22234 Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Commission previously has approved a 

proposed rule change relating to listing and trading 

on the Exchange of Units based on municipal bond 

indexes. See Securities Exchange Act Release Nos. 

67985 (October 4, 2012), 77 FR 61804 (October 11, 

2012) (SR–NYSEArca–2012–92) (order approving 

proposed rule change relating to the listing and 

trading of iShares 2018 S&P AMT-Free Municipal 

Series and iShares 2019 S&P AMT-Free Municipal 

Series under NYSE Arca Equities Rule 5.2(j)(3), 

Commentary .02); 72523 (July 2, 2014), 79 FR 39016 

(July 9, 2014) (SR–NYSEArca–2014–37) (order 

approving proposed rule change relating to the 

listing and trading of iShares 2020 S&P AMT-Free 

Municipal Series under NYSE Arca Equities Rule 

5.2(j)(3), Commentary .02). The Commission also 

has issued a notice of filing and immediate 

effectiveness of a proposed rule change relating to 

listing and trading on the Exchange of the iShares 

Taxable Municipal Bond Fund. See Securities 

Exchange Act Release No. 63176 (October 25, 2010), 

75 FR 66815 (October 29, 2010) (SR–NYSEArca– 

2010–94). The Commission has approved two 

actively managed funds of the PIMCO ETF Trust 

that hold municipal bonds. See Securities Exchange 

Act Release No. 60981 (November 10, 2009), 74 FR 

59594 (November 18, 2009) (SR–NYSEArca–2009– 

79) (order approving listing and trading of PIMCO 

Short-Term Municipal Bond Strategy Fund and 

PIMCO Intermediate Municipal Bond Strategy 

Fund, among others). The Commission also has 

approved listing and trading on the Exchange of the 

SPDR Nuveen S&P High Yield Municipal Bond 

Fund. See Securities Exchange Act Release No. 

63881 (February 9, 2011), 76 FR 9065 (February 16, 

2011) (SR–NYSEArca–2010–120). 

5An 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, BFA 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 nonpublic 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. 

6With respect to the iShares iBonds Dec 2021 

AMT-Free Muni Bond ETF, see Post-Effective 

Amendment No. 1,380 to the Trust’s registration 

statement on Form N–1A under the Securities Act 

of 1933 (15 U.S.C. 77a) (‘‘1933 Act’’) and the 

Investment Company Act of 1940 (‘‘1940 Act’’) (15 

U.S.C. 80a–1), dated March 26, 2015 (File Nos. 333– 

92935 and 811–09729), and, with respect to the 

iShares iBonds Dec 2022 AMT-Free Muni Bond 

ETF, see Post-Effective Amendment No. 1,381 to the 

Trust’s registration statement on Form N–1A under 

the 1933 Act and 1940 Act, dated March 26, 2015 

(File Nos. 333–92935 and 811–09729) (each a 

‘‘Registration Statement’’ and, collectively, the 

‘‘Registration Statements’’). The description of the 

operation of the Trust and the Funds herein is 

based, in part, on the Registration Statements. In 

addition, the Commission has issued an order 

granting certain exemptive relief to the Trust under 

the 1940 Act. See Investment Company Act Release 

No. 27608 (December 21, 2006) (File No. 812– 

13208) (‘‘Exemptive Order’’). 

7The 2021 Index and the S&P AMT-Free 

Municipal Series December 2022 IndexTM (or the 

‘‘2022 Index’’) (described below) are products of 

S&P Dow Jones Indices LLC, a subsidiary of 

McGraw Hill Financial, Inc. (the ‘‘Index Provider’’), 

which is independent of the Funds and BFA. The 

Index Provider determines the composition and 

relative weightings of the securities in the 2021 

Index and 2022 Index and publishes information 

regarding the market value of the 2021 Index and 

2022 Index. The Index Provider is not a brokerdealer or affiliated with a broker-dealer and has 

implemented procedures designed to prevent the 

use and dissemination of material, non-public 

information regarding the 2021 Index and 2022 

Index. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74730; File No. SR– 

NYSEArca–2015–25] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change, and Amendment No. 1 

Thereto, To List and Trade Shares of 

the iShares iBonds Dec 2021 AMT-Free 

Muni Bond ETF and iShares iBonds 

Dec 2022 AMT-Free Muni Bond ETF 

Under NYSE Arca Equities Rule 

5.2(j)(3) 

April 15, 2015. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that, on March 

31, 2015, NYSE Arca, Inc. (the 

‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. On April 14, 2015, the 

Exchange filed Amendment No. 1 to the 

proposed rule change, which 

superseded the original filing. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change, as amended by Amendment No. 

1, from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to list and 

trade under NYSE Arca Equities Rule 

5.2(j)(3), Commentary .02, the shares of 

the following series of the iShares Trust: 

iShares iBonds Dec 2021 AMT-Free 

Muni Bond ETF and iShares iBonds Dec 

2022 AMT-Free Muni Bond ETF. The 

text of the proposed rule change is 

available on the Exchange’s Web site 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 to list and 

trade shares (‘‘Shares’’) of the following 

series of the iShares Trust (the ‘‘Trust’’) 

under NYSE Arca Equities Rule 5.2(j)(3), 

Commentary .02, which governs the 

listing and trading of Investment 

Company Units (‘‘Units’’) based on fixed 

income securities indexes: iShares 

iBonds Dec 2021 AMT-Free Muni Bond 

ETF and iShares iBonds Dec 2022 AMTFree Muni Bond ETF (each a ‘‘Fund’’ 

and, collectively, the ‘‘Funds’’).4

Blackrock Fund Advisors (‘‘BFA’’) 

will be the investment adviser for the 

Funds.5

BlackRock Investments, LLC is the 

Funds’ distributor (‘‘Distributor’’).6

iShares iBonds Dec 2021 AMT-Free 

Muni Bond ETF 

The Fund will seek to track the 

investment results of an index 

composed of investment-grade U.S. 

municipal bonds maturing after 

December 31, 2020 and before December 

2, 2021. Specifically, the Fund will seek 

to track the investment results of the 

S&P AMT-Free Municipal Series 

December 2021 IndexTM (the ‘‘2021 

Index’’), which measures the 

performance of investment-grade, noncallable U.S. municipal bonds maturing 

after December 31, 2020 and before 

December 2, 2021.7 As of February 10, 

2015, there were 4,217 issues in the 

2021 Index. 

The 2021 Index includes municipal 

bonds primarily from issuers that are 

state or local governments or agencies 

such that the interest on the bonds is 

exempt from U.S. federal income taxes 

and the federal alternative minimum tax 

(‘‘AMT’’). Each bond must have a rating 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 22235 

8Commentary .02(a)(2) to NYSE Arca Equities 

Rule 5.2(j)(3) provides that components that in the 

aggregate account for at least 75% of the weight of 

the index or portfolio each shall have a minimum 

original principal amount outstanding of $100 

million or more. 

9Commentary .02(a)(4) to NYSE Arca Equities 

Rule 5.2(j)(3) provides that no component fixedincome security (excluding Treasury Securities and 

GSE Securities, as defined therein) shall represent 

more than 30% of the weight of the index or 

portfolio, and the five most heavily weighted 

component fixed-income securities in the index or 

portfolio shall not in the aggregate account for more 

than 65% of the weight of the index or portfolio. 

10BFA represents that when bonds are close 

substitutes for one another, pricing vendors can use 

executed trade information from all similar bonds 

as pricing inputs for an individual security. This 

can make individual securities more liquid, because 

valuations for a single security are better estimators 

of actual trading prices when they are informed by 

trades in a large group of closely related securities. 

As a result, securities are more likely to trade at 

prices close to their valuation when they need to 

be sold. 

of at least BBB- by Standard & Poor’s 

Ratings Services (‘‘S&P’’), Baa3 by 

Moody’s Investors Service, Inc. 

(‘‘Moody’s’’), or BBB- by Fitch Ratings, 

Inc. (‘‘Fitch’’) and must have a 

minimum maturity par amount of $2 

million to be eligible for inclusion in the 

2021 Index. To remain in the 2021 

Index, bonds must maintain a minimum 

par amount greater than or equal to $2 

million as of each rebalancing date. All 

bonds in the 2021 Index will mature 

after December 31, 2020 and before 

December 2, 2021. When a bond 

matures in the 2021 Index, an amount 

representing its value at maturity will be 

included in the 2021 Index throughout 

the remaining life of the 2021 Index, 

and any such amount will be assumed 

to earn a rate equal to the performance 

of the Standard & Poor’s Financial 

Services LLC’s (a subsidiary of The 

McGraw-Hill Companies, Inc.) Weekly 

High Grade Index, municipal taxexempt notes that are not subject to 

federal AMT. The 2021 Index is a 

market value weighted index and is 

rebalanced after the market close on the 

last business day of each month. 

The Fund generally will invest at least 

80% of its assets in the securities of the 

2021 Index, except during the last 

months of the Fund’s operations, as 

described below. The Fund may invest 

the remainder of its assets in cash and 

cash equivalents (including shares of 

money market funds affiliated with 

BFA), as well as in municipal bonds not 

included in the 2021 Index, but which 

BFA believes will help the Fund track 

the 2021 Index. The Fund will seek to 

track the investment results of the 2021 

Index before fees and expenses of the 

Fund. 

The Fund will generally hold 

municipal bond securities issued by 

state and local municipalities whose 

interest payments are exempt from U.S. 

federal income tax, the federal AMT and 

a federal Medicare contribution tax of 

3.8% on ‘‘net investment income,’’ 

including dividends, interest and 

capital gains. In addition, the Fund may 

invest any cash assets in one or more 

affiliated municipal money market 

funds. In the last months of operation, 

as the bonds held by the Fund mature, 

the proceeds will not be reinvested in 

bonds but instead will be held in cash 

and cash equivalents, including, 

without limitation, shares of money 

market funds affiliated with BFA, AMTfree tax-exempt municipal notes, 

variable rate demand notes and 

obligations, tender option bonds and 

municipal commercial paper. These 

cash equivalents may not be included in 

the 2021 Index. Around December 1, 

2021, the Fund will wind up and 

terminate, and its net assets will be 

distributed to then-current shareholders. 

The Exchange is submitting this 

proposed rule change because the 2021 

Index for the Fund does not meet all of 

the ‘‘generic’’ listing requirements of 

Commentary .02(a) to NYSE Arca 

Equities Rule 5.2(j)(3) applicable to the 

listing of Units based on fixed income 

securities indexes. The 2021 Index 

meets all such requirements except for 

those set forth in Commentary .02(a)(2).8

Specifically, as of February 10, 2015, 

6.8% of the weight of the 2021 Index 

components have a minimum original 

principal amount outstanding of $100 

million or more. 

As of February 10, 2015, 72% of the 

weight of the 2021 Index components 

was comprised of individual maturities 

that were part of an entire municipal 

bond offering with a minimum original 

principal amount outstanding of $100 

million or more for all maturities of the 

offering. In addition, the total dollar 

amount outstanding of issues in the 

2021 Index was approximately $38.9 

billion and the average dollar amount 

outstanding of issues in the 2021 Index 

was approximately $9.2 million. 

Further, the most heavily weighted 

component represented 0.57% of the 

weight of the 2021 Index and the five 

most heavily weighted components 

represented 2.51% of the weight of the 

2021 Index.9 Therefore, the Exchange 

believes that, notwithstanding that the 

2021 Index does not satisfy the criterion 

in NYSE Arca Equities Rule 5.2(j)(3), 

Commentary .02 (a)(2), the 2021 Index 

is sufficiently broad-based to deter 

potential manipulation, given that it is 

comprised of approximately 4217 

issues. In addition, the 2021 Index 

securities are sufficiently liquid to deter 

potential manipulation in that a 

substantial portion (72%) of the 2021 

Index weight is comprised of maturities 

that are part of a minimum original 

principal amount outstanding of $100 

million or more, and in view of the 

substantial total dollar amount 

outstanding and the average dollar 

amount outstanding of 2021 Index 

issues, as referenced above.10

As of February 10, 2015, 58.2% of the 

2021 Index weight consisted of issues 

with a rating of AA/Aa2 or higher. 

The 2021 Index value, calculated and 

disseminated at least once daily, as well 

as the components of the 2021 Index 

and their percentage weighting, will be 

available from major market data 

vendors. In addition, the portfolio of 

securities held by the Fund will be 

disclosed on the Fund’s Web site at 

www.iShares.com. 

According to the Registration 

Statement, BFA expects that, over time, 

the Fund’s tracking error will not 

exceed 5%. ‘‘Tracking error’’ is the 

difference between the performance 

(return) of the Fund’s portfolio and that 

of the 2021 Index. 

iShares iBonds Dec 2022 AMT-Free 

Muni Bond ETF 

According to the Registration 

Statement, the iShares iBonds Dec 2022 

AMT-Free Muni Bond ETF will seek to 

track the investment results of an index 

composed of investment-grade U.S. 

municipal bonds maturing after 

December 31, 2021 and before December 

2, 2022. The Fund will seek to track the 

investment results of the S&P AMT-Free 

Municipal Series December 2022 

IndexTM (the ‘‘2022 Index’’), which 

measures the performance of 

investment-grade, non-callable U.S. 

municipal bonds maturing after 

December 31, 2021 and before December 

2, 2022. As of February 10, 2015, there 

were 3473 issues in the 2022 Index. 

The 2022 Index includes municipal 

bonds primarily from issuers that are 

state or local governments or agencies 

such that the interest on the bonds is 

exempt from U.S. federal income taxes 

and the federal alternative minimum tax 

(‘‘AMT’’). Each bond must have a rating 

of at least BBB- by S&P, Baa3 by 

Moody’s, or BBB- by Fitch Ratings, Inc. 

and must have a minimum maturity par 

amount of $2 million to be eligible for 

inclusion in the 2022 Index. To remain 

in the 2022 Index, bonds must maintain 

a minimum par amount greater than or 

equal to $2 million as of each 

rebalancing date. All bonds in the 2022 

Index will mature in after December 31, 

2021 and before December 2, 2022. 


tkelley on DSK3SPTVN1PROD with NOTICES
22236 Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 

11Commentary .02(a)(2) to NYSE Arca Equities 

Rule 5.2(j)(3) provides that components that in the 

aggregate account for at least 75% of the weight of 

the index or portfolio each shall have a minimum 

original principal amount outstanding of $100 

million or more. 

12Commentary .02(a)(4) to NYSE Arca Equities 

Rule 5.2(j)(3) provides that no component fixedincome security (excluding Treasury Securities and 

GSE Securities, as defined therein) shall represent 

more than 30% of the weight of the index or 

portfolio, and the five most heavily weighted 

component fixed-income securities in the index or 

portfolio shall not in the aggregate account for more 

than 65% of the weight of the index or portfolio. 

13BFA represents that when bonds are close 

substitutes for one another, pricing vendors can use 

executed trade information from all similar bonds 

as pricing inputs for an individual security. This 

can make individual securities more liquid, because 

valuations for a single security are better estimators 

of actual trading prices when they are informed by 

trades in a large group of closely related securities. 

As a result, securities are more likely to trade at 

prices close to their valuation when they need to 

be sold. 

14 17 CFR 240.10A–3. 15The IIV will be widely disseminated by one or 

more major market data vendors at least every 15 

seconds during the Exchange’s Core Trading 

Session of 9:30 a.m. to 4:00 p.m., Eastern time. 

Currently, it is the Exchange’s understanding that 

several major market data vendors display and/or 

make widely available IIVs taken from the 

Consolidated Tape Association (‘‘CTA’’) or other 

data feeds. 

16See, e.g., Securities Exchange Act Release Nos. 

55783 (May 17, 2007), 72 FR 29194 (May 24, 2007) 

(SR–NYSEArca-2007–36) (order approving NYSE 

Arca generic listing standards for Units based on a 

fixed income index); 44551 (July 12, 2001), 66 FR 

37716 (July 19, 2001) (SR–PCX–2001–14) (order 

approving generic listing standards for Units and 

Portfolio Depositary Receipts); 41983 (October 6, 

1999), 64 FR 56008 (October 15, 1999) (SR–PCX– 

98–29) (order approving rules for listing and trading 

of Units). 

When a bond matures in the 2022 Index, 

an amount representing its value at 

maturity will be included in the 2022 

Index throughout the remaining life of 

the 2022 Index, and any such amount 

will be assumed to earn a rate equal to 

the performance of the Standard & 

Poor’s Financial Services LLC’s Weekly 

High Grade Index, which consists of 

Moody’s Investment Grade-1 municipal 

tax-exempt notes that are not subject to 

federal AMT. The 2022 Index is a 

market value weighted index and is 

rebalanced after the market close on the 

last business day of each month. 

The Fund generally will invest at least 

80% of its assets in the securities of the 

2022 Index, except during the last 

months of the Fund’s operations, as 

described below. The Fund may invest 

the remainder of its assets in cash and 

cash equivalents (including shares of 

money market funds affiliated with 

BFA), as well as in municipal bonds not 

included in the 2022 Index, but which 

BFA believes will help the Fund track 

the 2022 Index. The Fund will seek to 

track the investment results of the 2022 

Index before fees and expenses of the 

Fund. 

The Fund will generally hold 

municipal bond securities issued by 

state and local municipalities whose 

interest payments are exempt from U.S. 

federal income tax, the federal AMT and 

a federal Medicare contribution tax of 

3.8% on ‘‘net investment income,’’ 

including dividends, interest and 

capital gains. In the last months of 

operation, as the bonds held by the 

Fund mature, the proceeds will not be 

reinvested in bonds but instead will be 

held in cash and cash equivalents, 

including, without limitation, shares of 

money market funds affiliated with 

BFA, AMT-free tax-exempt municipal 

notes, variable rate demand notes and 

obligations, tender option bonds and 

municipal commercial paper. These 

cash equivalents may not be included in 

the 2022 Index. Around December 1, 

2022, the Fund will wind up and 

terminate, and its net assets will be 

distributed to then-current shareholders. 

The Exchange is submitting this 

proposed rule change because the 2022 

Index for the Fund does not meet all of 

the ‘‘generic’’ listing requirements of 

Commentary .02(a) to NYSE Arca 

Equities Rule 5.2(j)(3) applicable to the 

listing of Units based on fixed income 

securities indexes. The 2022 Index 

meets all such requirements except for 

those set forth in Commentary 

.02(a)(2).11 Specifically, as of February 

10, 2015, 5.8% of the weight of the 2022 

Index components have a minimum 

original principal amount outstanding 

of $100 million or more. 

As of February 10, 2015, 72.4% of the 

weight of the 2022 Index components 

was comprised of individual maturities 

that were part of an entire municipal 

bond offering with a minimum original 

principal amount outstanding of $100 

million or more for all maturities of the 

offering. In addition, the total dollar 

amount outstanding of issues in the 

2022 Index was approximately $30.5 

billion and the average dollar amount 

outstanding of issues in the 2022 Index 

was approximately $8.8 million. 

Further, the most heavily weighted 

component represented 0.55% of the 

weight of the 2022 Index and the five 

most heavily weighted components 

represented 2.67% of the weight of the 

2022 Index.12 Therefore, the Exchange 

believes that, notwithstanding that the 

2022 Index does not satisfy the criterion 

in NYSE Arca Equities Rule 5.2(j)(3), 

Commentary .02 (a)(2), the 2022 Index 

is sufficiently broad-based to deter 

potential manipulation, given that it is 

comprised of approximately 3473 

issues. In addition, the 2022 Index 

securities are sufficiently liquid to deter 

potential manipulation in that a 

substantial portion (72.4%) of the 2022 

Index weight is comprised of maturities 

that are part of an offering with a 

minimum original principal amount 

outstanding of $100 million or more, 

and in view of the substantial total 

dollar amount outstanding and the 

average dollar amount outstanding of 

2022 Index issues, as referenced 

above.13

As of February 10, 2015, 59.7% of the 

2022 Index weight consisted of issues 

with a rating of AA/Aa2 or higher. 

The 2022 Index value, calculated and 

disseminated at least once daily, as well 

as the components of the 2022 Index 

and their percentage weighting, will be 

available from major market data 

vendors. In addition, the portfolio of 

securities held by the Fund will be 

disclosed on the Fund’s Web site at 

www.iShares.com. 

According to the Registration 

Statement, BFA expects that, over time, 

the Fund’s tracking error will not 

exceed 5%. ‘‘Tracking error’’ is the 

difference between the performance 

(return) of the Fund’s portfolio and that 

of the 2022 Index. 

The Exchange represents that: (1) 

Except for Commentary .02(a)(2) to 

NYSE Arca Equities Rule 5.2(j)(3), the 

2021 Index and 2022 Index currently 

satisfy all of the generic listing 

standards under NYSE Arca Equities 

Rule 5.2(j)(3); (2) the continued listing 

standards under NYSE Arca Equities 

Rules 5.2(j)(3) and 5.5(g)(2) applicable to 

Units shall apply to the Shares of a 

Fund; and (3) the Trust is required to 

comply with Rule 10A–3 14 under the 

Act for the initial and continued listing 

of the Shares of a Fund. In addition, the 

Exchange represents that the Shares of 

the Funds will comply with all other 

requirements applicable to Units 

including, but not limited to, 

requirements relating to the 

dissemination of key information such 

as the value of the 2021 Index and 2022 

Index, respectively, and the Intraday 

Indicative Value (‘‘IIV’’),15 rules 

governing the trading of equity 

securities, trading hours, trading halts, 

surveillance, and the Information 

Bulletin to Equity Trading Permit 

Holders (‘‘ETP Holders’’), as set forth in 

Exchange rules applicable to Units and 

prior Commission orders approving the 

generic listing rules applicable to the 

listing and trading of Units.16

The current value of the 2021 Index 

and 2022 Index will be widely 

disseminated by one or more major 

market data vendors at least once per 

day, as required by NYSE Arca Equities 

Rule 5.2(j)(3), Commentary .02(b)(ii). 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 22237 

17 General obligation (‘‘GO’’) bonds are backed by 

the full faith and credit of the issuer and by its 

taxing power. Revenue bonds (‘‘REV’’) are payable 

solely from net or gross non-tax revenues derived 

from a specific project. Double barreled (‘‘DB’’) GO 

bonds are secured by both a specific revenue stream 

and by the taxing power of the issuer. As of 

February 10, 2015, the market value of GO, REV and 

DB bonds in the 2021 Index was approximately 

$14.3 billion, $23.4 billion and $1.3 million, 

respectively, representing 36.7%, 60.0% and 3.3% 

of the 2021 Index weight, respectively. As of 

February 10, 2015, the market value of GO, REV and 

DB bonds in the 2022 Index was approximately 

$11.7 billion, $ 17.8 billion and $987 million, 

respectively, representing 38.4%, 58.4% and 3.2% 

of the 2022 Index weight, respectively. 

18Source: Standard and Poor’s, January 1, 2014 to 

January 1, 2015, daily evaluated prices. Evaluated 

prices, as defined by Standard and Poor’s, are based 

on a methodology that incorporates, among other 

things, trade data, broker dealer quotes, new issue 

pricing, and certain fundamental characteristics 

such as credit quality and sector. 

19This is a composite rating among Standard & 

Poor’s, Moody’s and Fitch ratings. Under BFA’s 

methodology, the median rating is used if all three 

ratings are available; the lowest rating is used if 

only two ratings are available; and, if only one 

rating is available, that one is used. 

20According to the Registration Statement, 

‘‘representative sampling’’ is an indexing strategy 

that involves investing in a representative sample 

of securities that collectively has an investment 

profile similar to the 2021 Index or 2022 Index, 

respectively. The securities selected are expected to 

have, in the aggregate, investment characteristics 

(based on factors such as market capitalization and 

industry weightings), fundamental characteristics 

(such as return variability, duration, maturity or 

credit ratings and yield) and liquidity measures 

similar to those of the Index. A Fund may or may 

not hold all of the securities in the 2021 Index or 

2022 Index. 

The IIV for Shares of a Fund will be 

disseminated by one or more major 

market data vendors, updated at least 

every 15 seconds during the Exchange’s 

Core Trading Session, as required by 

NYSE Arca Equities Rule 5.2(j)(3), 

Commentary .02(c). 

Correlation Among Municipal Bond 

Instruments With Common 

Characteristics 

With respect to the Funds, BFA 

represents that the nature of the 

municipal bond market and municipal 

bond instruments makes it feasible to 

categorize individual issues represented 

by CUSIPs (i.e., the specific identifying 

number for a security) into categories 

according to common characteristics— 

specifically, rating, geographical region, 

purpose (i.e., general obligation bonds, 

revenue bonds or ‘‘double-barreled’’ 

bonds),17 and maturity. Bonds that share 

similar characteristics tend to trade 

similarly to one another; therefore, 

within these categories, the issues may 

be considered fungible from a portfolio 

management perspective, allowing one 

CUSIP to be represented by another that 

shares similar characteristics for 

purposes of developing an investment 

strategy. Therefore, while 6.8% of the 

weight of the 2021 Index and 5.8% of 

the weight of the 2022 Index 

components have a minimum original 

principal amount outstanding of $100 

million or more, the nature of the 

municipal bond market makes the 

issues relatively fungible for investment 

purposes when aggregated into 

categories such as ratings, geographical 

region, purpose and maturity. In 

addition, within a single municipal 

bond issuer, there are often multiple 

contemporaneous or sequential 

issuances that have the same rating, 

structure and maturity, but have 

different CUSIPs; these separate issues 

by the same issuer are also likely to 

trade similarly to one another. 

BFA represents that iShares 

municipal bond funds are managed 

utilizing the principle that municipal 

bond issues are generally fungible in 

nature when sharing common 

characteristics, and specifically make 

use of the four categories referred to 

above. In addition, this principle is used 

in, and consistent with, the portfolio 

construction process for other iShares 

funds—namely, portfolio optimization. 

These portfolio optimization techniques 

are designed to facilitate the creation 

and redemption process, and to enhance 

liquidity (among other benefits, such as 

reducing transaction costs), while still 

allowing each fund to closely track its 

reference index. 

In addition, individual CUSIPs within 

the 2021 Index and 2022 Index that 

share characteristics with other CUSIPs 

based on the four categories described 

above have a high yield to maturity 

correlation, and frequently have a 

correlation of one or close to one. Such 

correlation demonstrates that the 

CUSIPs within their respective category 

behave similarly; this reinforces the 

fungible nature of municipal bond 

issues for purposes of developing an 

investment strategy. 

Attached as Exhibit 3 to this proposed 

rule change are two examples reflecting 

the correlation among CUSIPs in the 

2021 Index and 2022 Index, 

respectively.18 These examples show 

the correlation of selected constituents 

that share three common characteristics: 

rating, purpose and geographical region. 

Example 1 relating to the 2021 Index 

shows the yield to maturity of issues 

sharing the following characteristics: 

Rating AA/Aa; 19 West; GO Bonds 

maturing July 1, 2021. Example 2 

relating to the 2022 Index shows the 

yield to maturity of issues sharing the 

following characteristics: Rating AA/Aa; 

West; GO Bonds maturing July 1, 2022. 

Creation and Redemption of Shares 

According to the Registration 

Statement, each Fund will issue and 

redeem Shares on a continuous basis at 

the net asset value per Share (‘‘NAV’’) 

only in a large specified number of 

Shares called a ‘‘Creation Unit’’, or 

multiples thereof, with each Creation 

Unit consisting of 50,000 Shares, 

provided, however, that from time to 

time a Fund may change the number of 

Shares (or multiples thereof) required 

for each Creation Unit, if a Fund 

determines such a change would be in 

the best interests of a Fund. 

The consideration for purchase of 

Creation Units of a Fund generally will 

consist of the in-kind deposit of a 

designated portfolio of securities 

(including any portion of such securities 

for which cash may be substituted) (i.e., 

the Deposit Securities), which 

constitutes a representative sample of 

the securities of the 2021 Index or 2022 

Index, as applicable,20 and the Cash 

Component computed as described 

below. Together, the Deposit Securities 

and the Cash Component constitute the 

‘‘Fund Deposit,’’ which represents the 

minimum initial and subsequent 

investment amount for a Creation Unit 

of a Fund. 

The portfolio of securities required for 

purchase of a Creation Unit may not be 

identical to the portfolio of securities a 

Fund will deliver upon redemption of a 

Fund’s Shares. The Deposit Securities 

and Fund Securities (as defined below), 

as the case may be, in connection with 

a purchase or redemption of a Creation 

Unit, generally will correspond pro rata, 

to the extent practicable, to the 

securities held by such Fund. As the 

planned termination date of a Fund 

approaches, and particularly as the 

bonds held by a Fund begin to mature, 

a Fund would expect to effect both 

creations and redemptions increasingly 

for cash. 

The Cash Component will be an 

amount equal to the difference between 

the NAV of the Shares (per Creation 

Unit) and the ‘‘Deposit Amount,’’ which 

will be an amount equal to the market 

value of the Deposit Securities, and 

serve to compensate for any differences 

between the NAV per Creation Unit and 

the Deposit Amount. A Fund currently 

will offer Creation Units for in-kind 

deposits but reserves the right to utilize 

a ‘‘cash’’ option in lieu of some or all 

of the applicable Deposit Securities for 

creation of Shares. 

BFA will make available through the 

National Securities Clearing Corporation 

(‘‘NSCC’’) on each business day, prior to 

the opening of business on the 

Exchange, the list of names and the 


tkelley on DSK3SPTVN1PROD with NOTICES
22238 Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 

required number or par value of each 

Deposit Security and the amount of the 

Cash Component to be included in the 

current Fund Deposit (based on 

information as of the end of the 

previous business day) for a Fund. 

The identity and number or par value 

of the Deposit Securities will change 

pursuant to changes in the composition 

of a Fund’s portfolio and as rebalancing 

adjustments and corporate action events 

will be reflected from time to time by 

BFA with a view to the investment 

objective of a Fund. The composition of 

the Deposit Securities may also change 

in response to adjustments to the 

weighting or composition of the 

component securities constituting the 

2021 Index or 2022 Index. 

Each 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’’). 

Creation Units may be purchased only 

by or through a DTC participant that has 

entered into an ‘‘Authorized Participant 

Agreement’’ (as described in the 

applicable Registration Statement) with 

the Distributor (an ‘‘Authorized 

Participant’’). Except as noted below, all 

creation orders must be placed for one 

or more Creation Units and must be 

received by the Distributor in proper 

form no later than the closing time of 

the regular trading session of the 

Exchange (normally 4:00 p.m., Eastern 

time) in each case on the date such 

order is placed in order for creation of 

Creation Units to be effected based on 

the NAV of Shares of a Fund as next 

determined on such date after receipt of 

the order in proper form. Orders 

requesting substitution of a ‘‘cash in 

lieu’’ amount generally must be received 

by the Distributor no later than 2:00 

p.m., Eastern time. On days when the 

Exchange or the bond markets close 

earlier than normal, a Fund may require 

orders to create Creation Units to be 

placed earlier in the day. 

Fund Deposits must be delivered 

through the Federal Reserve System (for 

cash and government securities) and 

through DTC (for corporate and 

municipal securities) by an Authorized 

Participant. The Fund Deposit transfer 

must be ordered by the DTC participant 

in a timely fashion so as to ensure the 

delivery of the requisite number of 

Deposit Securities through DTC to the 

account of a Fund by no later than 3:00 

p.m., Eastern time, on the ‘‘Settlement 

Date’’. The Settlement Date is generally 

the third business day after the 

transmittal date. 

A standard creation transaction fee 

will be imposed to offset the transfer 

and other transaction costs associated 

with the issuance of Creation Units. 

Shares of a Fund may be redeemed 

only in Creation Units at the NAV next 

determined after receipt of a redemption 

request in proper form by the 

Distributor and only on a business day. 

BFA will make 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 on that day (‘‘Fund Securities’’). 

Fund Securities received on redemption 

may not be identical to Deposit 

Securities that are applicable to 

creations of Creation Units. 

Unless cash redemptions are available 

or specified for a Fund, the redemption 

proceeds for a Creation Unit generally 

will consist of a specified amount of 

cash, Fund Securities, plus additional 

cash in an amount equal to the 

difference between the NAV of the 

Shares being redeemed, as next 

determined after the receipt of a request 

in proper form, and the value of the 

specified amount of cash and Fund 

Securities, less a redemption transaction 

fee. A Fund currently will redeem 

Shares for Fund Securities, but a Fund 

reserves the right to utilize a ‘‘cash’’ 

option for redemption of Shares. 

A standard redemption transaction fee 

will be imposed to offset transfer and 

other transaction costs that may be 

incurred by a Fund. 

Redemption requests for Creation 

Units of a Fund must be submitted to 

the Distributor by or through an 

Authorized Participant no later than 

4:00 p.m. Eastern time on any business 

day, in order to receive that day’s NAV. 

The Authorized Participant must 

transmit the request for redemption in 

the form required by a Fund to the 

Distributor in accordance with 

procedures set forth in the Authorized 

Participant Agreement. 

Detailed descriptions of the Funds, 

the 2021 Index and 2022 Index, 

procedures for creating and redeeming 

Shares, transaction fees and expenses, 

dividends, distributions, taxes, risks, 

and reports to be distributed to 

beneficial owners of the Shares can be 

found in the Registration Statements or 

on the Web site for the Funds 

(www.iShares.com), as applicable. 

Net Asset Value 

The NAV of a Fund normally will be 

determined once daily Monday through 

Friday, generally as of the regularly 

scheduled close of business of the New 

York Stock Exchange (‘‘NYSE’’) 

(normally 4:00 p.m., Eastern time) on 

each day that the NYSE is open for 

trading, based on prices at the time of 

closing provided that (a) any Fund 

assets or liabilities denominated in 

currencies other than the U.S. dollar 

will be translated into U.S. dollars at the 

prevailing market rates on the date of 

valuation as quoted by one or more data 

service providers and (b) U.S. fixedincome assets may be valued as of the 

announced closing time for trading in 

fixed-income instruments in a particular 

market or exchange. The NAV of a Fund 

will be calculated by dividing the value 

of the net assets of a Fund (i.e., the value 

of its total assets less total liabilities) by 

the total number of outstanding Shares 

of a Fund, generally rounded to the 

nearest cent. 

The value of the securities and other 

assets and liabilities held by a Fund will 

be determined pursuant to valuation 

policies and procedures approved by 

the Trust’s Board of Trustees (‘‘Board’’). 

A Fund’s assets and liabilities will be 

valued on the basis of market 

quotations, when readily available. 

Each Fund will value fixed-income 

portfolio securities using prices 

provided directly from one or more 

broker-dealers, market makers, or 

independent third-party pricing services 

which may use matrix pricing and 

valuation models, as well as recent 

market transactions for the same or 

similar assets, to derive values. Certain 

short-term debt securities may be valued 

on the basis of amortized cost. 

Generally, trading in non-U.S. 

securities, U.S. government securities, 

money market instruments and certain 

fixed-income securities is substantially 

completed each day at various times 

prior to the close of business on the 

NYSE. The values of such securities 

used in computing the NAV of a Fund 

are determined as of such times. 

When market quotations are not 

readily available or are believed by BFA 

to be unreliable, a Fund’s investments 

will be valued at fair value. Fair value 

determinations will be made by BFA in 

accordance with policies and 

procedures approved by the Trust’s 

Board. BFA may conclude that a market 

quotation is not readily available or is 

unreliable if a security or other asset or 

liability does not have a price source 

due to its lack of liquidity, if a market 

quotation differs significantly from 

recent price quotations or otherwise no 

longer appears to reflect fair value, 

where the security or other asset or 

liability is thinly traded, or where there 

is a significant event subsequent to the 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 22239 

21Under accounting procedures followed by a 

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

will be booked and reflected in NAV on the current 

business day (‘‘T+1’’). Accordingly, a 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. 22 17 CFR 240.10A–3. 

most recent market quotation. A 

‘‘significant event’’ is an event that, in 

the judgment of BFA, is likely to cause 

a material change to the closing market 

price of the asset or liability held by a 

Fund. 

Fair value represents a good faith 

approximation of the value of an asset 

or liability. The fair value of an asset or 

liability held by a Fund is the amount 

a Fund might reasonably expect to 

receive from the current sale of that 

asset or the cost to extinguish that 

liability in an arm’s-length transaction. 

Availability of Information 

On each business day, each Fund will 

disclose on its Web site the portfolio 

that will form the basis for a Fund’s 

calculation of NAV at the end of the 

business day.21

On a daily basis, a Fund will disclose 

for each portfolio security or other 

financial instrument of a Fund the 

following information on the Funds’ 

Web site: Ticker symbol (if applicable), 

name of security and financial 

instrument, a common identifier such as 

CUSIP or ISIN (if applicable), number of 

shares (if applicable), and dollar value 

of securities and financial instruments 

held in the portfolio, and percentage 

weighting of the security and financial 

instrument in the portfolio. The Web 

site information will be publicly 

available at no charge. 

The current value of the 2021 Index 

and 2022 Index will be widely 

disseminated by one or more major 

market data vendors at least once per 

day, as required by NYSE Arca Equities 

Rule 5.2(j)(3), Commentary .02 (b)(ii). 

The IIV for Shares of a Fund will be 

disseminated by one or more major 

market data vendors, updated at least 

every 15 seconds during the Exchange’s 

Core Trading Session, as required by 

NYSE Arca Equities Rule 5.2(j)(3), 

Commentary .02(c). 

Investors can also obtain the Trust’s 

Statement of Additional Information 

(‘‘SAI’’), a Fund’s Shareholder Reports, 

and its Form N–CSR and Form N–SAR, 

filed twice a year. The Trust’s SAI and 

Shareholder Reports are available free 

upon request from the Trust, and those 

documents and the Form N–CSR and 

Form N–SAR may be viewed on-screen 

or downloaded from the Commission’s 

Web site at www.sec.gov. Information 

regarding market price and trading 

volume of the Shares will be continually 

available on a real-time basis throughout 

the day on brokers’ computer screens 

and other electronic services. 

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 of each Fund will be 

available via the Consolidated Tape 

Association (‘‘CTA’’) high speed line. 

Quotation information for investment 

company securities (excluding ETFs) 

may be obtained through nationally 

recognized pricing services through 

subscription agreements or from brokers 

and dealers who make markets in such 

securities. Price information regarding 

municipal bonds, AMT-free tax-exempt 

municipal notes, variable rate demand 

notes and obligations, tender option 

bonds and municipal commercial paper 

is available from third party pricing 

services and major market data vendors. 

Trading Rules 

The Exchange deems the Shares of the 

Funds to be equity securities, thus 

rendering trading in the Shares subject 

to the Exchange’s existing rules 

governing the trading of equity 

securities. Shares of the Funds will 

trade on the NYSE Arca Marketplace 

from 4:00 a.m. to 8:00 p.m. Eastern time 

in accordance with NYSE Arca Equities 

Rule 7.34 (Opening, 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 Equities Rule 7.6, Commentary .03, 

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. 

The Shares of each Fund will conform 

to the initial and continued listing 

criteria under NYSE Arca Equities Rules 

5.2(j)(3) and 5.5(g)(2), respectively 

(except for those set forth in 

Commentary .02(a)(2)). The Exchange 

represents that, for initial and/or 

continued listing, the Fund [sic] will be 

in compliance with Rule 10A–3 22 under 

the Act, as provided by NYSE Arca 

Equities Rule 5.3. A minimum of 

100,000 Shares for each Fund 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 of each Fund will be calculated 

daily and that the NAV per Share will 

be made available to all market 

participants at the same time. 

Trading Halts 

The Exchange will halt trading in the 

Shares if the circuit breaker parameters 

of NYSE Arca Equities Rule 7.12 have 

been reached. In exercising its 

discretion to halt or suspend trading in 

the Shares, the Exchange may consider 

factors such as the extent to which 

trading in the underlying securities is 

not occurring or whether other unusual 

conditions or circumstances detrimental 

to the maintenance of a fair and orderly 

market are present, in addition to other 

factors that may be relevant. If the IIV 

(as defined in Commentary .01 to Rule 

5.2(j)(3)) or the value of the 2021 Index 

or 2022 Index is not being disseminated 

as required, the Exchange may halt 

trading during the day in which the 

interruption to the dissemination of the 

IIV or the 2021 Index value or 2022 

Index value occurs. If the interruption to 

the dissemination of the IIV, 2021 Index 

value or 2022 Index value persists past 

the trading day in which it occurred, the 

Exchange will halt trading. 

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 Equities Rule 9.2(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 Opening and Late Trading 

Sessions when an updated IIV will not 

be calculated or publicly disseminated; 

(4) how information regarding the IIV 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 a 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. 


tkelley on DSK3SPTVN1PROD with NOTICES
22240 Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 

23 15 U.S.C. 78f(b)(5). 

24FINRA surveils trading on the Exchange 

pursuant to a regulatory services agreement. The 

Exchange is responsible for FINRA’s performance 

under this regulatory services agreement. 

25Commentary .02(a)(4) to NYSE Arca Equities 

Rule 5.2(j)(3) provides that no component fixedincome security (excluding Treasury Securities and 

GSE Securities, as defined therein) shall represent 

more than 30% of the weight of the index or 

portfolio, and the five most heavily weighted 

component fixed-income securities in the index or 

portfolio shall not in the aggregate account for more 

than 65% of the weight of the index or portfolio. 

26Commentary .02(a)(4) to NYSE Arca Equities 

Rule 5.2(j)(3) provides that no component fixedincome security (excluding Treasury Securities and 

GSE Securities, as defined therein) shall represent 

more than 30% of the weight of the index or 

portfolio, and the five most heavily weighted 

component fixed-income securities in the index or 

portfolio shall not in the aggregate account for more 

than 65% of the weight of the index or portfolio. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under section 6(b)(5) 23 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. 

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 Equities 

Rule 5.2(j)(3). The Exchange represents 

that trading in the Shares will be subject 

to the existing trading surveillances, 

administered by the Financial Industry 

Regulatory Authority (‘‘FINRA’’) on 

behalf of the Exchange, which are 

designed to detect violations of 

Exchange rules and applicable federal 

securities laws.24 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. FINRA, on behalf of the 

Exchange, will communicate as needed 

regarding trading in the Shares with 

other markets or other entities that are 

members of the Intermarket 

Surveillance group (‘‘ISG’’), and FINRA 

may obtain trading information 

regarding trading in the Shares from 

such markets or entities. FINRA also can 

access data obtained from the Municipal 

Securities Rulemaking Board relating to 

municipal bond trading activity for 

surveillance purposes in connection 

with trading in the Shares. FINRA, on 

behalf of the Exchange, is able to access, 

as needed, trade information for certain 

fixed income securities held by a Fund 

reported to FINRA’s Trade Reporting 

and Compliance Engine (‘‘TRACE’’). In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares from markets or other entities 

that are members of ISG or with which 

the Exchange has in place a 

comprehensive surveillance sharing 

agreement. 

The Index Provider is not a brokerdealer or affiliated with a broker-dealer 

and has implemented procedures 

designed to prevent the use and 

dissemination of material, non-public 

information regarding the 2021 Index 

and 2022 Index. As of February 10, 

2015, there were 4,217 issues in the 

2021 Index. As of February 10, 2015, 

6.8% of the weight of the 2021 Index 

components have a minimum original 

principal amount outstanding of $100 

million or more. As of February 10, 

2015, 72% of the weight of the 2021 

Index components was comprised of 

individual maturities that were part of 

an entire municipal bond offering with 

a minimum original principal amount 

outstanding of $100 million or more for 

all maturities of the offering. In 

addition, the total dollar amount 

outstanding of issues in the 2021 Index 

was approximately $38.9 billion and the 

average dollar amount outstanding of 

issues in the 2021 Index was 

approximately $9.2 million. Further, the 

most heavily weighted component 

represented 0.57% of the weight of the 

2021 Index and the five most heavily 

weighted components represented 

2.51% of the weight of the 2021 Index.25

Therefore, the Exchange believes that, 

notwithstanding that the Index does not 

satisfy the criterion in NYSE Arca 

Equities Rule 5.2(j)(3), Commentary .02 

(a)(2), the Index is sufficiently broadbased to deter potential manipulation, 

given that it is comprised of 

approximately 4217 issues. In addition, 

the 2021 Index securities are sufficiently 

liquid to deter potential manipulation in 

that a substantial portion (72%) of the 

2021 Index weight is comprised of 

maturities that are part of a minimum 

original principal amount outstanding 

of $100 million or more, and in view of 

the substantial total dollar amount 

outstanding and the average dollar 

amount outstanding of Index issues. 

As of February 10, 2015, there were 

3473 issues in the 2022 Index. As of 

February 10, 2015, 5.8% of the weight 

of the 2022 Index components have a 

minimum original principal amount 

outstanding of $100 million or more. As 

of February 10, 2015, 72.4% of the 

weight of the 2022 Index components 

was comprised of individual maturities 

that were part of an entire municipal 

bond offering with a minimum original 

principal amount outstanding of $100 

million or more for all maturities of the 

offering. In addition, the total dollar 

amount outstanding of issues in the 

2022 Index was approximately $30.5 

billion and the average dollar amount 

outstanding of issues in the 2022 Index 

was approximately $8.8 million. 

Further, the most heavily weighted 

component represented 0.55% of the 

weight of the 2022 Index and the five 

most heavily weighted components 

represented 2.67% of the weight of the 

2022 Index.26 Therefore, the Exchange 

believes that, notwithstanding that the 

2022 Index does not satisfy the criterion 

in NYSE Arca Equities Rule 5.2(j)(3), 

Commentary .02 (a)(2), the 2022 Index 

is sufficiently broad-based to deter 

potential manipulation, given that it is 

comprised of approximately 3473 

issues. In addition, the 2022 Index 

securities are sufficiently liquid to deter 

potential manipulation in that a 

substantial portion (72.4%) of the 2022 

Index weight is comprised of maturities 

that are part of an offering with a 

minimum original principal amount 

outstanding of $100 million or more, 

and in view of the substantial total 

dollar amount outstanding and the 

average dollar amount outstanding of 

2022 Index issues, as referenced above. 

The 2021 Index value and 2022 Index 

value, calculated and disseminated at 

least once daily, as well as the 

components of the 2021 Index and 2022 

Index and their percentage weightings, 

will be available from major market data 

vendors. In addition, the portfolio of 

securities held by the Funds will be 

disclosed on the Funds’ Web site at 

www.iShares.com. The IIV for Shares of 

the Funds will be disseminated by one 

or more major market data vendors, 

updated at least every 15 seconds 

during the Exchange’s Core Trading 

Session. According to the Registration 

Statement, BFA expects that, over time, 

a Fund’s tracking error will not exceed 

5%. BFA represents that bonds that 

share similar characteristics, as 

described above, tend to trade similarly 

to one another; therefore, within these 

categories, the issues may be considered 

fungible from a portfolio management 

perspective. Within a single municipal 

bond issuer, BFA represents that 

separate issues by the same issuer are 

also likely to trade similarly to one 

another. In addition, BFA represents 

that individual CUSIPs within the 2021 

Index and 2022 Index that share 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 22241 

characteristics with other CUSIPs based 

on the four categories described above 

have a high yield to maturity 

correlation, and frequently have a 

correlation of one or close to one. 

The proposed rule change is designed 

to promote just and equitable principles 

of trade and to protect investors and the 

public interest in that a large amount of 

information will be publicly available 

regarding the Funds and the Shares, 

thereby promoting market transparency. 

The Funds’ portfolio holdings will be 

disclosed on the Funds’ Web site daily 

after the close of trading on the 

Exchange and prior to the opening of 

trading on the Exchange the following 

day. Moreover, the IIV will be widely 

disseminated by one or more major 

market data vendors at least every 15 

seconds during the Exchange’s Core 

Trading Session. The current values of 

the 2021 Index and 2022 Index will be 

disseminated by one or more major 

market data vendors at least once per 

day. Information regarding market price 

and trading volume of the Shares will be 

continually available on a real-time 

basis throughout the day on brokers’ 

computer screens and other electronic 

services, and quotation and last sale 

information will be available via the 

CTA high-speed line. The Web site for 

the Funds will include the prospectus 

for the Funds and additional data 

relating to NAV and other applicable 

quantitative information. Moreover, 

prior to the commencement of trading, 

the Exchange will inform its ETP 

Holders in an Information Bulletin of 

the special characteristics and risks 

associated with trading the Shares. If the 

Exchange becomes aware that the NAV 

is not being disseminated to all market 

participants at the same time, it will halt 

trading in the Shares until such time as 

the NAV is available to all market 

participants. With respect to trading 

halts, the Exchange may consider all 

relevant factors in exercising its 

discretion to halt or suspend trading in 

the Shares of the Funds. Trading also 

may be halted because of market 

conditions or for reasons that, in the 

view of the Exchange, make trading in 

the Shares inadvisable. If the IIV, the 

2021 Index value or the 2022 Index 

value are not being disseminated as 

required, the Corporation may halt 

trading during the day in which the 

interruption to the dissemination of the 

IIV, the 2021 Index value or the 2022 

Index value occurs. If the interruption to 

the dissemination of the IIV, the 2021 

Index value or the 2022 Index value 

persists past the trading day in which it 

occurred, the Corporation will halt 

trading. Trading in Shares of the Funds 

will be halted if the circuit breaker 

parameters in NYSE Arca Equities Rule 

7.12 have been reached or because of 

market conditions or for reasons that, in 

the view of the Exchange, make trading 

in the Shares inadvisable, and trading in 

the Shares will be subject to NYSE Arca 

Equities Rule 7.34, which sets forth 

circumstances under which Shares of 

the Funds may be halted. In addition, 

investors will have ready access to 

information regarding the IIV, and 

quotation and last sale information for 

the Shares. 

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 additional type of exchange-traded 

fund that holds municipal bonds and 

that will enhance competition among 

market participants, to the benefit of 

investors and the marketplace. As noted 

above, the Exchange has in place 

surveillance procedures relating to 

trading in the Shares and may obtain 

information via ISG from other 

exchanges that are members of ISG or 

with which the Exchange has entered 

into a comprehensive surveillance 

sharing agreement. In addition, 

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 will 

facilitate the listing and trading of 

another exchange-traded product that 

holds municipal securities and 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 within such longer period 

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, as modified by Amendment No. 

1, 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–2015–25 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–2015–25. 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 Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site 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 such 

filing will also be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 


tkelley on DSK3SPTVN1PROD with NOTICES
22242 Federal Register / Vol. 80, No. 76 / Tuesday, April 21, 2015 / Notices 

27 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. 73141 

(Sept. 18, 2014), 79 FR 57161 (‘‘Notice’’). 

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

5See Securities Exchange Act Release No. 73515, 

79 FR 66758 (Nov. 10, 2014). The Commission 

designated a longer period within which to take 

action on the proposed rule change and designated 

December 23, 2014, as the date by which it should 

approve, disapprove, or institute proceedings to 

determine whether to disapprove the proposed rule 

change. 

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

7See Securities Exchange Act Release No. 73914, 

79 FR 78524 (Dec. 30, 2014) (‘‘Order Instituting 

Proceedings’’). Specifically, the Commission 

instituted proceedings to allow for additional 

analysis of the proposed rule change’s consistency 

with Section 6(b)(5) of the Act, which requires, 

among other things, that the rules of a national 

securities exchange be ‘‘designed to prevent 

fraudulent and manipulative acts and practices, to 

promote just and equitable principles of trade,’’ and 

‘‘to protect investors and the public interest.’’ See 

id., 79 FR at 78530. 

8See id. (soliciting public comment on the 

statements of the Exchange contained in the Notice, 

including the statements made in connection with 

information sharing procedures with respect to 

certain non-U.S. equity security holdings and the 

Exchange’s arguments regarding the applicability of 

the definition of ‘‘Actively-Traded Securities’’ 

under Regulation M (‘‘Reg M’’)). 

9The text of Amendment No. 1, which amends 

and replaces the proposed rule change in its 

entirety, is available on the Exchange’s Web site, at 

the principal office of the Exchange, and at the 

Commission’s Public Reference Room. The text of 

Amendment No. 1 to the proposed rule change is 

also available on the Commission’s Web site. See 

Letter from Martha Redding, Senior Counsel and 

Assistant Secretary, New York Stock Exchange, to 

Kevin M. O’Neill, Deputy Secretary, Commission 

(Jan. 22, 2015), available at http://www.sec.gov/

comments/sr-nysearca-2014–100/nysearca2014100- 

1.pdf. 

10 15 U.S.C. 78s(b)(2). 11See Securities Exchange Act Release No. 74559, 

80 FR 16047 (Mar. 26, 2015). The Commission 

designated a longer period within which to take 

action on the proposed rule change and designated 

May 7, 2015 as the date by which it should 

determine whether to disapprove the proposed rule 

change. See also Securities Exchange Act Release 

No. 74559A (Apr. 13, 2015) (correcting the date by 

which the Commission must take action on 

proceedings to determine whether to disapprove the 

proposed rule change to May 22, 2015). 

12See Amendment No. 2, available at http://

www.sec.gov/comments/sr-nysearca-2014–100/

nysearca2014100-2.pdf. 

13See Notice, supra note 3, at 57162. 

14See supra note 9, at 8. 

15 Id. at 7. According to the Exchange, Depositary 

Receipts are defined to include investments in 

common stock of foreign corporations in the form 

of American Depositary Receipts (‘‘ADRs’’), Global 

Depositary Receipts (‘‘GDRs’’), and European 

Depositary Receipts (‘‘EDRs’’). Depositary Receipts 

are receipts, typically issued by a bank or trust 

NYSEArca–2015–25 and should be 

submitted on or before May 12, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–09066 Filed 4–20–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74729; File No. SR– 

NYSEArca–2014–100] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of 

Amendment Nos. 1 and 2 to Proposed 

Rule Change Relating to Listing and 

Trading of Shares of the SPDR SSgA 

Global Managed Volatility ETF Under 

NYSE Arca Equities Rule 8.600 

April 15, 2015. 

On September 5, 2014, NYSE Arca, 

Inc. (‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

list and trade shares (‘‘Shares’’) of the 

SPDR SSgA Global Managed Volatility 

ETF (‘‘Fund’’) under NYSE Arca 

Equities Rule 8.600, which governs the 

listing and trading of Managed Fund 

Shares. The proposed rule change was 

published for comment in the Federal 

Register on September 24, 2014.3 On 

November 4, 2014, pursuant to Section 

19(b)(2) of the Act,4 the Commission 

designated a longer period within which 

to approve the proposed rule change, 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether to disapprove the proposed 

rule change.5 On December 22, 2014, 

the Commission instituted proceedings 

under Section 19(b)(2)(B) of the Act 6 to 

determine whether to approve or 

disapprove the proposed rule change.7

In the Order Instituting Proceedings, the 

Commission solicited responses to 

specified matters related to the 

proposal.8 The Commission received no 

comment letters on the proposed rule 

change. The Exchange subsequently 

filed Amendment No. 1 to the proposed 

rule change on January 20, 2015.9 On 

March 20, 2015, pursuant to Section 

19(b)(2) of the Act,10 the Commission 

designated a longer period for 

Commission action on proceedings to 

determine whether to disapprove the 

proposed rule change.11 On April 7, 

2015, the Exchange filed Amendment 

No. 2 to the proposed rule change.12 The 

Commission is publishing this notice to 

solicit comments from interested 

persons on Amendment Nos. 1 and 2 to 

the proposed rule change. 

I. Description of Amendment No. 1 to 

the Proposed Rule Change 

As noted above, the Exchange filed 

Amendment No. 1 to the proposed rule 

change on January 20, 2015. 

Amendment No. 1 replaced the original 

proposed rule change in its entirety, but 

made only certain, specific changes to 

the proposed rule change as published 

in the Notice. The changes effected by 

Amendment No. 1 are described below. 

First, Amendment No. 1 deletes the 

statement in the original filing that the 

exchange-listed and traded equity 

securities in which the Fund would be 

permitted to invest would be limited to: 

(1) Equity securities that trade in 

markets that are members of the 

Intermarket Surveillance Group (‘‘ISG’’) 

or are parties to a comprehensive 

surveillance sharing agreement 

(‘‘CSSA’’) with the Exchange; or (2) 

‘‘Actively-Traded Securities,’’ as 

defined in Reg M under the Act that are 

traded on U.S. and non-U.S. exchanges 

with last sale reporting.13

Second, Amendment No. 1 replaces 

the deleted language described above 

with the requirement that the Fund’s 

non-U.S. equity securities holdings 

would be subject to quantitative criteria 

that are substantially identical to the 

‘‘generic’’ listing criteria in NYSE Arca 

Equities Rule 5.2(j)(3), Commentary 

.01(a)(B), relating to an index or 

portfolio of U.S. and non-U.S. stocks 

underlying a series of Investment 

Company Units. Specifically, the 

Exchange states that, under normal 

circumstances, the non-U.S. equity 

securities in the Fund’s portfolio would 

be required to meet the following 

criteria at time of purchase: (1) Non-U.S. 

equity securities each shall have a 

minimum market value of at least $100 

million; (2) non-U.S. equity securities 

each shall have a minimum global 

monthly trading volume of 250,000 

shares, or minimum global notional 

volume traded per month of 

$25,000,000, averaged over the last six 

months; (3) the most heavily weighted 

non-U.S. equity security shall not 

exceed 25% of the weight of the Fund’s 

entire portfolio, and, to the extent 

applicable, the five most heavily 

weighted non-U.S. equity securities 

shall not exceed 60% of the weight of 

the Fund’s entire portfolio; and (4) each 

non-U.S. equity security shall be listed 

and traded on an exchange that has lastsale reporting.14

Third, Amendment No. 1 clarifies that 

the Fund’s non-U.S. equity securities 

holdings would be common stocks and 

preferred securities of foreign 

corporations; non-U.S. exchange-traded 

real estate investment trusts; and 

‘‘Depositary Receipts’’ (excluding 

Depositary Receipts that are registered 

under the Act).15


tkelley on DSK3SPTVN1PROD with NOTICES