186 Federal Register / Vol. 83, No. 1 / Tuesday, January 2, 2018 / Notices 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3The Commission approved Nasdaq Rule 5745 in 

Securities Exchange Act Release No. 34–73562 

(Nov. 7, 2014), 79 FR 68309 (Nov. 14, 2014) (SR– 

NASDAQ–2014–020). 

4Additional information regarding the Fund will 

be available on the free public website for the Fund 

at www.reinhartfunds.com and in the Registration 

Statement for the Fund. 

5See Post-Effective Amendment number 316 to 

the Registration Statement on Form N–1A for 

Managed Portfolio Series dated Oct. 26, 2017 (File 

Nos. 333–172080 and 811–22525). The descriptions 

of the Fund and the Shares contained herein 

conform to the initial Registration Statement. 

6The Commission has issued an order granting 

Managed Portfolio Series and certain affiliates 

exemptive relief under the Investment Company 

Act of 1940, as amended (the ‘‘Investment Company 

Act’’). See Investment Company Act Release No. 

32893 (Nov. 28, 2017) (File No. 812–14830). 

7An investment adviser to an open-end fund is 

required to be registered under the Advisers Act. As 

a result, the Adviser and its related personnel are 

subject to the provisions of Rule 204A–1 under the 

Advisers Act relating to codes of ethics. This Rule 

requires investment advisers to adopt a code of 

ethics that reflects the fiduciary nature of the 

relationship to clients as well as compliance with 

other applicable securities laws. Accordingly, 

procedures designed to prevent the communication 

and misuse of non-public information by an 

investment adviser must be consistent with Rule 

204A–1 under the Advisers Act. In addition, Rule 

206(4)–7 under the Advisers Act makes it unlawful 

for an investment adviser to provide investment 

advice to clients unless such investment adviser has 

(i) adopted and implemented written policies and 

procedures reasonably designed to prevent 

violation, by the investment adviser and its 

supervised persons, of the Advisers Act and the 

Commission rules adopted thereunder; (ii) 

implemented, at a minimum, an annual review 

regarding the adequacy of the policies and 

procedures established pursuant to subparagraph (i) 

above and the effectiveness of their 

implementation; and (iii) designated an individual 

(who is a supervised person) responsible for 

administering the policies and procedures adopted 

under subparagraph (i) above. 

8Additional information regarding the Fund will 

be available on a free public website for the Fund 

(www.reinhartfunds.com which may contain links 

for certain information to www.nextshares.com) and 

in the Registration Statement for the Fund. 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–CboeBZX–2017–014 and 

should be submitted on or before 

January 23, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Brent J. Fields, 

Secretary. 

[FR Doc. 2017–28228 Filed 12–29–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82408; File No. SR– 

NASDAQ–2017–131] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing of Proposed Rule Change To 

List and Trade the Shares of the 

Reinhart Intermediate Bond 

NextShares Fund 

December 27, 2017. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

20, 2017, The Nasdaq Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

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 proposes to list and 

trade under Nasdaq Rule 5745 

(Exchange-Traded Managed Fund 

Shares (‘‘NextShares’’)) the common 

shares (‘‘Shares’’) of the Reinhart 

Intermediate Bond NextShares (the 

‘‘Fund’’). 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to list and 

trade the Shares of the Fund under 

Nasdaq Rule 5745, which governs the 

listing and trading of exchange-traded 

managed fund shares, as defined in 

Nasdaq Rule 5745(c)(1), on the 

Exchange.3 Managed Portfolio Series, 

which is discussed below, is registered 

with the Commission as an open-end 

investment company and has filed a 

registration statement on Form N–1A 

(‘‘Registration Statement’’) with the 

Commission. The Fund is a series of 

Managed Portfolio Series and will be 

advised by an investment adviser 

registered under the Investment 

Advisers Act of 1940 (‘‘Advisers Act’’), 

as described below. The Fund will be 

actively managed and will pursue the 

principal investment strategy noted 

below.4

I. Managed Portfolio Series 

Managed Portfolio Series is registered 

with the Commission as an open-end 

investment company and has filed a 

Registration Statement with the 

Commission.5 The following Fund is a 

series of Managed Portfolio Series.6

Reinhart Partners, Inc. (the ‘‘Adviser’’) 

will be the adviser to the Fund. The 

Adviser is not a registered broker-dealer, 

and is not affiliated with a brokerdealer. Personnel who make decisions 

on the Fund’s portfolio composition 

must be subject to procedures designed 

to prevent the use and dissemination of 

material, non-public information 

regarding the open-end fund’s 

portfolio.7

In the event that (a) the Adviser 

registers as a broker-dealer or becomes 

newly affiliated with a broker-dealer, or 

(b) any new adviser or sub-adviser to the 

Fund is a registered broker-dealer or is 

affiliated with a broker-dealer, such 

adviser or sub-adviser will implement 

and will maintain a fire wall with 

respect to its relevant personnel and/or 

such broker-dealer affiliate, as 

applicable, regarding access to 

information concerning the composition 

and/or changes to the Fund’s portfolio 

and will be subject to procedures 

designed to prevent the use and 

dissemination of material non-public 

information regarding such portfolio. 

Quasar Distributors, LLC will be the 

principal underwriter and distributor of 

the Fund’s Shares. U.S. Bancorp Fund 

Services, LLC will act as the 

administrator and accounting agent to 

the Fund; U.S. Bancorp Fund Services, 

LLC will act as transfer agent to the 

Fund; and U.S. Bank, NA will act as 

custodian to the Fund. 

The Fund will be actively managed 

and will pursue the principal 

investment strategies described below.8

Reinhart Intermediate Bond NextShares 

The investment objective of the 

Reinhart Intermediate Bond NextShares 

is that the Fund will seek to outperform 

its benchmark, the Barclays Capital 

Intermediate Government/Credit Index, 

measured over an entire market cycle, 

while maintaining key risks (interest 


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9As with other registered open-end investment 

companies, NAV generally will be calculated daily 

(on each day the New York Stock Exchange is open 

for trading), as of 4:00 p.m. Eastern Time. NAV will 

be calculated by dividing the Fund’s net asset value 

by the number of Shares outstanding. Information 

regarding the valuation of investments in 

calculating the Fund’s NAV will be contained in the 

Registration Statement for its Shares. 

10 ‘‘Authorized Participants’’ will be either: (1) 

‘‘participating parties,’’ i.e., brokers or other 

participants in the Continuous Net Settlement 

System (‘‘CNS System’’) of the National Securities 

Clearing Corporation (‘‘NSCC’’), a clearing agency 

registered with the Commission and affiliated with 

the Depository Trust Company (‘‘DTC’’), or (2) DTC 

participants, which in either case have executed 

participant agreements with the Fund’s distributor, 

and which have been acknowledged by the transfer 

agent, regarding the creation and redemption of 

Creation Units. Investors will not have to be 

Authorized Participants in order to transact in 

Creation Units, but must place an order through and 

make appropriate arrangements with an Authorized 

Participant for such transactions. 

11 In compliance with Nasdaq Rule 5745(b)(5), 

which applies to Shares based on an international 

or global portfolio, Managed Portfolio Series’ 

application for exemptive relief under the 

Investment Company Act states that Managed 

Portfolio Series will comply with the federal 

securities laws in accepting securities for deposits 

and satisfying redemptions with securities, 

including that the securities accepted for deposits 

and the securities used to satisfy redemption 

requests are sold in transactions that would be 

exempt from registration under the Securities Act 

of 1933, as amended (15 U.S.C. 77a). 

12The free public website containing the 

Composition File will be www.nextshares.com. 

13 In determining whether the Fund will issue or 

redeem Creation Units entirely on a cash basis, the 

key consideration will be the benefit that would 

accrue to the Fund and its investors. For instance, 

in bond transactions, the Adviser may be able to 

obtain better execution for the Fund than 

Authorized Participants because of the Adviser’s 

size, experience and potentially stronger 

relationships in the fixed-income markets. 

14Authorized Participants that participate in the 

CNS System of the NSCC are expected to be able 

to use the enhanced NSCC/CNS process for 

effecting in-kind purchases and redemptions of 

Continued 

rate risk, credit risk, structure risk, and 

liquidity risk) similar to the benchmark. 

An entire market cycle refers to the 

broad economy transitioning from a 

peak in economic growth through a 

trough and back. 

Under normal market conditions, the 

Reinhart Intermediate Bond NextShares 

will invest primarily in investment 

grade fixed income securities. The Fund 

considers a fixed income security to be 

investment grade if it is rated within the 

BBB-category or better by Standard & 

Poor’s Ratings Services or the Baa3 

category or better by Moody’s Investors 

Services, Inc., or an equivalent rating by 

another nationally recognized statistical 

rating organization; or, if unrated, 

determined by the Adviser to be of 

comparable quality. 

The Fund will normally invest within 

the intermediate term structure of the 

yield curve. The average-dollar 

weighted maturity of the securities in 

which the Fund expects to invest will 

generally range from 3 to 10 years. The 

Fund’s investments in fixed income 

securities may include government or 

agency securities or obligations, 

corporate bonds, mortgage-backed 

securities, asset-backed securities, 

municipal bonds, revenue bonds, 

variable and floating rate securities, zero 

coupon bonds and collateralized 

mortgage obligations (‘‘CMOs’’). 

Normally, the Reinhart Intermediate 

Bond NextShares will invest at least 

80% of its total assets in fixed income 

securities. 

Creations and Redemptions of Shares 

Shares will be issued and redeemed 

on a daily basis at the Fund’s nextdetermined net asset value (‘‘NAV’’) 9 in 

specified blocks of Shares called 

‘‘Creation Units.’’ A Creation Unit will 

consist of at least 25,000 Shares. 

Creation Units may be purchased and 

redeemed by or through ‘‘Authorized 

Participants.’’ 10 Purchases and sales of 

Shares in amounts less than a Creation 

Unit may be effected only in the 

secondary market, as described below, 

and not directly with the Fund. 

The creation and redemption process 

for the Fund may be effected ‘‘in kind,’’ 

in cash, or in a combination of securities 

and cash. Creation ‘‘in kind’’ means that 

an Authorized Participant—usually a 

brokerage house or large institutional 

investor—purchases the Creation Unit 

with a basket of securities equal in value 

to the aggregate NAV of the Shares in 

the Creation Unit. When an Authorized 

Participant redeems a Creation Unit in 

kind, it receives a basket of securities 

equal in value to the aggregate NAV of 

the Shares in the Creation Unit.11

Composition File 

As defined in Nasdaq Rule 5745(c)(3), 

the Composition File is the specified 

portfolio of securities and/or cash that 

the Fund will accept as a deposit in 

issuing a Creation Unit of Shares, and 

the specified portfolio of securities and/ 

or cash that the Fund will deliver in a 

redemption of a Creation Unit of Shares. 

The Composition File will be 

disseminated through the NSCC once 

each business day before the open of 

trading in Shares on such day and also 

will be made available to the public 

each day on a free public website.12

Because the Fund will seek to preserve 

the confidentiality of its current 

portfolio trading program, the Fund’s 

Composition File generally will not be 

a pro rata reflection of the Fund’s 

investment positions. 

Each security included in the 

Composition File will be a current 

holding of the Fund, but the 

Composition File generally will not 

include all of the securities in the 

Fund’s portfolio or match the 

weightings of the included securities in 

the portfolio. Securities that the Adviser 

is in the process of acquiring for the 

Fund generally will not be represented 

in the Fund’s Composition File until 

their purchase has been completed. 

Similarly, securities that are held in the 

Fund’s portfolio but in the process of 

being sold may not be removed from its 

Composition File until the sale program 

is substantially completed. To the extent 

that the Fund creates or redeems Shares 

in kind, it will use cash amounts to 

supplement the in-kind transactions to 

the extent necessary to ensure that 

Creation Units are purchased and 

redeemed at NAV. The Composition 

File also may consist entirely of cash, in 

which case it will not include any of the 

securities in the Fund’s portfolio.13

Transaction Fees 

All persons purchasing or redeeming 

Creation Units are expected to incur a 

transaction fee to cover the estimated 

cost to the Fund of processing the 

transaction, including the costs of 

clearance and settlement charged to it 

by NSCC or DTC, and the estimated 

trading costs (i.e., brokerage 

commissions, bid-ask spread and market 

impact) to be incurred in converting the 

Composition File to or from the desired 

portfolio holdings. The transaction fee is 

determined daily and will be limited to 

amounts approved by the board of 

trustees of the Fund and determined by 

the Adviser to be appropriate to defray 

the expenses that the Fund incurs in 

connection with the purchase or 

redemption of Creation Units. 

The purpose of transaction fees is to 

protect the Fund’s existing shareholders 

from the dilutive costs associated with 

the purchase and redemption of 

Creation Units. Transaction fees may 

vary over time for the Fund depending 

on the estimated trading costs for its 

portfolio positions and Composition 

File, processing costs and other 

considerations. To the extent that the 

Fund specifies greater amounts of cash 

in its Composition File, it may impose 

higher transaction fees. In addition, to 

the extent that the Fund includes in its 

Composition File instruments that clear 

through DTC, the Fund may impose 

higher transaction fees than when the 

Composition File consists solely of 

instruments that clear through NSCC, 

because DTC may charge more than 

NSCC in connection with Creation Unit 

transactions.14 The transaction fees 


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Shares (the ‘‘NSCC Process’’) to purchase and 

redeem Creation Units of the Fund that limits the 

composition of its basket to include only NSCC 

Process-eligible instruments (generally domestic 

equity securities and cash). Because the NSCC 

Process is generally more efficient than the DTC 

clearing process, NSCC is likely to charge the Fund 

less than DTC to settle purchases and redemptions 

of Creation Units. 

15The free public website will be 

www.nextshares.com. 

16Aspects of NAV-Based Trading are protected 

intellectual property subject to issued and pending 

U.S. patents held by NextShares Solutions LLC 

(‘‘NextShares Solutions’’), a wholly owned 

subsidiary of Eaton Vance Corp. Nasdaq has entered 

into a license agreement with NextShares Solutions 

to allow for NAV-Based Trading on the Exchange 

of exchange-traded managed funds that have 

themselves entered into license agreements with 

NextShares Solutions. 

17The free public website containing this 

information will be www.nextshares.com, which 

will be available directly and through a link from 

www.reinhartfunds.com. 

18As noted below, all orders to buy or sell Shares 

that are not executed on the day the order is 

submitted will be automatically cancelled as of the 

close of trading on such day. Prior to the 

commencement of trading in the Fund, the 

Exchange will inform its members in an 

Information Circular of the effect of this 

characteristic on existing order types. 

19 Due to systems limitations, the Consolidated 

Tape will report intraday execution prices and 

quotes for Shares using a proxy price format. As 

noted, Nasdaq will separately report real-time 

execution prices and quotes to member firms and 

providers of market data services in the 

‘‘NAV¥$0.01/NAV + $0.01’’ (or similar) display 

format, and otherwise seek to ensure that 

representations of intraday bids, offers and 

execution prices for Shares that are made available 

to the investing public follow the same display 

format. 

20All orders to buy or sell Shares that are not 

executed on the day the order is submitted will be 

automatically cancelled as of the close of trading on 

such day. 

applicable to the Fund’s purchases and 

redemptions on a given business day 

will be disseminated through the NSCC 

prior to the open of market trading on 

that day and also will be made available 

to the public each day on a free public 

website.15 In all cases, the transaction 

fees will be limited in accordance with 

the requirements of the Commission 

applicable to open-end management 

investment companies offering 

redeemable securities. 

NAV-Based Trading 

Because Shares will be listed and 

traded on the Exchange, Shares will be 

available for purchase and sale on an 

intraday basis. Shares will be purchased 

and sold in the secondary market at 

prices directly linked to the Fund’s 

next-determined NAV using a new 

trading protocol called ‘‘NAV-Based 

Trading.’’ 16 All bids, offers and 

execution prices of Shares will be 

expressed as a premium/discount 

(which may be zero) to the Fund’s nextdetermined NAV (e.g., NAV¥$0.01, 

NAV + $0.01). The Fund’s NAV will be 

determined daily (on each day the New 

York Stock Exchange is open for 

trading), as of 4:00 p.m. Eastern Time. 

Trade executions will be binding at the 

time orders are matched on Nasdaq’s 

facilities, with the transaction prices 

contingent upon the determination of 

NAV. 

Trading Premiums and Discounts 

Bid and offer prices for Shares will be 

quoted throughout the day relative to 

NAV. The premium or discount to NAV 

at which Share prices are quoted and 

transactions are executed will vary 

depending on market factors, including 

the balance of supply and demand for 

Shares among investors, transaction fees 

and other costs in connection with 

creating and redeeming Creation Units 

of Shares, the cost and availability of 

borrowing Shares, competition among 

market makers, the Share inventory 

positions and inventory strategies of 

market makers, the profitability 

requirements and business objectives of 

market makers, and the volume of Share 

trading. Reflecting such market factors, 

prices for Shares in the secondary 

market may be above, at or below NAV. 

A fund with higher transaction fees may 

trade at wider premiums or discounts to 

NAV than other funds with lower 

transaction fees, reflecting the added 

costs to market makers of managing 

their Share inventory positions through 

purchases and redemptions of Creation 

Units. 

Because making markets in Shares 

will be simple to manage and low risk, 

competition among market makers 

seeking to earn reliable, low-risk profits 

should enable the Shares to routinely 

trade at tight bid-ask spreads and 

narrow premiums/discounts to NAV. As 

noted below, the Fund will make 

available on a free public website that 

will be updated on a daily basis current 

and historical trading spreads and 

premiums/discounts of Shares trading 

in the secondary market.17

Transmitting and Processing Orders. 

Member firms will utilize certain 

existing order types and interfaces to 

transmit Share bids and offers to 

Nasdaq, which will process Share trades 

like trades in shares of other listed 

securities.18 In the systems used to 

transmit and process transactions in 

Shares, the Fund’s next-determined 

NAV will be represented by a proxy 

price (e.g., 100.00) and a premium/ 

discount of a stated amount to the nextdetermined NAV to be represented by 

the same increment/decrement from the 

proxy price used to denote NAV (e.g., 

NAV¥$0.01 would be represented as 

99.99; NAV + $0.01 as 100.01). 

To avoid potential investor confusion, 

Nasdaq will work with member firms 

and providers of market data services to 

seek to ensure that representations of 

intraday bids, offers and execution 

prices of Shares that are made available 

to the investing public follow the 

‘‘NAV¥$0.01/NAV + $0.01’’ (or similar) 

display format. Shares listed on the 

Exchange will have a unique identifier 

associated with its ticker symbol, which 

would indicate that the Shares are 

traded using NAV-Based Trading. 

Nasdaq makes available to member 

firms and market data services certain 

proprietary data feeds that are designed 

to supplement the market information 

disseminated through the consolidated 

tape (‘‘Consolidated Tape’’). 

Specifically, the Exchange will use 

the Nasdaq Basic and Nasdaq Last Sale 

data feeds to disseminate intraday price 

and quote data for Shares in real time 

in the ‘‘NAV¥$0.01/NAV + $0.01’’ (or 

similar) display format. Member firms 

could use the Nasdaq Basic and Nasdaq 

Last Sale data feeds to source intraday 

Share prices for presentation to the 

investing public in the ‘‘NAV¥$0.01/ 

NAV + $0.01’’ (or similar) display 

format. Alternatively, member firms 

could source intraday Share prices in 

proxy price format from the 

Consolidated Tape and other Nasdaq 

data feeds (e.g., Nasdaq TotalView and 

Nasdaq Level 2) and use a simple 

algorithm to convert prices into the 

‘‘NAV¥$0.01/NAV + $0.01’’ (or similar) 

display format. As noted below, prior to 

the commencement of trading in the 

Fund, the Exchange will inform its 

members in an Information Circular of 

the identities of the specific Nasdaq data 

feeds from which intraday Share prices 

in proxy price format may be obtained. 

Intraday Reporting of Quotes and 

Trades. All bids and offers for Shares 

and all Share trade executions will be 

reported intraday in real time by the 

Exchange to the Consolidated Tape 19

and separately disseminated to member 

firms and market data services through 

the Exchange data feeds listed above. 

The Exchange will also provide the 

member firms participating in each 

Share trade with a contemporaneous 

notice of trade execution, indicating the 

number of Shares bought or sold and the 

executed premium/discount to NAV.20

Final Trade Pricing, Reporting and 

Settlement. All executed Share trades 

will be recorded and stored intraday by 

Nasdaq to await the calculation of the 

Fund’s end-of- day NAV and the 

determination of final trade pricing. 

After the Fund’s NAV is calculated and 

provided to the Exchange, Nasdaq will 

price each Share trade entered into 


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21File Transfer Protocol (‘‘FTP’’) is a standard 

network protocol used to transfer computer files on 

the internet. Nasdaq will arrange for the daily 

dissemination of an FTP file with executed Share 

trades to member firms and market data services. 

22The free public website containing this 

information will be www.reinhartfunds.com. 

23The free public website containing the Fund’s 

NAV will be www.reinhartfunds.com. All other 

information listed will be made available on 

www.nextshares.com, which can be accessed 

directly and via a link on www.reinhartfunds.com. 

24The free public website containing this 

information will be www.nextshares.com. 25See Nasdaq Rule 5745(c)(4). 

26See Nasdaq Rule 4120(b)(4) (describing the 

three trading sessions on the Exchange: (1) PreMarket Session from 4 a.m. to 9:30 a.m. Eastern 

Time; (2) Regular Market Session from 9:30 a.m. to 

4 p.m. or 4:15 p.m. Eastern Time; and (3) PostMarket Session from 4 p.m. or 4:15 p.m. to 8 p.m. 

Eastern Time). 

27 IIVs for the Fund disseminated throughout each 

trading day would be based on the same portfolio 

as used to calculate that day’s NAV. The Fund will 

reflect purchases and sales of portfolio positions in 

its NAV the next business day after trades are 

executed. 

28Because, in NAV-Based Trading, prices of 

executed trades are not determined until the 

reference NAV is calculated, buyers and sellers of 

Shares during the trading day will not know the 

final value of their purchases and sales until the 

end of the trading day. The Fund’s Registration 

Statement, free public website and any advertising 

or marketing materials will include prominent 

disclosure of this fact. Although the IIV for the 

Fund may provide useful estimates of the value of 

intraday trades, they cannot be used to calculate 

with precision the dollar value of the Shares to be 

bought or sold. 

during the day at the Fund’s NAV plus/ 

minus the trade’s executed premium/ 

discount. Using the final trade price, 

each executed Share trade will then be 

disseminated to member firms and 

market data services via an FTP file to 

be created for exchange-traded managed 

funds and confirmed to the member 

firms participating in the trade to 

supplement the previously provided 

information to include final pricing.21

After the pricing is finalized, Nasdaq 

will deliver the Share trading data to 

NSCC for clearance and settlement, 

following the same processes used for 

the clearance and settlement of trades in 

other exchange-traded securities. 

Availability of Information 

Prior to the commencement of market 

trading in Shares, the Fund will be 

required to establish and maintain a free 

public website through which its 

current prospectus may be 

downloaded.22 The free public website 

will include directly or through a link 

additional Fund information updated on 

a daily basis, including the prior 

business day’s NAV, and the following 

trading information for such business 

day expressed as premiums/discounts to 

NAV: (a) Intraday high, low, average 

and closing prices of Shares in 

Exchange trading; (b) the midpoint of 

the highest bid and lowest offer prices 

as of the close of Exchange trading, 

expressed as a premium/discount to 

NAV (the ‘‘Closing Bid/Ask Midpoint’’); 

and (c) the spread between highest bid 

and lowest offer prices as of the close of 

Exchange trading (the ‘‘Closing Bid/Ask 

Spread.’’).23 The free public website will 

also contain charts showing the 

frequency distribution and range of 

values of trading prices, Closing Bid/ 

Ask Midpoints and Closing Bid/Ask 

Spreads over time. 

The Composition File will be 

disseminated through the NSCC before 

the open of trading in Shares on each 

business day and also will be made 

available to the public each day on a 

free public website as noted above.24

Consistent with the disclosure 

requirements that apply to traditional 

open-end investment companies, a 

complete list of current Fund portfolio 

positions will be made available at least 

once each calendar quarter, with a 

reporting lag of not more than 60 days. 

The Fund may provide more frequent 

disclosures of portfolio positions at its 

discretion. 

Reports of Share transactions will be 

disseminated to the market and 

delivered to the member firms 

participating in the trade 

contemporaneous with execution. Once 

the Fund’s daily NAV has been 

calculated and disseminated, Nasdaq 

will price each Share trade entered into 

during the day at the Fund’s NAV plus/ 

minus the trade’s executed premium/ 

discount. Using the final trade price, 

each executed Share trade will then be 

disseminated to member firms and 

market data services via an FTP file to 

be created for exchange-traded managed 

funds and confirmed to the member 

firms participating in the trade to 

supplement the previously provided 

information to include final pricing. 

Information regarding NAV-based 

trading prices, best bids and offers for 

Shares, and volume of Shares traded 

will be continuously available on a realtime basis throughout each trading day 

on brokers’ computer screens and other 

electronic services. 

Initial and Continued Listing 

Shares will conform to the initial and 

continued listing criteria as set forth 

under Nasdaq Rule 5745. A minimum of 

50,000 Shares and no less than two 

Creation Units of the 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 will be calculated daily (on each 

day the New York Stock Exchange is 

open for trading) and provided to 

Nasdaq via the Mutual Fund Quotation 

Service (’’MFQS’’) by the fund 

accounting agent. As soon as the NAV 

is entered into MFQS, Nasdaq will 

disseminate the NAV to market 

participants and market data vendors 

via the Mutual Fund Dissemination 

Service (‘‘MFDS’’) so all firms will 

receive the NAV per Share at the same 

time. The Reporting Authority 25 also 

will implement and maintain, or will 

ensure that the Composition File will be 

subject to, procedures designed to 

prevent the use and dissemination of 

material non-public information 

regarding the Fund’s portfolio positions 

and changes in the positions. 

An estimated value of an individual 

Share, defined in Nasdaq Rule 

5745(c)(2) as the ‘‘Intraday Indicative 

Value,’’ will be calculated and 

disseminated at intervals of not more 

than 15 minutes throughout the Regular 

Market Session 26 when Shares trade on 

the Exchange. The Exchange will obtain 

a representation from the issuer of the 

Shares that the IIV for the Fund will be 

calculated on an intraday basis and 

provided to Nasdaq for dissemination 

via the Nasdaq Global Index Service 

(‘‘GIDS’’). 

The IIV for the Fund will be based on 

current information regarding the value 

of the securities and other assets held by 

the Fund.27 The purpose of the IIV for 

the Fund is to enable investors to 

estimate the next-determined NAV so 

they can determine the number of 

Shares to buy or sell if they want to 

transact in an approximate dollar 

amount (e.g., if an investor wants to 

acquire approximately $5,000 of the 

Fund, how many Shares should the 

investor buy?).28

The Adviser is not a registered brokerdealer, or affiliated with a broker-dealer. 

Personnel who make decisions on the 

Fund’s portfolio composition must be 

subject to procedures designed to 

prevent the use and dissemination of 

material, non-public information 

regarding the open-end fund’s portfolio. 

In the event that (a) the Adviser 

registers as a broker-dealer or becomes 

newly affiliated with a broker-dealer, or 

(b) any new adviser or sub-adviser to the 

Fund is a registered broker-dealer or 

becomes affiliated with a broker-dealer, 

such adviser or sub-adviser will 

implement and will maintain a fire wall 

with respect to its relevant personnel 

and/or such broker-dealer affiliate, as 

applicable, regarding access to 

information concerning the composition 

and/or changes to the Fund’s portfolio 

and will be subject to procedures 

designed to prevent the use and 


daltland on DSKBBV9HB2PROD with NOTICES
190 Federal Register / Vol. 83, No. 1 / Tuesday, January 2, 2018 / Notices 

29See Nasdaq Rule 5745(h). 

30See Nasdaq Rule 5745(b)(6). 

31FINRA provides surveillance of trading on the 

Exchange pursuant to a regulatory services 

agreement. The Exchange is responsible for 

FINRA’s performance under this regulatory services 

agreement. 

32For a list of the current members of ISG, see 

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

components of the Fund’s portfolio may trade on 

markets that are members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement. 

33For municipal securities, trade information can 

generally be found on the Electronic Municipal 

Market Access (‘‘EMMA’’) of the Municipal 

Securities Rulemaking Board (‘‘MSRB’’). 34See supra footnote 23. 

dissemination of material non- public 

information regarding such portfolio. 

Trading Halts 

The Exchange may consider all 

relevant factors in exercising its 

discretion to halt or suspend trading in 

Shares. Nasdaq will halt trading in 

Shares under the conditions specified in 

Nasdaq Rules 4120 and in Nasdaq Rule 

5745(d)(2)(C). Additionally, Nasdaq may 

cease trading Shares if other unusual 

conditions or circumstances exist 

which, in the opinion of Nasdaq, make 

further dealings on Nasdaq detrimental 

to the maintenance of a fair and orderly 

market. To manage the risk of a nonregulatory Share trading halt, Nasdaq 

has in place back-up processes and 

procedures to ensure orderly trading. 

Because, in NAV-Based Trading, all 

trade execution prices are linked to endof-day NAV, buyers and sellers of 

Shares should be less exposed to risk of 

loss due to intraday trading halts than 

buyers and sellers of conventional 

exchange-traded funds (‘‘ETFs’’) and 

other exchange-traded securities. 

Every order to trade Shares of the 

Fund is subject to the proxy price 

protection threshold of plus/minus 

$1.00, which determines the lower and 

upper threshold for the life of the order 

and whereby the order will be cancelled 

at any point if it exceeds $101.00 or falls 

below $99.00, the established 

thresholds.29 With certain exceptions, 

each order also must contain the 

applicable order attributes, including 

routing instructions and time-in-force 

information, as described in Nasdaq 

Rule 4703.30

Trading Rules 

Nasdaq deems Shares to be equity 

securities, thus rendering trading in 

Shares subject to Nasdaq’s existing rules 

governing the trading of equity 

securities. Nasdaq will allow trading in 

Shares from 9:30 a.m. until 4:00 p.m. 

Eastern Time. 

Surveillance 

The Exchange represents that trading 

in Shares will be subject to the existing 

trading surveillances, administered by 

both Nasdaq and the Financial Industry 

Regulatory Authority, Inc. (‘‘FINRA’’) on 

behalf of the Exchange, which are 

designed to detect violations of 

Exchange rules and applicable federal 

securities laws.31 The Exchange 

represents that these procedures are 

adequate to properly monitor trading of 

Shares on the Exchange and to deter and 

detect violations of Exchange rules and 

applicable federal securities laws. 

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

FINRA, on behalf of the Exchange, 

will communicate as needed with other 

markets and other entities that are 

members of the Intermarket 

Surveillance Group (‘‘ISG’’) 32 regarding 

trading in Shares, and in exchangetraded securities and instruments held 

by the Fund (to the extent such 

exchange-traded securities and 

instruments are known through the 

publication of the Composition File and 

periodic public disclosures of the 

Fund’s portfolio holdings), and FINRA 

may obtain trading information 

regarding such trading from other 

markets and other entities. In addition, 

the Exchange may obtain information 

regarding trading in Shares, and in 

exchange-traded securities and 

instruments held by the Fund (to the 

extent such exchange-traded securities 

and instruments are known through the 

publication of the Composition File and 

periodic public disclosures of the 

Fund’s portfolio holdings), from markets 

and other entities that are members of 

ISG, which includes securities and 

futures exchanges, or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement. 

Moreover, FINRA, on behalf of the 

Exchange, will be able to access, as 

needed, trade information for certain 

fixed income securities held by the 

Fund reported to FINRA’s Trade 

Reporting and Compliance Engine 

(‘‘TRACE’’).33

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material non-public 

information by its employees. 

Information Circular 

Prior to the commencement of trading 

in the Fund, the Exchange will inform 

its members in an Information Circular 

of the special characteristics and risks 

associated with trading the Shares of the 

Fund. Specifically, the Information 

Circular will discuss the following: (1) 

The procedures for purchases and 

redemptions of Shares in Creation Units 

(and noting that Shares are not 

individually redeemable); (2) Nasdaq 

Rule 2111A, which imposes suitability 

obligations on Nasdaq members with 

respect to recommending transactions in 

Shares to customers; (3) how 

information regarding the IIV and 

Composition File is disseminated; (4) 

the requirement that members deliver a 

prospectus to investors purchasing 

Shares prior to or concurrently with the 

confirmation of a transaction; and (5) 

information regarding NAV-Based 

Trading protocols. 

As noted above, all orders to buy or 

sell Shares that are not executed on the 

day the order is submitted will be 

automatically cancelled as of the close 

of trading on such day. The Information 

Circular will discuss the effect of this 

characteristic on existing order types. 

The Information Circular also will 

identify the specific Nasdaq data feeds 

from which intraday Share prices in 

proxy price format may be obtained. 

In addition, the Information Circular 

will advise members, prior to the 

commencement of trading, of the 

prospectus delivery requirements 

applicable to the Fund. Members 

purchasing Shares from the Fund for 

resale to investors will deliver a 

summary prospectus to such investors. 

The Information Circular will also 

discuss any exemptive, no-action and 

interpretive relief granted by the 

Commission from any rules under the 

Act. 

The Information Circular also will 

reference that the Fund is subject to 

various fees and expenses described in 

the Registration Statement. The 

Information Circular will also disclose 

the trading hours of the Shares and the 

applicable NAV calculation time for the 

Shares. The Information Circular will 

disclose that information about the 

Shares will be publicly available on the 

Fund’s free public website.34

Information regarding Fund trading 

protocols will be disseminated to 

Nasdaq members in accordance with 

current processes for newly listed 

products. Nasdaq intends to provide its 

members with a detailed explanation of 

NAV-Based Trading through a Trader 


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Federal Register / Vol. 83, No. 1 / Tuesday, January 2, 2018 / Notices 191 

35 15 U.S.C. 78f(b). 

36 15 U.S.C. 78f(b)(5). 

37See supra footnote 33. 

38See supra footnote 22. 

39See supra footnote 23. 

40See supra footnote 12. 

41See supra footnote 26. 

Alert issued prior to the commencement 

of trading in Shares on the Exchange. 

Continued Listing Representations 

All statements and representations 

made in this filing regarding (a) the 

description of the portfolio or reference 

assets, (b) limitations on portfolio 

holdings or reference assets, (c) 

dissemination and availability of the 

reference asset or intraday indicative 

values, or (d) the applicability of 

Exchange listing rules shall constitute 

continued listing requirements for 

listing the Shares on the Exchange. In 

addition, the issuer has represented to 

the Exchange that it will advise the 

Exchange of any failure by the Fund to 

comply with the continued listing 

requirements, and, pursuant to its 

obligations under Section 19(g)(1) of the 

Act, the Exchange will monitor for 

compliance with the continued listing 

requirements. If the Fund is not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

the Nasdaq 5800 Series. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,35 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,36

in particular, in that it is designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, and to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system. 

The Exchange believes that the 

proposed rule change is designed to 

prevent fraudulent and manipulative 

acts and practices in that the Shares 

would be listed and traded on the 

Exchange pursuant to the initial and 

continued listing criteria in Nasdaq Rule 

5745. The Exchange believes that its 

surveillance procedures are adequate to 

properly monitor the trading of Shares 

on Nasdaq and to deter and detect 

violations of Exchange rules and the 

applicable federal securities laws. The 

Adviser is not a registered broker-dealer, 

and is not affiliated with a brokerdealer. Personnel who make decisions 

on the Fund’s portfolio composition 

must be subject to procedures designed 

to prevent the use and dissemination of 

material, non-public information 

regarding the open-end fund’s portfolio. 

In the event that (a) the Adviser 

registers as a broker-dealer or becomes 

newly affiliated with a broker-dealer, or 

(b) any new adviser or sub-adviser to the 

Fund is a registered broker-dealer or 

becomes affiliated with a broker-dealer, 

such adviser or sub-adviser will 

implement and will maintain a fire wall 

with respect to its relevant personnel 

and/or such broker-dealer affiliate, as 

applicable, regarding access to 

information concerning the composition 

and/or changes to the Fund’s portfolio 

and will be subject to procedures 

designed to prevent the use and 

dissemination of material non- public 

information regarding such portfolio. 

The Exchange 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. Moreover, FINRA, on behalf 

of the Exchange, will be able to access, 

as needed, trade information for certain 

fixed income securities held by the 

Fund reported to FINRA’s TRACE.37

The proposed rule change is designed 

to promote just and equitable principles 

of trade and to protect investors and the 

public interest. The Exchange will 

obtain a representation from the issuer 

of Shares that the NAV per Share will 

be calculated daily (on each day the 

New York Stock Exchange is open for 

trading) and provided to Nasdaq via the 

MFQS by the fund accounting agent. As 

soon as the NAV is entered into MFQS, 

Nasdaq will disseminate the NAV to 

market participants and market data 

vendors via MFDS so all firms will 

receive the NAV per Share at the same 

time. In addition, a large amount of 

information would be publicly available 

regarding the Fund and the Shares, 

thereby promoting market transparency. 

Prior to the commencement of market 

trading in Shares, the Fund will be 

required to establish and maintain a free 

public website through which its 

current prospectus may be 

downloaded.38 The free public website 

will include directly or through a link 

additional Fund information updated on 

a daily basis, including the prior 

business day’s NAV, and the following 

trading information for such business 

day expressed as premiums/discounts to 

NAV: (a) Intraday high, low, average 

and closing prices of Shares in 

Exchange trading; (b) the Closing Bid/ 

Ask Midpoint; and (c) the Closing Bid/ 

Ask Spread.39 The free public website 

will also contain charts showing the 

frequency distribution and range of 

values of trading prices, Closing Bid/ 

Ask Midpoints and Closing Bid/Ask 

Spreads over time. 

The Composition File will be 

disseminated through the NSCC before 

the open of trading in Shares on each 

business day and also will be made 

available to the public each day on a 

free public website.40 An estimated 

value of an individual Share, defined in 

Nasdaq Rule 5745(c)(2) as the ‘‘Intraday 

Indicative Value,’’ will be calculated 

and disseminated at intervals of not 

more than 15 minutes throughout the 

Regular Market Session 41 when Shares 

trade on the Exchange. The Exchange 

will obtain a representation from the 

issuer of the Shares that the IIV for the 

Fund will be calculated on an intraday 

basis and provided to Nasdaq for 

dissemination via GIDS. A complete list 

of current portfolio positions for the 

Fund will be made available at least 

once each calendar quarter, with a 

reporting lag of not more than 60 days. 

The Fund may provide more frequent 

disclosures of portfolio positions at its 

discretion. 

Transactions in Shares will be 

reported to the Consolidated Tape at the 

time of execution in proxy price format 

and will be disseminated to member 

firms and market data services through 

Nasdaq’s trading service and market 

data interfaces, as defined above. Once 

the Fund’s daily NAV has been 

calculated and the final price of its 

intraday Share trades has been 

determined, Nasdaq will deliver a 

confirmation with final pricing to the 

transacting parties. At the end of the 

day, Nasdaq will also post a newly 

created FTP file with the final 

transaction data for the trading and 

market data services. Information 

regarding NAV-based trading prices, 

best bids and offers for Shares, and 

volume of Shares traded will be 

continuously available on a real-time 

basis throughout each trading day on 

brokers’ computer screens and other 

electronic services. Because Shares will 

trade at prices based on the nextdetermined NAV, investors will be able 

to buy and sell individual Shares at a 

known premium or discount to NAV 

that they can limit by transacting using 

limit orders at the time of order entry. 

Trading in Shares will be subject to 

Nasdaq Rules 5745(d)(2)(B) and (C), 

which provide for the suspension of 

trading or trading halts under certain 

circumstances, including if, in the view 

of the Exchange, trading in Shares 

becomes inadvisable. 


daltland on DSKBBV9HB2PROD with NOTICES
192 Federal Register / Vol. 83, No. 1 / Tuesday, January 2, 2018 / Notices 

42 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

5See SR–LCH SA–2017–010. 

Every order to trade Shares of the 

Fund is subject to the proxy price 

protection threshold of plus/minus 

$1.00, which determines the lower and 

upper threshold for the life of the order 

and whereby the order will be cancelled 

at any point if it exceeds $101.00 or falls 

below $99.00, the established 

thresholds. With certain exceptions, 

each order also must contain the 

applicable order attributes, including 

routing instructions and time-in-force 

information, as described in Nasdaq 

Rule 4703. 

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 the Fund, which will seek to provide 

investors with access to actively 

managed investment strategies in a 

structure that offers the cost and tax 

efficiencies and shareholder protections 

of ETFs, while removing the 

requirement for daily portfolio holdings 

disclosure, and is designed to ensure a 

tight relationship between market 

trading prices and NAV. 

For the above reasons, Nasdaq 

believes the proposed rule change is 

consistent with the requirements of 

Section 6(b)(5) of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will result in 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. In fact, the 

Exchange believes that the introduction 

of the Fund would promote competition 

by making available to investors actively 

managed investment strategies in a 

structure that offers the cost and tax 

efficiencies and shareholder protections 

of ETFs, while removing the 

requirement for daily portfolio holdings 

disclosure, and is designed to ensure a 

tight relationship between market 

trading prices and NAV. Moreover, the 

Exchange believes that the proposed 

method of Share trading would provide 

investors with transparency of trading 

costs, and the ability to control trading 

costs using limit orders, that is not 

available for conventionally traded 

ETFs. 

These developments could 

significantly enhance competition to the 

benefit of the markets and investors. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

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 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– 

NASDAQ–2017–131 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–NASDAQ–2017–131. 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 No. 

SR–NASDAQ–2017–131 and should be 

submitted on or before January 23, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

Brent J. Fields, 

Secretary. 

[FR Doc. 2017–28310 Filed 12–29–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82406; File No. SR–LCH 

SA–2017–011] 

Self-Regulatory Organizations; LCH 

SA; Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change Relating to the CDSClear Fee 

Grid for All Accounts Structures 

December 27, 2017. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on December 

20, 2017, Banque Centrale de 

Compensation, which conducts 

business under the name LCH SA (‘‘LCH 

SA’’), filed with the Securities and 

Exchange Commission (‘‘Commission’’) 

the proposed rule change described in 

Items I, II, and III below, which Items 

have been prepared primarily by LCH 

SA. LCH SA filed the proposed rule 

changes pursuant to Section 

19(b)(3)(A) 3 of the Act and Rule 19b– 

4(f)(2) 4 thereunder, so that the proposal 

was effective upon filing with the 

Commission. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

LCH SA is filing a proposed fee grid 

for all accounts structures, including 

those introduced 5 to reflect the indirect 


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