43932 Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices 

107See Kaleda Letter, supra note 12; Santos 

Letter, supra note 12; Netto Letter, supra note 12. 

108See Desai Letter, supra note 12, at 1; Kumar 

Letter, supra note 12. 

109See Kumar Letter, supra note 12; Malkin 

Letter, supra note 12; Bhat Letter, supra note 12; 

GraniteShares Letter, supra note 12, at 6–7, 10–11. 

110See Ahn Letter, supra note 12. 

111See Otenyi Letter, supra note 12; Desai Letter, 

supra note 12, at 1. 

112See Desai Letter, supra note 12, at 1; Malkin 

Letter, supra note 12, at 1; Bhat Letter, supra note 

12. 

113See Barnwell Letter, supra note 12, at 2; Desai 

Letter, supra note 12, at 1; Fitzgerald Letter, supra 

note 12, at 1; Kumar Letter, supra note 12; Malkin 

Letter, supra note 12, at 1. 

114See NERA Letter, supra note 12, at 1–3, 5; 

GraniteShares Letter, supra note 12, at 3, 5–6. 

115See GraniteShares Letter, supra note 12, at 8. 

116See id. at 7. 

117See id. at 3. 

118See id. at 6. 

119See Krohn Letter, supra note 12; Hales Letter, 

supra note 12; Santos Letter, supra note 12. 

120See Hales Letter, supra note 12. 

121See Otenyi Letter, supra note 12. 

122See Desai Letter, supra note 12, at 1, 2; Kumar 

Letter, supra note 12; Santos Letter, supra note 12. 

123See supra note 10 and accompanying text. 

124The Sponsor also represents in its August 20, 

2018, comment letter that the Funds would invest 

only in Bitcoin Futures Contracts. See 

GraniteShares Letter, supra note 12, at 5. 

125See supra notes 78–91 and accompanying text. 

126Additionally, even though the Exchange’s 

amendments would have removed the 

representation in the Notice that the Exchange 

expects significant liquidity to exist in the market 

for Bitcoin Futures Contracts, based on numerous 

conversations with market participants, issuers, and 

discussions with personnel of CFE, see supra notes 

23 & 82 and accompanying text, the elimination of 

this representation would not alter the 

Commission’s conclusion that the Exchange has not 

met its burden to demonstrate that CFE and CME 

are markets ‘‘of significant size.’’ 

127 In disapproving the proposed rule change, the 

Commission has considered its impact on 

efficiency, competition, and capital formation. See 

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

128 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

D. Other Comments 

Comment letters also addressed the 

following topics: 

• The desire of investors to gain 

access to bitcoin through an ETP; 107

• investor understanding about 

bitcoin; 108

• the valuation of bitcoin and price 

differentials across bitcoin trading 

venues; 109

• the intrinsic value of bitcoin; 110

• the reliability of bitcoin as a store 

of value; 111

• the volatility of bitcoin prices; 112

• the regulation of bitcoin spot 

markets; 113

• the operation and valuation of the 

proposed ETPs; 114

• arbitrage between the price of the 

Shares and the underlying portfolio 

instruments; 115

• the ability of the Funds to meet 

redemption orders; 116

• the custody of the assets of the 

Funds; 117

• the effect on the Funds of a fork in 

the bitcoin blockchain; 118

• the potential impact of Commission 

approval of the proposed ETP on the 

price of bitcoin and on the U.S. 

economy; 119

• the leadership role that the United 

States might play in the cryptocurrency 

space if the Commission were to 

approve the proposed ETP; 120

• the utility of a bitcoin ETP as a 

global tool for wealth distribution; 121

and 

• the legitimacy that Commission 

approval of the proposed ETP might 

confer upon bitcoin as a digital asset.122

Ultimately, however, additional 

discussion of these tangential topics is 

unnecessary, as they do not bear on the 

basis for the Commission’s decision to 

disapprove the proposal. 

E. The Exchange’s Untimely 

Amendments to the Proposal 

As noted above, the deadline for 

rebuttal comments in response to the 

Order Instituting Proceedings was May 

15, 2018.123 On August 21, 2018, 

however, the Exchange filed 

Amendment No. 1 with the 

Commission, stating that the 

amendment ‘‘amends and replaces in its 

entirety the proposal as originally 

submitted on January 5, 2018.’’ Then, on 

August 22, 2018, the Exchange filed 

Amendment No. 2 with the 

Commission, stating that the 

amendment ‘‘amends and replaces in its 

entirety Amendment No. 1 as submitted 

on August 21, 2018, which amended 

and replaced in its entirety the proposal 

as originally submitted on January 5, 

2018.’’ Because these amendments were 

filed months after the deadline for 

comments on the proposed rule change, 

the Commission deems Amendment No. 

1 and Amendment No. 2 to have been 

untimely filed. 

Even if these amendments had been 

timely filed, however, the Commission 

would still conclude that the Exchange 

had not met its burden to demonstrate 

that its proposal is consistent with 

Exchange Act Section 6(b)(5). The 

change that the amendments made to 

the proposal was to limit the 

investments of the Funds to Bitcoin 

Futures Contracts, which trade on CFE 

and CME, eliminating the Funds’ ability 

to invest in listed or unlisted swaps on 

bitcoin or on the Benchmark Futures 

Contracts.124 Although CFE and CME 

are ‘‘regulated markets,’’ the record, as 

discussed above, does not provide a 

basis for the Commission to conclude 

that CFE and CME are regulated markets 

‘‘of significant size’’ in Bitcoin Futures 

Contracts.125 Therefore, even if the 

Exchange’s amendments were timely 

filed, the Commission would be unable 

to find, based on the record, that the 

Exchange had entered into a 

surveillance-sharing agreement with a 

regulated market of significant size 

related to bitcoin.126

F. Basis for Disapproval 

The record before the Commission 

does not provide a basis for the 

Commission to conclude that the 

Exchange has met its burden under the 

Exchange Act and the Commission’s 

Rules of Practice to demonstrate that its 

proposed rule change is consistent with 

Exchange Act Section 6(b)(5).127

IV. Conclusion 

For the reasons set forth above, the 

Commission does not find, pursuant to 

Section 19(b)(2) of the Exchange Act, 

that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange, and in 

particular, with Section 6(b)(5) of the 

Exchange Act. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act, 

that proposed rule change SR– 

CboeBZX–2018–001 is disapproved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.128

Brent J. Fields, 

Secretary. 

[FR Doc. 2018–18578 Filed 8–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83908; File No. SR– 

CboeBZX–2018–064] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Amend 

Certain Representations Relating to 

the Listing and Trading of Shares of 

the Innovator S&P 500 Buffer ETFs 

August 22, 2018. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on August 

16, 2018, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 


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Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices 43933 

3See Securities Exchange Act Release No. 83679 

(July 20, 2018), 83 FR 35505 (July 26, 2018) (SR– 

BatsBZX–2017–72) (the ‘‘Prior Approval’’). 

4See Registration Statement on Form N–1A for 

the Trust, dated August 8, 2018 (File Nos. 333– 

146827 and 811–22135) (the ‘‘Registration 

Statement’’). The Commission has issued an order 

granting certain exemptive relief to the Trust under 

the Investment Company Act of 1940 (15 U.S.C 

80a–1) (‘‘1940 Act’’) (the ‘‘Exemptive Order’’). See 

Investment Company Act Release No. 32854 

(October 6, 2017) (File No. 812–14781). 

5The Exchange notes that while a change was 

made to the principal investment strategy, there 

were no changes to the Buffer Funds’ investment 

objective, the method or methods used to select the 

Buffer Funds’ portfolio investments, or the Buffer 

Funds’ fees and expenses. 

6 15 U.S.C. 78f. 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A). 

9 17 CFR 240.19b–4(f)(6). As required under 

Rule19b–4(f)(6)(iii), the Exchange provided the 

Commission with written notice of its intent to file 

the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. 

below, which Items have been prepared 

by the Exchange. 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 filed a proposal to 

amend certain representations made in 

a proposed rule change previously filed 

with the Commission pursuant to Rule 

19b–4 relating to the Innovator S&P 500 

Buffer ETFs (the ‘‘Buffer Funds’’). 

The text of the proposed rule change 

is available at the Exchange’s website at 

www.markets.cboe.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 

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 parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The shares of the Buffer Funds (the 

‘‘Shares’’) were approved to be listed 

and traded on the Exchange under Rule 

14.11(i),3 which governs the listing and 

trading of Managed Fund Shares, but 

have not yet begun trading. The Buffer 

Funds are each a series of the Innovator 

ETFs Trust (the ‘‘Trust’’), which is 

organized as a Delaware statutory trust 

and is registered with the Commission 

as an open-end management investment 

company.4

In this proposed rule change, the 

Exchange proposes to amend several 

representations made in the Prior 

Approval related to the investment 

strategy, as described below.5

Throughout the description of the Buffer 

Funds’ investment strategy in the Prior 

Approval, there are representations such 

as ‘‘(each Buffer Fund will) seek to 

provide investment returns during the 

outcome period that match the gains of 

the S&P 500 Index up to the Buffer Cap 

Level, while shielding investors from 

S&P 500 Index losses of up to 10%.’’ 

The Exchange is proposing to amend all 

such representations related to the 

Buffer Funds such that the Buffer Funds 

will provide investment returns during 

the outcome period that match the gains 

of the S&P 500 Index up to the Buffer 

Cap Level, while shielding investors 

from S&P 500 Index losses of up to 9% 

instead of the previously stated 10%. 

The Exchange does not believe that 

this proposed change raises any 

substantive issues for the Commission 

because it represents only a small 

change to the investment strategy and 

all other statements and representations 

made in the Prior Approval regarding 

the description of the portfolio or 

reference assets, limitations on portfolio 

holdings or reference assets, 

dissemination and availability of 

reference assets and intraday indicative 

values, and the applicability of 

Exchange listing rules specified in the 

Prior Approval remain true and shall 

continue to constitute continued listing 

requirements for the Buffer Funds. 

Additionally, the change proposed 

above will constitute a continued listing 

requirement for the Buffer Funds. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with Section 6(b) 

of the Act 6 in general and Section 

6(b)(5) of the Act 7 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, in general, to protect 

investors and the public interest. 

Specifically, the Exchange believes that 

the proposal 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, in general, to protect investors and 

the public interest. 

As described above, all of the 

representations from the Prior Approval 

which formed the basis for the Prior 

Approval remain true and will continue 

to constitute continued listing 

requirements for the Buffer Funds with 

the exception of the one point (changing 

the downside protection from 10% to 

9%) that the Exchange is proposing to 

amend. This proposed change will not 

make any changes to the types of 

instruments that the Buffer Funds can 

hold, but will only make a small change 

to the investment strategy. As such, the 

Exchange believes that the proposal 

does not raise any substantive issues 

that were not previously addressed in 

the Prior Approval. 

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 

believes that the proposal to allow the 

Buffer Funds to amend their investment 

strategy will enhance competition 

among both market participants and 

listing venues by allowing additional 

series of Managed Fund Shares to come 

to list on the Exchange, to the benefit of 

investors and the marketplace. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange has neither solicited 

nor received written comments on the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not (i) significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, it has 

become effective pursuant to Section 

19(b)(3)(A)of the Act 8 and subparagraph 

(f)(6) of Rule 19b–4 thereunder.9

A proposed rule change filed 

pursuant to Rule 19b–4(f)(6) under the 


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43934 Federal Register / Vol. 83, No. 167 / Tuesday, August 28, 2018 / Notices 

10 17 CFR 240.19b–4(f)(6). 

11 17 CFR 240.19b–4(f)(6)(iii). 

12For purposes only of waiving the 30-day 

operative delay, the Commission also has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 13 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 82350 

(Dec. 19, 2017), 82 FR 61100 (Dec. 26, 2017) 

(‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 82602 

(Jan. 30, 2018), 83 FR 4941 (Feb. 2, 2018). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 82939 

(Mar. 23, 2018), 83 FR 13537 (Mar. 29, 2018) 

(‘‘Order Instituting Proceedings’’). 

8See Securities Exchange Act Release No. 83452 

(June 15, 2018), 83 FR 28894 (June 21, 2018). 

Act 10 normally does not become 

operative for 30 days after the date of its 

filing. However, Rule 19b–4(f)(6)(iii) 11

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 proposed 

rule change may become operative upon 

filing. The Exchange states that waiver 

of the 30-day operative delay would 

allow the Buffer Funds to immediately 

begin listing and trading on the 

Exchange and employ its amended 

investment strategy. The Commission 

does not believe that any new or novel 

issues are raised by the proposal. 

Moreover, as noted above, apart from 

modifying the downside protection from 

10% to 9%, all other statements and 

representations made in the Prior 

Approval would remain true and will 

apply on a continuous basis. 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 

operative upon filing.12

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

change 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–2018–064 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–2018–064. 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–2018–064, and 

should be submitted on or before 

September 18, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–18573 Filed 8–27–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–83904; File No. SR– 

NYSEArca–2017–139] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Disapproving a 

Proposed Rule Change To List and 

Trade the Shares of the ProShares 

Bitcoin ETF and the ProShares Short 

Bitcoin ETF 

August 22, 2018. 

I. Introduction 

On December 4, 2017, NYSE Arca, 

Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Exchange 

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

proposed rule change to list and trade 

the shares (‘‘Shares’’) of the ProShares 

Bitcoin ETF and the ProShares Short 

Bitcoin ETF (each a ‘‘Fund’’ and, 

collectively, the ‘‘Funds’’) issued by the 

ProShares Trust II (‘‘Trust’’) under 

NYSE Arca Rule 8.200–E, Commentary 

.02. The proposed rule change was 

published for comment in the Federal 

Register on December 26, 2017.3 The 

comment period for the Notice of 

Proposed Rule Change closed on 

January 16, 2018. 

On January 30, 2018, pursuant to 

Section 19(b)(2) of the Exchange Act,4

the Commission designated a longer 

period within which to approve the 

proposed rule change, disapprove the 

proposed rule change, or institute 

proceedings to determine whether to 

approve or disapprove the proposed 

rule change.5 On March 23, 2018, the 

Commission instituted proceedings 

under Section 19(b)(2)(B) of the 

Exchange Act 6 to determine whether to 

approve or disapprove the proposed 

rule change.7 The comment period and 

rebuttal comment period for the Order 

Instituting Proceedings closed on April 

19, 2018, and May 3, 2018, respectively. 

Finally, on June 15, 2018, the 

Commission extended the period for 

consideration of the proposed rule 

change to August 23, 2018.8 As of 


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