60% of the Fund’s 

assets (calculated as the aggregate gross 

notional value) may be invested in OTC 

Derivatives, the Adviser believes that it 

is important to provide the Fund with 

additional flexibility to manage risk 

associated with its investments. 

Depending on market conditions, it may 

be critical that the Fund be able to 

utilize available OTC Derivatives to 

efficiently gain exposure to the multiple 

commodities markets that underlie the 

Reference Benchmark.33

OTC Derivatives can be tailored to 

provide specific exposure to the Fund’s 

Reference Benchmark, allowing the 

Fund to more efficiently meet its 

investment objective. For example, the 

Reference Benchmark is composed of 22 

futures contracts across 20 physical 

commodities, which may not be 

sufficiently liquid and would not 

provide the commodity exposure the 

Fund requires to meet its investment 

objective if the Fund were to invest in 

the futures directly. A total return swap 

can be structured to provide exposure to 

the same futures contracts as exist in the 

Reference Benchmark, while providing 

sufficient efficiency to allow the Fund 

to more easily meet its investment 

objective. 

In addition, if the Fund were to gain 

commodity exposure exclusively 

through the use of listed futures, the 

Fund’s holdings in Listed Derivatives 

would be subject to position limits and 

accountability levels established by an 

exchange. Such limitations would 

restrict the Fund’s ability to gain 

efficient exposure to the commodities in 

the Reference Benchmark, thereby 

impeding the Fund’s ability to satisfy its 

investment objective. 

The Adviser represents that the basket 

or index on which much of the Fund’s 

OTC Derivatives will be based will 

satisfy the criteria applicable to 

holdings in Listed Derivatives in 

Commentary .01(d)(2) on an initial and 


khammond on DSK30JT082PROD with NOTICES
Federal Register / Vol. 83, No. 249 / Monday, December 31, 2018 / Notices 67749 

34See note 22, supra. 

35 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

continued listing basis.34 With respect 

to the Fund’s holdings in OTC 

Derivatives, the aggregate gross notional 

value of OTC Derivatives based on any 

five or fewer underlying reference assets 

will not exceed 65% of the weight of the 

portfolio (including gross notional 

exposures), and the aggregate gross 

notional value of OTC Derivatives based 

on any single underlying reference asset 

will not exceed 30% of the weight of the 

portfolio (including gross notional 

exposures). Futures on all commodities 

in the Reference Benchmark are traded 

on futures exchanges that are members 

of the ISG. 

The Adviser represents that it is in the 

best interests of the Fund’s shareholders 

for the Fund to be allowed to reduce 

commodities-related risks arising from 

the Fund’s investments using the most 

efficient financial instruments. While 

certain risks can be hedged via Listed 

Derivatives, OTC Derivatives can be 

customized to hedge against precise 

risks. Accordingly, the Adviser believes 

that OTC Derivatives may frequently be 

a more efficient hedging vehicle than 

Listed Derivatives. Depending on 

market conditions, it may be critical that 

the Fund be able to utilize available 

OTC Derivatives for this purpose to gain 

exposure to the commodities in the 

Reference Benchmark in an efficient 

manner. Therefore, the Exchange 

believes that increasing the percentage 

limit in Commentary .01(e) (with 

respect to OTC Derivatives), as 

described above, to the Fund’s 

investments in OTC Derivatives would 

help protect investors and the public 

interest. 

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 an actively-managed exchange-traded 

product that, through permitted use of 

an increased level of OTC derivatives 

above that currently permitted by the 

generic listing requirements of 

Commentary .01 to NYSE Arca Rule 

8.600–E, 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 have ready access to 

information regarding the Fund’s 

holdings, the PIV, the Disclosed 

Portfolio, and quotation and last sale 

information for the Shares. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purpose of the Act. The Exchange 

notes that the proposed rule change will 

facilitate the listing and trading of an 

additional type of actively-managed 

exchange-traded product that will 

enhance competition among market 

participants, to the benefit of investors 

and the marketplace. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or up to 90 days (i) as the 

Commission may designate if it finds 

such longer period to be appropriate 

and publishes its reasons for so finding 

or (ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2018–83 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–NYSEArca–2018–83. 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–NYSEArca–2018–83 and 

should be submitted on or before 

January 22, 2019. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.35

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–28393 Filed 12–28–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–84932; File No. SR–BX– 

2018–064] 

Self-Regulatory Organizations; Nasdaq 

BX, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend General 8 

December 21, 2018. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

19, 2018, Nasdaq BX, Inc. (‘‘BX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 


khammond on DSK30JT082PROD with NOTICES