3380 Federal Register / Vol. 83, No. 16 / Wednesday, January 24, 2018 / Notices 

29The Exchange represents that the website 

containing this information will be 

www.brandesfunds.com. 

30The Commission notes that certain other 

proposals for the listing and trading of Managed 

Fund Shares include a representation that the 

exchange will ‘‘surveil’’ for compliance with the 

continued listing requirements. See, e.g., Securities 

Exchange Act Release No. 78005 (Jun. 7, 2016), 81 

FR 38247 (Jun. 13, 2016) (SR–BATS–2015–100). In 

the context of this representation, it is the 

Commission’s view that ‘‘monitor’’ and ‘‘surveil’’ 

both mean ongoing oversight of a fund’s compliance 

with the continued listing requirements. Therefore, 

the Commission does not view ‘‘monitor’’ as a more 

or less stringent obligation than ‘‘surveil’’ with 

respect to the continued listing requirements. 

31 15 U.S.C. 78f(b)(5). 

32 15 U.S.C. 78k–1(a)(1)(C)(iii). 

33 15 U.S.C. 78s(b)(2). 

34 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

calculated daily (on each business 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 the 

MFQS, Nasdaq will disseminate the 

NAV to market participants and market 

data vendors via the Mutual Fund 

Dissemination Service so all firms will 

receive the NAV per Share at the same 

time. 

The Exchange further represents that 

it may consider all relevant factors in 

exercising its discretion to halt or 

suspend trading in the Shares. The 

Exchange will halt trading in the Shares 

under the conditions specified in 

Nasdaq Rule 4120 and in Nasdaq Rule 

5745(d)(2)(D). Additionally, the 

Exchange may cease trading the Shares 

if other unusual conditions or 

circumstances exist that, in the opinion 

of the Exchange, make further dealings 

on the Exchange 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. 

Prior to the commencement of market 

trading in the Shares, the Fund will be 

required to establish and maintain a free 

public website through which its 

current prospectus may be 

downloaded.29 The website will include 

additional information concerning the 

Fund updated on a daily basis, 

including the prior business day’s NAV, 

and the following trading information 

for the business day expressed as 

premiums/discounts to NAV: (a) 

Intraday high, low, average and closing 

prices of the 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 (‘‘Closing 

Bid/Ask Midpoint’’); and (c) the spread 

between highest bid and lowest offer 

prices as of the close of Exchange 

trading (‘‘Closing Bid/Ask Spread’’). The 

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 Exchange represents that 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 IIV, 

or (d) the applicability of Exchange 

listing rules shall constitute continued 

listing requirements for listing the 

Shares on the Exchange. 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.30 If the Fund is not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

the Nasdaq 5800 Series. 

The approval order is based on all of 

the Exchange’s representations, 

including those set forth above and in 

Amendments No. 1 and 2. In particular, 

the Commission notes that, although the 

Shares will be available for purchase 

and sale on an intraday basis, the Shares 

will be purchased and sold at prices 

directly linked to the Fund’s nextdetermined NAV. Further, the 

Commission notes that the Fund and the 

Shares must comply with the 

requirements of Nasdaq Rule 5745 and 

the conditions set forth in this proposed 

rule change to be listed and traded on 

the Exchange on an initial and 

continuing basis. 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change, as modified by 

Amendments No. 1 and 2, is consistent 

with Section 6(b)(5) 31 and Section 

11A(a)(1)(C)(iii) of the Act,32 and the 

rules and regulations thereunder 

applicable to a national securities 

exchange. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,33 that the 

proposed rule change (SR–NASDAQ– 

2017–124), as modified by Amendments 

No. 1 and 2, be, and hereby is, 

approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.34

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–01207 Filed 1–23–18; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–82532; File No. SR– 

NYSEArca–2018–02] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing of Proposed 

Rule Change Relating to Listing and 

Trading of the Direxion Daily Bitcoin 

Bear 1X Shares, Direxion Daily Bitcoin 

1.25X Bull Shares, Direxion Daily 

Bitcoin 1.5X Bull Shares, Direxion 

Daily Bitcoin 2X Bull Shares and 

Direxion Daily Bitcoin 2X Bear Shares 

Under NYSE Arca Rule 8.200–E 

January 18, 2018. 

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 January 

4, 2018, 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. 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 the shares of the following under 

NYSE Arca Rule 8.200–E, Commentary 

.02 (‘‘Trust Issued Receipts’’): Direxion 

Daily Bitcoin Bear 1X Shares, Direxion 

Daily Bitcoin 1.25X Bull Shares, 

Direxion Daily Bitcoin 1.5X Bull Shares, 

Direxion Daily Bitcoin 2X Bull Shares 

and Direxion Daily Bitcoin 2X Bear 

Shares. The proposed change is 

available on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 


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4Commentary .02 to NYSE Arca Rule 8.200–E 

applies to Trust Issued Receipts that invest in 

‘‘Financial Instruments.’’ The term ‘‘Financial 

Instruments,’’ as defined in Commentary .02(b)(4) to 

NYSE Arca Rule 8.200–E, means any combination 

of investments, including cash; securities; options 

on securities and indices; futures contracts; options 

on futures contracts; forward contracts; equity caps, 

collars, and floors; and swap agreements. 

5The Trust is registered under the Securities Act 

of 1933. On December 15, 2017, the Trust submitted 

to the Securities and Exchange Commission 

(‘‘Commission’’) its draft registration statement on 

Form S–1 (the ‘‘Registration Statement’’) under the 

Securities Act of 1933 (15 U.S.C. 77a) (‘‘Securities 

Act’’). The Jumpstart Our Business Startups Act, 

enacted on April 5, 2012, added Section 6(e) to the 

Securities Act. Section 6(e) of the Securities Act 

provides that an ‘‘emerging growth company’’ may 

confidentially submit to the Commission a draft 

registration statement for confidential, non-public 

review by the Commission staff prior to public 

filing, provided that the initial confidential 

submission and all amendments thereto shall be 

publicly filed not later than 21 days before the date 

on which the issuer conducts a road show, as such 

term is defined in Securities Act Rule 433(h)(4). An 

emerging growth company is defined in Section 

2(a)(19) of the Securities Act as an issuer with less 

than $1,000,000,000 total annual gross revenues 

during its most recently completed fiscal year. The 

Trust meets the definition of an emerging growth 

company and consequently has submitted its Form 

S–1 Registration Statement on a confidential basis 

with the Commission. The description of the 

operation of the Trust and the Funds herein is 

based, in part, on the Registration Statement. 

6A futures contract is a standardized contract 

traded on, and subject to the rules of, an exchange 

that calls for the future delivery of a specified 

quantity and type of a commodity at a specified 

time and place. Bitcoin Futures Contracts will be 

cash-settled. The ‘‘lead month’’ contract is the 

monthly contract with the earliest expiration date. 

7The CME and CBOE are registered with the 

CFTC and seek to provide a neutral, regulated 

marketplace for the trading of derivatives contracts 

for commodities, such as futures, options and 

certain swaps. Both the CME and CBOE are 

members of the Intermarket Surveillance Group 

(‘‘ISG’’). See ftnt. 19, infra. The CME announced 

that its bitcoin futures contracts were scheduled to 

begin trading on December 18, 2017, and began 

trading on that date. See ‘‘CME Group Self-Certifies 

Bitcoin Futures to Launch Dec. 18,’’ December 1, 

2017, available at http://www.cmegroup.com/ 

media-room/press-releases/2017/12/01/cme_group_

self-certifiesbitcoinfuturestolaunchdec18.html. 

CBOE announced that the bitcoin futures contracts 

on its subsidiary Cboe Futures Exchange are 

scheduled to begin trading on December 10, 2017, 

and began trading on that date. See ‘‘Cboe Plans 

December 10 Launch of Bitcoin Futures Trading,’’ 

December 4, 2017, available at http://ir.cboe.com/ 

press-releases/2017/12-04-2017. See also ‘‘CFTC 

Statement on Self-Certification of Bitcoin Products 

by CME, CFE and Cantor Exchange,’’ dated 

December 1, 2017 (‘‘CFTC Release’’), available at 

http://www.cftc.gov/PressRoom/PressReleases/ 

pr7654-17. 

8Though this time may vary due to differences in 

when daylight savings time is effective between 

London and New York, 11:00 a.m. E.T. will govern. 

9 Daily rebalancing and the compounding of each 

day’s return over time means that the return of each 

Fund for a period longer than a single trading day 

will be the result of each day’s returns compounded 

over the period, which will very likely differ from 

either the multiple, inverse multiple or inverse, as 

applicable, of the return of the target benchmark for 

the Funds for the same period. 

10The term ‘‘normal market conditions’’ includes, 

but is not limited to, the absence of trading halts 

in the applicable financial markets generally; 

operational issues (e.g., systems failure) causing 

dissemination of inaccurate market information; or 

force majeure type events such as natural or 

Continued 

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 

under NYSE Arca Rule 8.200–E, 

Commentary .02, which governs the 

listing and trading of Trust Issued 

Receipts: The Direxion Daily Bitcoin 

Bear 1X Shares (the ‘‘1X Bear Fund’’), 

the Direxion Daily Bitcoin 1.25X Bull 

Shares (the ‘‘1.25X Bull Fund’’), the 

Direxion Daily Bitcoin 1.5X Bull Shares 

(the ‘‘1.5X Bull Fund’’), the Direxion 

Daily Bitcoin 2X Bull Shares (the ‘‘2X 

Bull Fund’’) and the Direxion Daily 

Bitcoin 2X Bear Shares (the ‘‘2X Bear 

Shares’’) (each a ‘‘Fund’’ and, 

collectively, the ‘‘Funds’’).4

Each Fund is a series of the Direxion 

Shares ETF Trust II (the ‘‘Trust’’), a 

Delaware statutory trust.5 The Trust and 

the Funds are managed and controlled 

by Direxion Asset Management, LLC 

(the ‘‘Sponsor’’). The Sponsor is 

registered as a commodity pool operator 

(‘‘CPO’’) with the Commodity Futures 

Trading Commission (‘‘CFTC’’) and is a 

member of the National Futures 

Association (‘‘NFA’’). 

In its capacity as the Custodian for the 

Funds, Bank of New York Mellon 

(‘‘BNYM’’ or the ‘‘Custodian’’) may hold 

the Funds’ investment assets and cash 

and cash equivalents pursuant to a 

custodian agreement. The Custodian is 

also the transfer agent for the Funds. In 

addition, in its capacity as 

Administrator for the Funds, U.S. 

Bancorp Fund Services, LLC (the 

‘‘Administrator’’) prepares and files 

certain regulatory filings on behalf of 

the Funds. 

Foreside Fund Services, LLC serves as 

the distributor of the Shares (the 

‘‘Distributor’’). 

Investment Objectives of the Funds 

According to the Registration 

Statement, the Funds will offer 

investors the opportunity to obtain daily 

short, leveraged long or leveraged short 

exposure to the lead month bitcoin 

futures contract traded on the Chicago 

Mercantile Exchange (‘‘CME’’) or on 

Cboe Global Markets, Inc. (‘‘CBOE’’) or 

on any other U.S. exchange that 

subsequently trades bitcoin futures 

contracts (the ‘‘Bitcoin Futures 

Contract’’), the target benchmark before 

fees and expenses.6 The target 

benchmark’s value will be calculated as 

the last sale price published by the CME 

or the CBOE,7 or any other U.S. 

exchange that subsequently trades 

bitcoin futures contracts on or before 

11:00 a.m. E.T. (the ‘‘Daily Last Sale 

Value’’) for the Bitcoin Futures Contract 

and may reflect trades occurring and 

published by the CME and/or CBOE or 

another U.S. exchange that subsequently 

trades bitcoin futures contracts outside 

the normal trading session for the 

Bitcoin Futures Contract.8

Each Fund will seek daily correlation 

to the target benchmark and should not 

be expected to track the performance of 

the target benchmark for any period 

longer than one business day. 

Additionally, while each Fund will seek 

daily correlation to the target 

benchmark, it should not be expected to 

track dollar for dollar the spot price of 

bitcoin because the Fund will invest in 

Bitcoin Futures Contracts rather than 

directly in bitcoin, and the spot price 

movements of bitcoin may not 

correspond directly to price movements 

of the Bitcoin Futures Contracts. In this 

regard, the Funds expect the notional 

value of the Bitcoin Futures Contracts 

held by a Fund to equal the target 

exposure for such Fund (i.e., 125%, 

150%, etc.). 

Each Fund will seek to engage in 

daily rebalancing to position its 

portfolio so that its exposure to the 

target benchmark is consistent with its 

daily investment objective. The impact 

of the target benchmark’s movements 

during the day will affect whether a 

Fund’s portfolio needs to be 

repositioned.9

As described below, under normal 

market conditions, each Fund intends to 

obtain exposure to its target benchmark 

by investing in the Bitcoin Futures 

Contract traded in the U.S., swaps on 

the Bitcoin Futures Contract or listed 

options on bitcoin or Bitcoin Futures 

Contracts (together,’’Bitcoin Financial 

Instruments’’).10 The Funds’ 


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manmade disaster, act of God, armed conflict, act 

of terrorism, riot or labor disruption or any similar 

intervening circumstance. 

11A ‘‘single trading day’’ is measured from the 

time a Fund calculates its Net Asset Value (‘‘NAV’’) 

to the time of a Fund’s next NAV calculation. See 

also, Net Asset Value, infra. 

investments in Bitcoin Financial 

Instruments are used to produce 

economically ‘‘leveraged’’ or ‘‘inverse 

leveraged’’ investment results for the 

Funds. Any remaining assets will be 

invested in cash or cash equivalents. 

Investment Objectives of the Leveraged 

Bull Funds 

According to the Registration 

Statement, the 1.25X Bull Fund, 1.5X 

Bull Fund and 2X Bull Fund (each a 

‘‘Bull Fund’’ and collectively, the ‘‘Bull 

Funds’’) seeks daily leveraged 

investment results (before fees and 

expenses) that correlate positively to 

either 125%, 150% or 200% the daily 

return of the target benchmark. The Bull 

Funds do not seek to achieve their 

investment objective over a period 

greater than a single trading day.11 If a 

Bull Fund is successful in meeting its 

objective, its value on a given day 

(before fees and expenses) should gain 

approximately 1.25 times, 1.5 times or 

2 times, as applicable, as much on a 

percentage basis as the level of its target 

benchmark when the target benchmark 

rises. Conversely, its value on a given 

day (before fees and expenses) should 

lose approximately 1.25 times, 1.5 times 

or 2 times, as applicable, as much on a 

percentage basis as the level of the target 

benchmark when the benchmark 

declines. Each Bull Fund acquires long 

exposure through any one of, or 

combinations of, Bitcoin Financial 

Instruments, including Bitcoin 

Financial Instruments with respect to 

the target benchmark, such that each 

Bull Fund has exposure intended to 

approximate either 125%, 150% or 

200%, as applicable, of the target 

benchmark at the time of its NAV 

calculation. 

Investment Objective of the 2X Bear 

Fund 

The 2X Bear Fund seeks daily 

leveraged inverse investment results 

(before fees and expenses) that correlate 

to two times the inverse (¥200%) of the 

daily return of the target benchmark. 

The 2X Bear Fund does not seek to 

achieve its investment objective over a 

period greater than a single trading day. 

If the 2X Bear Fund is successful in 

meeting its investment objective, its 

value on a given day (before fees and 

expenses) should gain approximately 

two times as much on a percentage basis 

as the level of the target benchmark 

when the target benchmark declines. 

Conversely, its value on a given day 

(before fees and expenses) should lose 

approximately two times as much on a 

percentage basis as the level of the target 

benchmark when the target benchmark 

rises. The 2X Bear Fund acquires short 

exposure through any one, or 

combinations of, Bitcoin Financial 

Instruments, including Bitcoin 

Financial Instruments with respect to 

the target benchmark, such that the 2X 

Bull Fund has exposure intended to 

approximate two times the inverse 

(¥200%) of its target benchmark at the 

time of its NAV calculation. 

Investment Objective of the 1X Bear 

Fund 

The 1X Bear Fund seeks daily 

investment results (before fees and 

expenses) that correlate to the inverse 

(¥100%) of the daily return of the target 

benchmark. The 1X Bear Fund does not 

seek to achieve its investment objective 

over a period greater than a single 

trading day. If the 1X Bear Fund is 

successful in meeting its investment 

objective, its value on a given day 

(before fees and expenses) should gain 

approximately as much on a percentage 

basis as the level of the target 

benchmark when the target benchmark 

declines. Conversely, its value on a 

given day (before fees and expenses) 

should lose approximately as much on 

a percentage basis as the level of its 

target benchmark when the target 

benchmark rises. The 1X Bear Fund 

acquires short exposure through any one 

of, or combinations of, Bitcoin Financial 

Instruments, including Bitcoin 

Financial Instruments with respect to 

the target benchmark, such that the 1X 

Bull Fund has exposure intended to 

approximately equal the inverse 

(¥100%) of its target benchmark at the 

time of its NAV calculation. 

Principal Investment Strategies 

According to the Registration 

Statement, in seeking to achieve each 

Fund’s daily investment objective, the 

Sponsor will use statistical and 

quantitative analysis to determine the 

investments each Fund makes and the 

techniques it employs. Using this 

approach, the Sponsor determines the 

type, quantity and mix of investment 

positions that the Sponsor believes in 

combination should produce daily 

returns consistent with a Fund’s 

investment objective. The Sponsor relies 

upon a pre-determined model to 

generate orders that result in 

repositioning each Fund’s investments 

in accordance with its daily investment 

objective. As a consequence, if a Fund 

is performing as designed, the return of 

the target benchmark will dictate the 

return for that Fund. Each Fund pursues 

its investment objective regardless of the 

market conditions and does not take 

defensive positions. 

Each Fund, under normal market 

conditions, will seek to achieve its daily 

investment objective by investing in 

Bitcoin Financial Instruments. A Fund 

may invest in listed options on bitcoin 

and Bitcoin Futures Contracts and 

swaps on Bitcoin Futures Contracts in a 

manner consistent with its investment 

objective in situations where the 

Sponsor believes that investing in such 

financial instruments is in the best 

interests of a Fund. In addition, a Fund 

may invest in swap contracts 

referencing Bitcoin Futures Contracts if 

the market for a specific bitcoin futures 

contract experiences emergencies or if 

position price or accountability limits (if 

any) are reached with respect to any 

Bitcoin Futures Contracts. At the close 

of the U.S. equity markets each trading 

day, each Fund will position its 

portfolio to ensure that the Fund’s 

exposure to the target benchmark is 

consistent with the Fund’s investment 

objective. The impact of market 

movements during the day will 

determine whether a portfolio needs to 

be repositioned. 

According to the Registration 

Statement, with futures contracts, there 

is minimal but some counterparty risk 

to the Funds since futures contracts are 

exchange traded and the exchange’s 

clearinghouse, as counterparty to all 

exchange-traded futures contracts, 

effectively guarantees futures contracts 

against default. Many futures exchanges 

and boards of trade limit the amount of 

fluctuation permitted in futures contract 

prices during a single trading day. Once 

the daily limit has been reached in a 

particular contract, no trades may be 

made that day at a price beyond that 

limit or trading may be suspended for 

specified times during the trading day. 

According to the Registration 

Statement, with respect to the Bitcoin 

Futures Contracts, as the futures 

contracts held by the Funds near 

expiration, the Funds do not intend to 

hold futures contracts through 

expiration, but instead to ‘‘roll’’ their 

respective positions. When the market 

for these contracts is such that the 

prices are higher in the more distant 

delivery months than in the nearer 

delivery months, the sale during the 

course of the ‘‘rolling process’’ of the 

more nearby contract would take place 

at a price that is lower than the price of 

the more distant contract. This pattern 

of higher futures prices for longer 

expiration futures contracts is often 

referred to as ‘‘contango.’’ Alternatively, 


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12The Sponsor on behalf of the corresponding 

Fund intends to enter into OTC swaps only with 

counterparties who are, or are affiliates of, (a) banks 

regulated by a federal bank regulator, (b) brokerdealers regulated by the Commission, (c) insurance 

companies domiciled in the U.S., and (d) 

producers, users or traders of an underlying 

commodity or currency, whether or not regulated 

by the CFTC. Any entity acting as a counterparty 

must also be regulated in either the U.S. or the U.K. 

unless otherwise approved by the Sponsor. A Fund 

will also require that the counterparty be highly 

rated and/or provide collateral or other credit 

support. The Sponsor also assesses or reviews, as 

appropriate, the creditworthiness of each potential 

or existing counterparty pursuant to established 

guidelines. 

13See CFTC Release, supra, ftnt. 7. 14The value of a futures contract is derived from 

the value of an underlying asset, rate or benchmark 

(such asset, rate or benchmark, a ‘‘Reference 

Asset’’). 

when the market for these contracts is 

such that the prices are higher in the 

nearer months than in the more distant 

months, the sale during the course of 

the ‘‘rolling process’’ of the more nearby 

contract would take place at a price that 

is higher than the price of the more 

distant contract. This pattern of higher 

futures prices for shorter expiration 

futures contracts is referred to as 

‘‘backwardation.’’ The presence of 

contango in certain futures contracts at 

the time of rolling would be expected to 

adversely affect the Funds with long 

positions, and positively affect the 

Funds with short positions. Similarly, 

the presence of backwardation in certain 

futures contracts at the time of rolling 

such contracts would be expected to 

adversely affect the Funds with short 

positions and positively affect the 

Funds with long positions. 

To reduce the credit risk that arises in 

connection with swaps, a Fund will 

generally enter into an agreement with 

each counterparty based on the Master 

Agreement published by the 

International Swaps and Derivatives 

Association, Inc.12

Assets of each Fund not invested in 

the Bitcoin Financial Instruments will 

be held in cash or invested in cash 

equivalents such as U.S. Treasury 

Securities or other high credit quality 

short- term fixed-income or similar 

securities (including shares of money 

market funds, bank deposits, bank 

money market accounts, certain variable 

rate-demand notes and repurchase 

agreements collateralized by 

government securities) (collectively 

’’Money Market Investments’’) that serve 

as collateral for, or pending investments 

in, the Funds’ investments. 

In the future, the Funds will disclose 

certain information relating to margin 

levels held at the FCM based on how 

each Fund will be managed. While the 

portfolio composition may vary over 

time, it is not expected that any Fund 

will ever have futures exposure greater 

than 300% of Fund assets. Thus the 

maximum margin held at an FCM 

would not exceed three times the 

margin requirement. 

Overview of Bitcoin 

According to the Registration 

Statement, Bitcoin is a digital asset that 

is not issued by any government, bank 

or organization. Bitcoin is a digital asset 

based on the decentralized, open source 

protocol of the peer-to-peer bitcoin 

computer network (the ‘‘Bitcoin 

Network’’). No single entity owns or 

operates the Bitcoin Network; the 

infrastructure is collectively maintained 

by a decentralized user base. The 

Bitcoin Network is accessed through 

software, and software governs bitcoin’s 

creation, movement, and ownership. 

The value of bitcoin is determined by 

the supply and demand for bitcoin on 

websites that facilitate the transfer of 

bitcoin in exchange for governmentissued currencies (‘‘Bitcoin 

Exchanges’’), and in private end-user-toend-user transactions. 

Bitcoin transactions and ownership 

records are reflected on the 

‘‘Blockchain’’, which is a digital public 

record or ledger. Copies of this ledger 

are stored in a decentralized manner on 

the computers of each Bitcoin Network 

user. Transaction date is permanently 

recorded in files called ‘‘blocks,’’ which 

reflect transactions that have been 

recorded and authenticated by Bitcoin 

Network participants. The Bitcoin 

Network software source codes includes 

protocols that govern the creation of 

bitcoin and the cryptographic system 

that secures and verifies Bitcoin 

transactions. 

Overview of Bitcoin Futures Contracts 

According to the Registration 

Statement, unlike the futures markets 

for traditional physical commodities, 

the market for exchange-traded bitcoin 

futures contract has limited trading 

history and operational experience and 

may be riskier, less liquid, more volatile 

and more vulnerable to economic, 

market and industry changes than more 

established futures markets. The 

liquidity of the market will depend on, 

among other things, the adoption of 

bitcoin and the commercial and 

speculative interest in the market for the 

ability to hedge against the price of 

bitcoin with exchange-traded bitcoin 

futures contracts. 

The CFTC has noted that the U.S. 

futures exchanges that will trade bitcoin 

futures have agreed to significant 

enhancements to protect customers and 

maintain orderly markets, and 

announced its expectation that futures 

exchanges that list and trade bitcoin 

futures contracts will, through 

information sharing agreements, 

monitor the trading activity on the 

relevant cash platforms for potential 

impacts on the price discovery process 

for bitcoin futures contracts, including 

potential market manipulation and 

market dislocations due to flash rallies 

and crashes and trading outages.13

Net Asset Value 

According to the Registration 

Statement, the NAV per Share of each 

Fund is computed by dividing the value 

of the net assets of such Fund (i.e., the 

value of its total assets less total 

liabilities) by its total number of Shares 

outstanding. Expenses and fees are 

accrued daily and taken into account for 

purposes of determining NAV. Each 

Fund’s NAV is calculated on each 

business day that the New York Stock 

Exchange LLC (‘‘NYSE’’) is open. The 

Funds compute their NAVs as of 11:00 

a.m. E.T., or such earlier time that the 

NYSE may close. 

In calculating the NAV of a Fund, the 

settlement value of a Fund’s nonexchange traded Bitcoin Financial 

Instruments is determined by applying 

the then-current prices for the target 

benchmark to the terms of such Fund’s 

non-exchange traded Bitcoin Financial 

Instruments. However, in the event that 

an underlying Bitcoin Futures Contract 

is not trading due to the operation of 

daily limits or otherwise, the Sponsor 

may in its sole discretion choose to fair 

value the Reference Asset in order to 

value a Fund’s non-exchange traded 

Bitcoin Financial Instruments for 

purposes of the NAV calculation.14

Such fair value prices would generally 

be determined based on available inputs 

about the current value of the 

underlying Reference Assets and would 

be based on principles that the Sponsor 

deems fair and equitable so long as such 

principles are consistent with normal 

industry standards. 

All open futures contracts traded on 

an exchange are calculated at their then 

current market value, which is based 

upon the settlement or the last traded 

price before the NAV calculation time, 

for that particular futures contract 

traded on the applicable exchange on 

the date with respect to which NAV is 

being determined; provided, that if a 

futures contract traded on an exchange 

could not be liquidated on such day, 

due to the operation of daily limits or 

other rules of the exchange upon which 

that position is traded or otherwise, the 

Sponsor may in its sole discretion 

choose to determine a fair value price as 


daltland on DSKBBV9HB2PROD with NOTICES
3384 Federal Register / Vol. 83, No. 16 / Wednesday, January 24, 2018 / Notices 

15Several major market data vendors display and/ 

or make widely available IFVs taken from the CTA 

or other data feeds. 

the basis for determining the market 

value of such position for such day. 

Money Market Investments will be 

valued on the basis of broker quotes, 

valuations provided by a third party 

pricing service or at amortized cost. 

Indicative Fund Value 

In order to provide updated 

information relating to the Funds for use 

by investors and market professionals, 

the Exchange will calculate an updated 

‘‘Indicative Fund Value’’ (‘‘IFV’’). The 

IFV will be calculated by using the prior 

day’s closing net assets of a Fund as a 

base and updating throughout the 

Exchange’s Core Trading Session of 9:30 

a.m. E.T. to 4:00 p.m. E.T. changes in 

the value of the Bitcoin Financial 

Instruments held by a Fund based on 

the most recently available prices for the 

Fund’s investments. 

The IFV will be disseminated on a per 

Share basis every 15 seconds during the 

Exchange’s Core Trading Session and be 

widely disseminated by one or more 

major market data vendors during the 

NYSE Arca Core Trading Session.15 In 

addition, circumstances may arise in 

which the NYSE Arca Core Trading 

Session is in progress, but trading in the 

Bitcoin Futures Contracts is not 

occurring. Such circumstances may 

result from reasons including, but not 

limited to, a futures exchange having a 

separate holiday schedule than the 

NYSE Arca, a futures exchange closing 

prior to the close of the NYSE Arca, 

price fluctuation limits being reached in 

a Bitcoin Futures Contract, or a futures 

exchange, imposing any other 

suspension or limitation on trading in a 

Bitcoin Futures Contract. In such 

instances, for IFV calculation purposes, 

the price of the applicable Bitcoin 

Futures Contracts, as well as Bitcoin 

Financial Instruments whose price is 

derived from the Bitcoin Futures 

Contracts, would be static or priced by 

a Fund at the applicable early cut-off 

time of the exchange trading the 

applicable Bitcoin Futures Contract. 

Creation and Redemption of Shares 

According to the Registration 

Statement, each Fund will create and 

redeem Shares in one or more Creation 

Units. A Creation Unit is a block of 

50,000 Shares of a Fund. 

A creation transaction, which is 

subject to acceptance by the Distributor, 

generally takes place when an 

Authorized Participant deposits a 

specified amount of cash in exchange 

for a specified number of Creation 

Units. Similarly, Shares can be 

redeemed only in Creation Units, 

generally for cash. 

Only ‘‘Authorized Participants’’ may 

purchase and redeem Shares from a 

Fund and then only in Creation Units. 

An Authorized Participant is an entity 

that has entered into an ‘‘Authorized 

Participant Agreement’’ with the Trust 

and the Sponsor. 

Creation Procedures 

On any Business Day, an Authorized 

Participant may place an order with the 

Distributor to create one or more 

Creation Units. For purposes of 

processing both purchase and 

redemption orders, a ‘‘Business Day’’ 

means any day on which the NAV of a 

Fund is calculated. Purchase orders 

must be placed by 11 a.m. E.T. or earlier 

if the NYSE Arca closes before the cutoff time. 

Redemption Procedures 

According to the Registration 

Statement, the procedures by which an 

Authorized Participant can redeem one 

or more Creation Units mirror the 

procedures for the creation of Creation 

Units. On any Business Day, an 

Authorized Participant may place an 

order with the Distributor to redeem one 

or more Creation Units. 

By placing a redemption order, an 

Authorized Participant agrees to deliver 

the Creation Units to be redeemed 

through DTC’s book-entry system to the 

applicable Fund not later than noon 

(Eastern Time), on the first Business Day 

immediately following the redemption 

order date (T+1). The Sponsor reserves 

the right to extend the deadline for the 

Fund to receive the Creation Units 

required for settlement up to the second 

Business Day following the redemption 

order date (T+2). 

Availability of Information 

The NAV for the Funds’ Shares will 

be disseminated daily to all market 

participants at the same time. The 

intraday, closing prices, and settlement 

prices of the Bitcoin Futures Contracts 

will be readily available from the 

applicable futures exchange websites, 

automated quotation systems, published 

or other public sources, or major market 

data vendors. The value of the Bitcoin 

Futures Contract will be disseminated 

by one or more major market data 

vendors on at least a 15-second delayed 

basis during the NYSE Arca Core 

Trading Session of 9:30 a.m. to 4:00 

p.m. E.T. 

Complete real-time data for the 

Bitcoin Futures Contracts and Options 

on Bitcoin Futures will be available by 

subscription through on-line 

information services. CME and CBOE 

will provide delayed futures and 

options on futures (once available) 

information on current and past trading 

sessions and market news free of charge 

on their respective websites. The 

specific contract specifications for 

Bitcoin Futures Contracts would also be 

available on such websites, as well as 

other financial informational sources. 

Quotation and last-sale information 

regarding the Shares will be 

disseminated through the facilities of 

the Consolidated Tape Association 

(‘‘CTA’’). Quotation information for 

Money Market Investments and OTC 

swaps agreements may be obtained from 

brokers and dealers who make markets 

in such instruments. Quotation 

information for exchange-traded swaps 

will be available from the applicable 

exchange and major market vendors. 

The IFV will be available through online information services. 

In addition, the Funds’ website, 

www.direxioninvestments.com, will 

display the applicable end of day 

closing NAV. The daily holdings of each 

Fund will be available on the Funds’ 

website before 9:30 a.m. E.T. Each 

Fund’s total portfolio composition will 

be disclosed each Business Day that 

NYSE Arca is open for trading, on the 

Funds’ website. The Funds’ website will 

also include a form of the prospectus for 

the Funds that may be downloaded. The 

website will include the Shares’ ticker 

and CUSIP information, along with 

additional quantitative information 

updated on a daily basis for each Fund. 

The Funds’ website will include (1) the 

prior business day’s reported NAV and 

closing price, and a calculation of the 

premium and discount of the closing 

price or mid-point of the bid/ask spread 

at the time of NAV calculation (‘‘Bid/ 

Ask Price’’) against the NAV; and (2) 

data in chart format displaying the 

frequency distribution of discounts and 

premiums of the daily closing price or 

Bid/Ask Price against the NAV, within 

appropriate ranges, for at least each of 

the four previous calendar quarters. The 

website disclosure of portfolio holdings 

will be made daily and will include, as 

applicable, (i) the name, quantity, value, 

expiration and strike price of Bitcoin 

Futures Contracts and Bitcoin Financial 

Instruments, (ii) the value of Bitcoin 

Financial Instruments, and (iii) the 

aggregate net value of the Money Market 

Investments held in each Fund’s 

portfolio, if applicable. The Funds’ 

website will be publicly available prior 

to the public offering of Shares and 

accessible at no charge. 

The spot price of bitcoin also is 

available on a 24-hour basis from major 

market data vendors. 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 16 / Wednesday, January 24, 2018 / Notices 3385 

16See NYSE Arca Rule 7.12–E. 17 17 CFR 240.10A–3. 

18FINRA conducts cross-market surveillances on 

behalf of the Exchange pursuant to a regulatory 

services agreement. The Exchange is responsible for 

FINRA’s performance under this regulatory services 

agreement. 19For a list of the current members of ISG, see 

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

components of a Fund may trade on markets that 

are members of ISG or with which the Exchange has 

in place a CSSA. 

Trading Halts 

With respect to trading halts, the 

Exchange may consider all relevant 

factors in exercising its discretion to 

halt or suspend trading in the Shares of 

a Fund.16 Trading in Shares of a Fund 

will be halted if the circuit breaker 

parameters in NYSE Arca Rule 7.12–E 

have been reached. Trading also may be 

halted because of market conditions or 

for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. 

The Exchange may halt trading during 

the day in which an interruption to the 

dissemination of the IFV or the value of 

the Bitcoin Futures Contract occurs. If 

the interruption to the dissemination of 

the IFV or the value of the Bitcoin 

Futures Contract persists past the 

trading day in which it occurred, the 

Exchange will halt trading no later than 

the beginning of the trading day 

following the interruption. In addition, 

if the Exchange becomes aware that the 

NAV with respect to the Shares is not 

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. 

Trading Rules 

The Exchange deems the Shares to be 

equity securities, thus rendering trading 

in the Shares subject to the Exchange’s 

existing rules governing the trading of 

equity securities. Shares will trade on 

the NYSE Arca Marketplace from 4 a.m. 

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

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

Trading Sessions). The Exchange has 

appropriate rules to facilitate 

transactions in the Shares during all 

trading sessions. As provided in NYSE 

Arca Rule 7.6–E, the minimum price 

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

of orders in equity securities traded on 

the NYSE Arca Marketplace is $0.01, 

with the exception of securities that are 

priced less than $1.00 for which the 

MPV for order entry is $0.0001. 

The Shares will conform to the initial 

and continued listing criteria under 

NYSE Arca Rule 8.200–E. The trading of 

the Shares will be subject to NYSE Arca 

Rule 8.200–E, Commentary .02(e), 

which sets forth certain restrictions on 

Equity Trading Permit (‘‘ETP’’) Holders 

acting as registered Market Makers in 

Trust Issued Receipts to facilitate 

surveillance. The Exchange represents 

that, for initial and continued listing, 

each Fund will be in compliance with 

Rule 10A–3 17 under the Act, as 

provided by NYSE Arca Rule 5.3–E. A 

minimum of 100,000 Shares of each 

Fund will be outstanding at the 

commencement of trading on the 

Exchange. 

Surveillance 

The Exchange represents that trading 

in the Shares of each Fund will be 

subject to the existing trading 

surveillances administered by the 

Exchange, as well as cross-market 

surveillances administered by 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.18 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. 

The surveillances referred to above 

generally focus on detecting securities 

trading outside their normal patterns, 

which could be indicative of 

manipulative or other violative activity. 

When such situations are detected, 

surveillance analysis follows and 

investigations are opened, where 

appropriate, to review the behavior of 

all relevant parties for all relevant 

trading violations. 

The Exchange or FINRA, on behalf of 

the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares and certain Bitcoin 

Futures Contracts with other markets 

and other entities that are members of 

the ISG, and the Exchange or FINRA, on 

behalf of the Exchange, or both, may 

obtain trading information regarding 

trading in the Shares and certain Bitcoin 

Futures Contracts from such markets 

and other entities. In addition, the 

Exchange may obtain information 

regarding trading in the Shares and 

certain Bitcoin Futures Contracts from 

markets and other entities that are 

members of ISG or with which the 

Exchange has in place a comprehensive 

surveillance sharing agreement 

(‘‘CSSA’’).19 The Exchange is also able 

to obtain information regarding trading 

in the Shares, futures, the commodity 

underlying futures or options on futures 

through ETP Holders, in connection 

with such ETP Holders’ proprietary or 

customer trades which they effect 

through ETP Holders on any relevant 

market. The Exchange can obtain market 

surveillance information, including 

customer identity information, with 

respect to transactions (including 

transactions in cash-settled Options) 

occurring on US futures exchanges, 

which are members of the ISG. 

In addition, the Exchange also has a 

general policy prohibiting the 

distribution of material, non-public 

information by its employees. 

All statements and representations 

made in this filing regarding (a) the 

description of the portfolios of the 

Funds or the target benchmark, (b) 

limitations on portfolio holdings, 

reference assets or the target benchmark, 

or (c) the applicability of Exchange 

listing rules specified in this rule filing 

shall constitute continued listing 

requirements for listing the Shares on 

the Exchange. 

The issuer has represented to the 

Exchange that it will advise the 

Exchange of any failure by the Funds 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 a Fund is not in 

compliance with the applicable listing 

requirements, the Exchange will 

commence delisting procedures under 

NYSE Arca Rule 5.5–E(m). 

Information Bulletin 

Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders in an Information Bulletin 

of the special characteristics and risks 

associated with trading the Shares. 

Specifically, the Information Bulletin 

will discuss the following: (1) The risks 

involved in trading the Shares during 

the Early and Late Trading Sessions 

when an updated IFV will not be 

calculated or publicly disseminated; (2) 

the procedures for purchases and 

redemptions of Shares in Creation Units 

(and that Shares are not individually 

redeemable); (3) NYSE Arca Rule 9.2– 

E(a), which imposes a duty of due 

diligence on its ETP Holders to learn the 

essential facts relating to every customer 

prior to trading the Shares; (4) how 

information regarding the IFV is 

disseminated; (5) how information 

regarding portfolio holdings is 

disseminated; (6) that a static IFV will 

be disseminated, between the close of 

trading on the CME and CBOE and the 

close of the NYSE Arca Core Trading 

Session; (7) the requirement that ETP 

Holders deliver a prospectus to 

investors purchasing newly issued 

Shares prior to or concurrently with the 


daltland on DSKBBV9HB2PROD with NOTICES
3386 Federal Register / Vol. 83, No. 16 / Wednesday, January 24, 2018 / Notices 

20 15 U.S.C. 78f(b)(5). 

confirmation of a transaction; and (8) 

trading information. 

Prior to the commencement of 

trading, the Exchange will inform its 

ETP Holders of the suitability 

requirements of NYSE Arca Rule 9.2– 

E(a) in an Information Bulletin. 

Specifically, ETP Holders will be 

reminded in the Information Bulletin 

that, in recommending transactions in 

the Shares, they must have a reasonable 

basis to believe that (1) the 

recommendation is suitable for a 

customer given reasonable inquiry 

concerning the customer’s investment 

objectives, financial situation, needs, 

and any other information known by 

such ETP Holder, and (2) the customer 

can evaluate the special characteristics, 

and is able to bear the financial risks, of 

an investment in the Shares. In 

connection with the suitability 

obligation, the Information Bulletin will 

also provide that ETP Holders must 

make reasonable efforts to obtain the 

following information: (1) The 

customer’s financial status; (2) the 

customer’s tax status; (3) the customer’s 

investment objectives; and (4) such 

other information used or considered to 

be reasonable by such ETP Holder or 

registered representative in making 

recommendations to the customer. 

Further, the Exchange states that 

FINRA has implemented increased sales 

practice and customer margin 

requirements for FINRA members 

applicable to inverse, leveraged and 

inverse leveraged securities (which 

include the Shares) and options on such 

securities, as described in FINRA 

Regulatory Notices 09–31 (June 2009), 

09–53 (August 2009), and 09–65 

(November 2009) (collectively, ‘‘FINRA 

Regulatory Notices’’). ETP Holders that 

carry customer accounts will be 

required to follow the FINRA guidance 

set forth in these notices. As noted 

above, the Funds will seek investment 

results that daily short, leverage long or 

leverage short the performance of the 

target benchmark. Over a period of time 

in excess of one day, the cumulative 

percentage increase or decrease in the 

NAV of the Shares of a Fund may 

diverge significantly from a multiple or 

inverse multiple of the cumulative 

percentage decrease or increase in the 

relevant benchmark due to a 

compounding effect. 

In addition, the Information Bulletin 

will advise ETP Holders, prior to the 

commencement of trading, of the 

prospectus delivery requirements 

applicable to a Fund. The Information 

Bulletin will also discuss any 

exemptive, no-action, and interpretive 

relief granted by the Commission from 

any rules under the Act. In addition, the 

Information Bulletin will reference that 

a Fund is subject to various fees and 

expenses described in the Registration 

Statement. The Information Bulletin 

will also reference that the CFTC has 

regulatory jurisdiction over the trading 

of Bitcoin Futures Contracts traded on 

U.S. markets. 

The Information Bulletin will also 

disclose the trading hours of the Shares 

that the NAV for the Shares will be 

calculated after 11:00 a.m. E.T. each 

trading day. The Information Bulletin 

will disclose that information about the 

Shares will be publicly available on the 

Funds’ website. 

2. Statutory Basis 

The basis under the Act for this 

proposed rule change is the requirement 

under Section 6(b)(5) 20 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 and to protect 

investors and the public interest in that 

the Shares will be listed and traded on 

the Exchange pursuant to the initial and 

continued listing criteria in NYSE Arca 

Rule 8.200–E. 

The Exchange has in place 

surveillance procedures that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. The Exchange or FINRA, on behalf 

of the Exchange, or both, will 

communicate as needed regarding 

trading in the Shares, and certain 

Bitcoin Futures Contracts with other 

markets and other entities that are 

members of the ISG, and the Exchange 

or FINRA, on behalf of the Exchange, or 

both, may obtain trading information 

regarding trading in the Shares and 

certain Bitcoin Futures Contracts from 

such markets and other entities. In 

addition, the Exchange may obtain 

information regarding trading in the 

Shares and certain Bitcoin Futures 

Contracts from markets and other 

entities that are members of ISG or with 

which the Exchange has in place a 

CSSA. The Exchange is also able to 

obtain information regarding trading in 

the Shares, the commodity underlying 

futures or options on futures through 

ETP Holders, in connection with such 

ETP Holders’ proprietary or customer 

trades which they effect through ETP 

Holders on any relevant market. 

The Exchange can obtain market 

surveillance information, including 

customer identity information, with 

respect to transactions (including 

transactions in cash-settled Options) 

occurring on U.S. futures exchanges, 

which are members of the ISG. The 

intraday, closing prices, and settlement 

prices of the Bitcoin Futures Contracts 

will be readily available from the 

applicable futures exchange websites, 

automated quotation systems, published 

or other public sources, or major market 

data vendors website or on-line 

information services. 

Complete real-time data for the 

Bitcoin Futures Contracts and Options 

on Bitcoin Futures will be available by 

subscription from on-line information 

services. CME and CBOE will provide 

delayed futures information on current 

and past trading sessions and market 

news free of charge on their websites. 

The specific contract specifications for 

Bitcoin Futures Contracts would also be 

available on such websites, as well as 

other financial informational sources. 

Information regarding options will be 

available from the applicable exchanges 

or major market data vendors. Quotation 

and last-sale information regarding the 

Shares will be disseminated through the 

facilities of the CTA. The Funds’ 

website will also include a form of the 

prospectus for the Funds that may be 

downloaded. The website will include 

the Shares’ ticker and CUSIP 

information, along with additional 

quantitative information updated on a 

daily basis for each Fund. The Funds’ 

website will include (1) the prior 

business day’s reported NAV and 

closing price, and a calculation of the 

premium and discount of the closing 

price or mid-point of the Bid/Ask Price 

against the NAV; and (2) data in chart 

format displaying the frequency 

distribution of discounts and premiums 

of the daily closing price or Bid/Ask 

Price against the NAV, within 

appropriate ranges, for at least each of 

the four previous calendar quarters. The 

website disclosure of portfolio holdings 

will be made daily and will include, as 

applicable, (i) the name, quantity, value, 

expiration and strike price of Bitcoin 

Futures Contracts and Bitcoin Financial 

Instruments, (ii) the value of Bitcoin 

Financial Instruments, and (iii) the 

aggregate net value of the Money Market 

Investments held in each Fund’s 

portfolio, if applicable. The Funds’ 

website will be publicly available prior 

to the public offering of Shares and 

accessible at no charge. 


daltland on DSKBBV9HB2PROD with NOTICES
Federal Register / Vol. 83, No. 16 / Wednesday, January 24, 2018 / Notices 3387 

21 17 CFR 200.30–3(a)(12). 

In addition, the CFTC has noted that 

the U.S. futures exchanges that will 

trade bitcoin futures have agreed to 

significant enhancements to protect 

customers and maintain orderly 

markets, and announced its expectation 

that futures exchanges that list and trade 

bitcoin futures contracts will, through 

information sharing agreements, 

monitor the trading activity on the 

relevant cash platforms for potential 

impacts on the price discovery process 

for bitcoin futures contracts, including 

potential market manipulation and 

market dislocations due to flash rallies 

and crashes and trading outages. 

Moreover, prior to the commencement 

of trading, the Exchange will inform its 

Equity Trading Permit Holders in an 

Information Bulletin of the special 

characteristics and risks associated with 

trading the Shares and of the suitability 

requirements of NYSE Arca Rule 9.2– 

E(a). The Information Bulletin will 

advise ETP Holders, prior to the 

commencement of trading, of the 

prospectus delivery requirements 

applicable to a Fund. The Information 

Bulletin will also discuss any 

exemptive, no-action, and interpretive 

relief granted by the Commission from 

any rules under the Act. In addition, the 

Information Bulletin will reference that 

a Fund is subject to various fees and 

expenses described in the Registration 

Statement. The Information Bulletin 

will also reference that the CFTC has 

regulatory jurisdiction over the trading 

of Bitcoin Futures Contracts traded on 

U.S. markets. The Information Bulletin 

will also disclose the trading hours of 

the Shares and that the NAV for the 

Shares will be calculated after 11:00 

a.m. E.T. each trading day. The 

Information Bulletin will disclose that 

information about the Shares will be 

publicly available on the Funds’ 

website. 

Trading in Shares of a Fund will be 

halted if the circuit breaker parameters 

in NYSE Arca Rule 7.12–E have been 

reached or because of market conditions 

or for reasons that, in the view of the 

Exchange, make trading in the Shares 

inadvisable. 

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 a new type of Trust Issued Receipt 

based on the price of Bitcoin Futures 

Contracts 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 that are 

adequate to properly monitor trading in 

the Shares in all trading sessions and to 

deter and detect violations of Exchange 

rules and applicable federal securities 

laws. 

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 a new 

type of Trust Issued Receipt based on 

the price of Bitcoin Futures Contracts 

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 is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2018–02 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2018–02. 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 will also be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSEArca–2018–02 and 

should be submitted on or before 

February 14, 2018. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2018–01209 Filed 1–23–18; 8:45 am] 

BILLING CODE 8011–01–P 

DEPARTMENT OF STATE 

[Public Notice 10284] 

E.O. 13224 Designation of Khalid 

Batarfi, aka Khaled Batarfi, aka Khaled 

Saeed Batarfi, aka Abu Miqdad, aka 

Abu al-Miqdad al-Kindi, aka Khalid bin 

Umar Batarfi, aka Khalid Saeed Batarfi, 

as a Specially Designated Global 

Terrorist 

Acting under the authority of and in 

accordance with section 1(b) of 

Executive Order 13224 of September 23, 

2001, as amended by Executive Order 

13268 of July 2, 2002, and Executive 

Order 13284 of January 23, 2003, I 

hereby determine that the person known 


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