Document ID: SEC-2021-1598-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2021-11-16T05:00Z

[Federal Register Volume 86, Number 218 (Tuesday, November 16, 2021)]
[Notices]
[Pages 63429-63431]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-24896]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93546; File No. SR-CboeBZX-2021-075]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Reflect 
a Modification to the Permitted Components of the Tracking Baskets of 
the Invesco Real Assets ESG ETF and Invesco US Large Cap Core ETF

November 9, 2021.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 2, 2021, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Cboe BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to 
reflect an amendment to the Reference Order relied upon by the Invesco 
Real Assets ESG ETF and Invesco US Large Cap Core ESG ETF, shares of 
which are listed and traded on the Exchange under BZX Rule 14.11(m).
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, and at 
the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant 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 adopted BZX Rule 14.11(m) for the purpose of 
permitting the listing and trading, or pursuant to unlisted trading 
privileges (``UTP''), of Tracking Fund Shares, which are securities 
issued by an actively managed open-end management investment 
company.\3\ Exchange Rule 14.11(m)(2)(A) requires the Exchange to file 
separate proposals under Section 19(b) of the Act before listing and 
trading any series of Tracking Fund Shares on the Exchange. Pursuant to 
this provision, the Exchange submitted proposals to list and trade 
shares (``Shares'') of Tracking Fund Shares of the following funds 
under BZX Rule 14.11(m): Invesco Real Assets ESG ETF and Invesco US 
Large Cap Core ESG

[[Page 63430]]

ETF (each, a ``Fund'' and, together the ``Funds'').\4\
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    \3\ See Securities Exchange Act Release No. 88887 (May 15, 
2020), 85 FR 30990 (May 21, 2020) (SR-CboeBZX-2019-107) (Notice of 
Filing of Amendment No. 5 and Order Granting Accelerated Approval of 
a Proposed Rule Change, as Modified by Amendment No. 5, to Adopt 
Rule 14.11(m), Tracking Fund Shares, and to List and Trade Shares of 
the Fidelity Blue Chip Value ETF, Fidelity Blue Chip Growth ETF, and 
Fidelity New Millennium ETF (``Approval Order'')). Rule 
14.11(m)(3)(A) provides that ``[t]he term ``Tracking Fund Share'' 
means a security that (i) represents an interest in an investment 
company registered under the Investment Company Act of 1940 
(``Investment Company'') organized as an open-end management 
investment company, that invests in a portfolio of securities 
selected by the Investment Company's investment adviser consistent 
with the Investment Company's investment objectives and policies; 
(ii) is issued in a specified aggregate minimum number in return for 
a deposit of a specified Tracking Basket and/or a cash amount with a 
value equal to the next determined net asset value; (iii) when 
aggregated in the same specified minimum number, may be redeemed at 
a holder's request, which holder will be paid a specified Tracking 
Basket and/or a cash amount with a value equal to the next 
determined net asset value; and (iv) the portfolio holdings for 
which are disclosed within at least 60 days following the end of 
every fiscal quarter. Rule 14.11(m)(3)(E) provides that ``[t]he term 
``Tracking Basket'' means the identities and quantities of the 
securities and other assets included in a basket that is designed to 
closely track the daily performance of the Fund Portfolio, as 
provided in the exemptive relief under the Investment Company Act of 
1940 applicable to a series of Tracking Fund Shares.''
    \4\ See Securities Exchange Act Release No. 90686 (December 16, 
2020) 85 FR 83657 (December 22, 2020) (SR-CboeBZX-2020-090).
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    Among others, Invesco Actively Managed Exchange-Traded Fund Trust 
(the ``Issuer''), issued a second amended and restated application for 
an order under Section 6(c) of the 1940 Act for exemptions from various 
provisions of the 1940 Act and rules thereunder (the 
``Application'').\5\ On October 27, 2020, the Commission issued an 
order (the ``Prior Exemptive Order'') under the 1940 Act granting the 
exemptions requested in the Application.\6\ The relief in the Prior 
Exemptive Order incorporates by reference terms and conditions of the 
same relief of a previous order granting the same relief sought by 
applicants, as that order may be amended from time to time (the 
``Reference Order'').\7\
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    \5\ See File No. 812-15141, dated September 30, 2020.
    \6\ See Investment Company Act Release No. 34076, October 27, 
2020.
    \7\ The Reference Order refers to the Fidelity Beach Street 
Trust, et al., Investment Company Act Rel. Nos. 33683 (Nov. 14, 
2019) (notice) and 33712 (Dec. 10, 2019) (order).
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    Under the Prior Exemptive Order, the Funds are required to publish 
a basket of securities and cash that, while different from the Fund's 
portfolio, is designed to closely track its daily performance (i.e., 
the Tracking Basket). The Prior Exemptive Order provided that the 
Tracking Basket will solely consist of a combination of (i) select 
recently disclosed portfolio holdings (``Strategy Components''); (ii) 
liquid U.S. exchange-traded funds (``ETFs'') that convey information 
about the types of instruments (that are not otherwise fully 
represented by the Strategy Components) in which a Fund invests 
(``Representative ETFs''); and (iii) cash and cash equivalents. 
Exchange Rule 14.11(m)(4)(B)(iii)(c) provides that the Exchange will 
consider the suspension of trading in and will commence delisting 
proceedings for a series of Tracking Fund Shares pursuant to Rule 14.12 
if, among other things, the Exchange is aware that the Investment 
Company is not in compliance with the conditions of any exemptive order 
or no-action relief granted by the Commission or the Commission staff 
under the 1940 Act to the Investment Company with respect to the series 
of Tracking Funds Shares. On August 5, 2021, the Commission issued an 
amended order to the Reference Order that, among other things, permits 
the Issuer to include select securities from which a Fund's investment 
are selected such as a broad-based market index (``Investment 
Universe'') in the Fund's Tracking Basket (the ``Amended Reference 
Order'').\8\ The Funds will comply with this condition of the Amended 
Reference Order and the Exchange is updating the listing rule for the 
Shares accordingly. Except for the change noted above, all other 
representations made in the rule filing remain unchanged and will 
continue to constitute continuing listing requirements for the Funds. 
The Funds will also continue to comply with the requirements of Rule 
14.11(m).
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    \8\ See Investment Company Act Release No. 34350, August 5, 
2021.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\9\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ requirements that the rules of an exchange be 
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 regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(5).
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    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. The proposed revision is intended to reflect the 
change in the Amended Reference Order that permits the Issuer to 
include select securities from the Fund's Investment Universe in the 
Fund's Tracking Basket. The proposed rule change would permit the Funds 
to operate consistent with the Prior Exemptive Order, which 
incorporates the Reference Order that may be amended from time to time. 
Furthermore, Exchange Rule 14.11(m)(4)(B)(iii)(c) provides that the 
Exchange will consider the suspension of trading in and will commence 
delisting proceedings for a series of Tracking Fund Shares pursuant to 
Rule 14.12 if, among other things, the Exchange is aware that the 
Investment Company is not in compliance with the conditions of any 
exemptive order or no-action relief granted by the Commission of the 
Commission Staff under the 1940 Act to the Investment Company with 
respect to the series of Tracking Funds Shares. By clearly identifying 
the change in the committed components of each Funds' Tracking Basket, 
the proposed Rule change will assist the Exchange in complying this 
aspect of the listing rule, as modified, consistent with section 
6(b)(1) of the Act.\11\ Except for the changes noted above, all other 
representations made in the respective rule filings remain unchanged 
and, as noted, will continue to constitute continuing listing 
requirements for the Funds.
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    \11\ 15 U.S.C. 78f(b)(1).
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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. As noted, the purpose of the 
filing is to reflect an amendment to the Reference Order governing the 
listing and trading of these Funds. As noted, the effect of this filing 
is to allow an adjustment to the components of the Tracking Baskets for 
each of the Funds. The Exchange believes this will not impose any 
burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \12\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires the Exchange to give the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. The 
Exchange has satisfied this requirement.

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[[Page 63431]]

    A proposed rule change filed under Rule 19b-4(f)(6) \14\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b-4(f)(6)(iii),\15\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay so that the proposed 
rule change may take effect upon filing. The Exchange states that the 
proposed rule change raises no novel regulatory issues because the 
Funds will continue to comply with the requirements of BZX Rule 
14.11(m). The Exchange also notes that a similar proposal to amend the 
listing rules of other shares that BZX also lists and trades pursuant 
to Rule 14.11(m) is currently in effect.\16\ For these reasons, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission waives the 30-day operative delay and 
designates the proposal operative upon filing.\17\
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    \14\ 17 CFR 240.19b-4(f)(6).
    \15\ 17 CFR 240.19b-4(f)(6)(iii).
    \16\ See Securities and Exchange Act No. 92946 (September 13, 
2021) 86 FR 51941 (September 17, 2021) (SR-CboeBZX-2021-060).
    \17\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeBZX-2021-075 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-CboeBZX-2021-075. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly.
    All submissions should refer to File Number SR-CboeBZX-2021-075 and 
should be submitted on or before December 7, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-24896 Filed 11-15-21; 8:45 am]
BILLING CODE 8011-01-P