Document ID: SEC-2018-1353-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2018-08-28T04:00Z

[Federal Register Volume 83, Number 167 (Tuesday, August 28, 2018)]
[Notices]
[Pages 43932-43934]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18573]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83908; File No. SR-CboeBZX-2018-064]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend 
Certain Representations Relating to the Listing and Trading of Shares 
of the Innovator S&P 500 Buffer ETFs

August 22, 2018.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on August 16, 2018, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II

[[Page 43933]]

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.
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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

    The Exchange filed a proposal to amend certain representations made 
in a proposed rule change previously filed with the Commission pursuant 
to Rule 19b-4 relating to the Innovator S&P 500 Buffer ETFs (the 
``Buffer Funds'').
    The text of the proposed rule change is available at the Exchange's 
website at www.markets.cboe.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

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

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant parts of such 
statements.

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

1. Purpose
    The shares of the Buffer Funds (the ``Shares'') were approved to be 
listed and traded on the Exchange under Rule 14.11(i),\3\ which governs 
the listing and trading of Managed Fund Shares, but have not yet begun 
trading. The Buffer Funds are each a series of the Innovator ETFs Trust 
(the ``Trust''), which is organized as a Delaware statutory trust and 
is registered with the Commission as an open-end management investment 
company.\4\
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    \3\ See Securities Exchange Act Release No. 83679 (July 20, 
2018), 83 FR 35505 (July 26, 2018) (SR-BatsBZX-2017-72) (the ``Prior 
Approval'').
    \4\ See Registration Statement on Form N-1A for the Trust, dated 
August 8, 2018 (File Nos. 333-146827 and 811-22135) (the 
``Registration Statement''). The Commission has issued an order 
granting certain exemptive relief to the Trust under the Investment 
Company Act of 1940 (15 U.S.C 80a-1) (``1940 Act'') (the ``Exemptive 
Order''). See Investment Company Act Release No. 32854 (October 6, 
2017) (File No. 812-14781).
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    In this proposed rule change, the Exchange proposes to amend 
several representations made in the Prior Approval related to the 
investment strategy, as described below.\5\ Throughout the description 
of the Buffer Funds' investment strategy in the Prior Approval, there 
are representations such as ``(each Buffer Fund will) seek to provide 
investment returns during the outcome period that match the gains of 
the S&P 500 Index up to the Buffer Cap Level, while shielding investors 
from S&P 500 Index losses of up to 10%.'' The Exchange is proposing to 
amend all such representations related to the Buffer Funds such that 
the Buffer Funds will provide investment returns during the outcome 
period that match the gains of the S&P 500 Index up to the Buffer Cap 
Level, while shielding investors from S&P 500 Index losses of up to 9% 
instead of the previously stated 10%.
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    \5\ The Exchange notes that while a change was made to the 
principal investment strategy, there were no changes to the Buffer 
Funds' investment objective, the method or methods used to select 
the Buffer Funds' portfolio investments, or the Buffer Funds' fees 
and expenses.
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    The Exchange does not believe that this proposed change raises any 
substantive issues for the Commission because it represents only a 
small change to the investment strategy and all other statements and 
representations made in the Prior Approval regarding the description of 
the portfolio or reference assets, limitations on portfolio holdings or 
reference assets, dissemination and availability of reference assets 
and intraday indicative values, and the applicability of Exchange 
listing rules specified in the Prior Approval remain true and shall 
continue to constitute continued listing requirements for the Buffer 
Funds. Additionally, the change proposed above will constitute a 
continued listing requirement for the Buffer Funds.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \6\ in general and Section 6(b)(5) of the Act \7\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to remove impediments to, and perfect the 
mechanism of a free and open market and, in general, to protect 
investors and the public interest. Specifically, the Exchange believes 
that the proposal is designed to prevent fraudulent and manipulative 
acts and practices, to promote just and equitable principles of trade, 
to remove impediments to, and perfect the mechanism of a free and open 
market and, in general, to protect investors and the public interest.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(5).
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    As described above, all of the representations from the Prior 
Approval which formed the basis for the Prior Approval remain true and 
will continue to constitute continued listing requirements for the 
Buffer Funds with the exception of the one point (changing the downside 
protection from 10% to 9%) that the Exchange is proposing to amend. 
This proposed change will not make any changes to the types of 
instruments that the Buffer Funds can hold, but will only make a small 
change to the investment strategy. As such, the Exchange believes that 
the proposal does not raise any substantive issues that were not 
previously addressed in the Prior Approval.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange believes that 
the proposal to allow the Buffer Funds to amend their investment 
strategy will enhance competition among both market participants and 
listing venues by allowing additional series of Managed Fund Shares to 
come to list on the Exchange, to the benefit of investors and the 
marketplace.

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

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

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

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A)of the Act \8\ and subparagraph (f)(6) of Rule 19b-4 
thereunder.\9\
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6). As required under Rule19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the

[[Page 43934]]

Act \10\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \11\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposed rule change may become operative upon filing. The Exchange 
states that waiver of the 30-day operative delay would allow the Buffer 
Funds to immediately begin listing and trading on the Exchange and 
employ its amended investment strategy. The Commission does not believe 
that any new or novel issues are raised by the proposal. Moreover, as 
noted above, apart from modifying the downside protection from 10% to 
9%, all other statements and representations made in the Prior Approval 
would remain true and will apply on a continuous basis. For these 
reasons, the Commission believes that waiver of the 30-day operative 
delay is consistent with the protection of investors and the public 
interest. Accordingly, the Commission hereby waives the operative delay 
and designates the proposed rule change operative upon filing.\12\
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    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay, 
the Commission also has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-CboeBZX-2018-064 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-CboeBZX-2018-064. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-CboeBZX-2018-064, and should be 
submitted on or before September 18, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18573 Filed 8-27-18; 8:45 am]
 BILLING CODE 8011-01-P