Document ID: SEC-2016-2300-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Bats BZX Exchange, Inc.
Posted Date: 2016-12-27T05:00Z

[Federal Register Volume 81, Number 248 (Tuesday, December 27, 2016)]
[Notices]
[Pages 95252-95260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31110]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79618; File No. SR-BatsBZX-2016-88]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change to BZX Rule 
14.11(i), Managed Fund Shares, To List Shares of the Cambria Sovereign 
High Yield Bond ETF and the Cambria Value and Momentum ETFs

December 20, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on December 13, 2016, Bats BZX Exchange, Inc. (``Exchange'' or 
``BZX'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by the Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 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 list shares of the Cambria 
Sovereign High Yield Bond ETF and the Cambria Value and Momentum ETF 
under Rule 14.11(i) (``Managed Fund Shares''), which are currently 
listed on NYSE Arca, Inc. (``Arca''). The shares of the Fund are 
referred to herein as the ``Shares.''
    The text of the proposed rule change is available at the Exchange's 
Web site at www.batstrading.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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to list shares of the Cambria Sovereign High 
Yield Bond ETF and the Cambria Value and Momentum ETF under Rule 
14.11(i), (``Managed Fund Shares''), (each, a ``Fund'' and, 
collectively, the ``Funds''),\4\ which governs the listing and trading 
of Managed Fund Shares on the Exchange.\5\ The Exchange notes that both 
of the Funds are already trading on the Exchange pursuant to unlisted 
trading privileges, as provided in Rule 14.11(j).
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    \4\ The Exchange notes that the Commission previously approved a 
proposal to list and trade shares of the Funds on Arca. See 
Securities Exchange Act Release No. 75540 (July 28, 2015), 80 FR 
46359 (August 4, 2015) (SR-NYSEArca-2015-50) (the ``Prior 
Proposal''). This proposal is substantively identical to the Prior 
Proposal and the issuer represents that all material representations 
contained within the Prior Proposal remain true. As further 
described below, the Exchange believes that its surveillance 
procedures are adequate to properly monitor the trading of the 
Shares on the Exchange during all trading sessions and to deter and 
detect violations of Exchange rules and the applicable federal 
securities laws. Trading of the Shares through the Exchange will be 
subject to the Exchange's surveillance procedures for derivative 
products, including Managed Fund Shares.
    \5\ The Commission approved BZX Rule 14.11(i) in Securities 
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 
(September 6, 2011) (SR-BATS-2011-018).
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    The Shares will be offered by the Cambria ETF Trust (the 
``Trust''), which is organized as a Delaware statutory trust and is 
registered with the

[[Page 95253]]

Commission as an open-end management investment company.\6\
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    \6\ See Registration Statement on Form N-1A for the Trust, dated 
September 30, 2015 (File Nos. 333-180879 and 811-22704) (the 
``Registration Statement''). The description of the operation of the 
Trust and the Funds herein is based, in part, on 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. 30340 (January 4, 2013) (File No. 
812-13959).
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Description of the Shares and the Fund
    Cambria Investment Management, L.P. (``Cambria'' or the 
``Adviser'') serves as the investment adviser of the Funds. SEI 
Investments Distribution Co. (the ``Distributor'' or ``SEI'') is the 
principal underwriter and distributor of the Funds' Shares. SEI 
Investments Global Funds Services (``SEI GFS'') will serve as the 
accountant and administrator of the Funds. Brown Brothers Harriman & 
Co. will serve as the ``Custodian'' and ``Transfer Agent'' of the 
Funds' assets.
    Rule 14.11(i)(7) provides that, if the investment adviser to the 
investment company issuing Managed Fund Shares is affiliated with a 
broker-dealer, such investment adviser shall erect a ``fire wall'' 
between the investment adviser and the broker-dealer with respect to 
access to information concerning the composition and/or changes to such 
investment company portfolio.\7\ In addition, Rule 14.11(i)(7) further 
requires that personnel who make decisions on the investment company's 
portfolio composition must be subject to procedures designed to prevent 
the use and dissemination of material nonpublic information regarding 
the applicable investment company portfolio. Rule 14.11(i)(7) is 
similar to Rule 14.11(b)(5)(A)(i), however, Rule 14.11(i)(7) in 
connection with the establishment of a ``fire wall'' between the 
investment adviser and the broker-dealer reflects the applicable open-
end fund's portfolio, not an underlying benchmark index, as is the case 
with index-based funds. The Adviser is not registered as a broker-
dealer and is not affiliated with a broker-dealer. In the event that 
(a) the Adviser or any sub-adviser becomes registered as, or becomes 
newly affiliated with, a broker-dealer, or (b) any new adviser or sub-
adviser is a registered broker-dealer or becomes affiliated with a 
broker-dealer, it will implement a fire wall with respect to its 
relevant personnel or broker dealer affiliate, as applicable, regarding 
access to information concerning the composition and/or changes to a 
portfolio, and will be subject to procedures designed to prevent the 
use and dissemination of material non-public information regarding such 
portfolio.
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    \7\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940, as amended 
(the ``Advisers Act''). As a result, the Adviser and its related 
personnel are subject to the provisions of Rule 204A-1 under the 
Advisers Act relating to codes of ethics. This Rule requires 
investment advisers to adopt a code of ethics that reflects the 
fiduciary nature of the relationship to clients as well as 
compliance with other applicable securities laws. Accordingly, 
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with 
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under 
the Advisers Act makes it unlawful for an investment adviser to 
provide investment advice to clients unless such investment adviser 
has (i) adopted and implemented written policies and procedures 
reasonably designed to prevent violation, by the investment adviser 
and its supervised persons, of the Advisers Act and the Commission 
rules adopted thereunder; (ii) implemented, at a minimum, an annual 
review regarding the adequacy of the policies and procedures 
established pursuant to subparagraph (i) above and the effectiveness 
of their implementation; and (iii) designated an individual (who is 
a supervised person) responsible for administering the policies and 
procedures adopted under subparagraph (i) above.
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Cambria Sovereign High Yield Bond ETF
Principal Investment Policies
    According to the Registration Statement, the Fund seeks income and 
capital appreciation from investments in securities and instruments 
that provide exposure to sovereign and quasi-sovereign bonds.
    Under normal market conditions,\8\ at least 80% of the value of the 
Fund's net assets (plus borrowings for investment purposes) will be 
invested in sovereign and quasi-sovereign high yield bonds (commonly 
known as ``junk bonds'').\9\ For the purposes of this policy, sovereign 
and quasi-sovereign high yield bonds include exchange-traded funds 
(``ETFs'') \10\ and exchange-traded notes (``ETNs'') \11\ that invest 
in or have exposure to such bonds. The Fund will invest in emerging and 
developed countries, including countries located in the G-20 and other 
countries. Potential countries include, but are not limited to, 
Argentina, Australia, Brazil, Canada, Chile, China, Colombia, members 
of the European Union, Hong Kong, India, Israel, Indonesia, Japan, 
Malaysia, Mexico, New Zealand, Norway, Peru, the Philippines, Russia, 
Saudi Arabia, Singapore, South Africa, South Korea, Sweden, 
Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and the 
United States.
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    \8\ The term ``under normal market conditions'' includes, but is 
not limited to, the absence of extreme volatility or trading halts 
in the equity markets or the financial markets generally; 
operational issues causing dissemination of inaccurate market 
information; or force majeure type events such as systems failure, 
natural or man- made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption or any similar intervening 
circumstance.
    \9\ Sovereign and quasi-sovereign bonds include securities 
issued or guaranteed by foreign governments (including political 
subdivisions) or their authorities, agencies, or instrumentalities 
or by supra-national agencies. Supra-national agencies are agencies 
whose member nations make capital contributions to support the 
agencies' activities. Examples include the International Bank for 
Reconstruction and Development (the World Bank), the Asian 
Development Bank, the European Coal and Steel Community, and the 
Inter-American Development Bank.
    \10\ For purposes of this filing, the term ``ETFs'' includes 
Portfolio Depository Receipts (as described in Rule 14.11(b)); Index 
Fund Shares (as described in Rule 14.11(c)); and Managed Fund Shares 
(as described in Rule 14.11(i)). All ETFs will be listed and traded 
in the U.S. on a national securities exchange. While the Funds may 
invest in inverse ETFs, the Funds will not invest in leveraged 
(e.g., 2X, -2X, 3X or -3X) ETFs.
    \11\ For purposes of this filing, the term ``ETNs'' includes 
Index-Linked Securities (as described in Rule 14.11(d)). All ETNs 
will be listed and traded in the U.S. on a national securities 
exchange. The Funds will not invest in leveraged (e.g., 2X, -2X, 3X 
or -3X) ETNs.
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    Sovereign bonds include debt securities issued by a national 
government, instrumentality or political sub-division. Quasi-sovereign 
bonds include debt securities issued by a supra-national government or 
a state-owned enterprise or agency. The sovereign and quasi-sovereign 
bonds that the Fund will invest in may be denominated in local and 
foreign currencies. The Fund may invest in securities of any duration 
or maturity.
    The Fund may invest up to 20% of its net assets in money market 
instruments or other high quality debt securities, cash or cash 
equivalents, or ETFs and ETNs that invest in, or provide exposure to, 
such instruments or securities.
    Cambria will utilize a quantitative model to select sovereign and 
quasi-sovereign bond exposures for the Fund. The model will review 
various characteristics of potential investments, with yield as the 
largest determinant. By considering together the various 
characteristics of potential investments, the model will identify 
potential allocations for the Fund, as well as opportune times to make 
such allocations. Screens will exclude foreign issuers whose securities 
are highly restricted or illegal for U.S. persons to own, including due 
to the imposition of sanctions by the U.S. Government.
Cambria Value and Momentum ETF
Principal Investments
    According to the Registration Statement, the Fund seeks income and 
capital appreciation from investments in the U.S. equity market. The 
Fund will seek to achieve its investment objective

[[Page 95254]]

by investing, under normal market conditions, at least 80% of the value 
of the Fund's net assets in U.S. exchange-listed equity securities that 
are undervalued according to various valuation metrics, including 
cyclically adjusted valuation metrics. These valuation metrics are 
derived by dividing the current market value of a reference index or 
asset by an inflation- adjusted normalized factor (typically earnings, 
book value, dividends, cash flows or sales) over the past seven to ten 
years. The Adviser intends to employ systematic quantitative strategies 
in an effort to avoid overvalued and downtrending markets.
    In attempting to avoid overvalued and downtrending markets, the 
Fund may use U.S. exchange-traded stock index futures or options 
thereon, or take short positions in ETFs to attempt to hedge the long 
equity portfolio during times when Cambria believes that the U.S. 
equity market is overvalued from a valuation standpoint, or Cambria's 
models identify unfavorable trends and momentum in the U.S. equity 
market. The Fund may hedge up to 100% of the value of the Fund's long 
portfolio using these strategies. During certain periods, including to 
collateralize the Fund's investments in futures contracts, the Fund may 
invest up to 20% of the value of its net assets in U.S. dollar and non-
U.S. dollar denominated money market instruments or other high quality 
debt securities, or ETFs that invest in these instruments.
    The Fund may invest in securities of companies in any industry, and 
will limit the maximum allocation to any particular sector. Although 
the Fund generally expects to invest in companies with larger market 
capitalizations, the Fund may also invest in small- and mid-
capitalization companies. Filters will be implemented to screen for 
companies that pass sector concentration and liquidity requirements.
    Screens also will exclude foreign issuers whose securities are 
highly restricted or illegal for U.S. persons to own, including due to 
the imposition of sanctions by the U.S. Government.
    Cambria will utilize a quantitative model that combines value and 
momentum factors to identify which securities the Fund may purchase and 
sell and opportune times for purchases and sales. The Fund will look to 
allocate to the top performing value stocks based on value factors as 
well as absolute and relative momentum. Valuation will typically be 
measured on a longer time horizon (five to ten years) than momentum 
(typically less than one year).
    The Fund may invest in U.S. exchange-listed preferred stocks. 
Preferred stocks include convertible and non-convertible preferred and 
preference stocks that are senior to common stock.
    The Fund may invest in U.S. exchange-listed real estate investment 
trusts (``REITs'').
    The Fund may engage in short sales of securities.
Other Investments
    While each Fund, under normal market conditions, will invest at 
least 80% of the value of its net assets (plus borrowings for 
investment purposes) in the securities and other assets described 
above, each Fund may invest its remaining assets in the securities and 
financial instruments described below.
    A Fund may invest a portion of its assets in cash or cash items 
pending other investments or to maintain liquid assets required in 
connection with some of a Fund's investments. These cash items and 
other high quality debt securities may include money market 
instruments, securities issued by the U.S. Government and its agencies, 
bankers' acceptances, commercial paper, bank certificates of deposit 
and shares of investment companies that invest primarily in such 
instruments.
    A Fund may invest in corporate debt securities. A Fund may invest 
in commercial paper, master notes and other short-term corporate 
instruments that are denominated in U.S. dollars. Commercial paper 
consists of short-term promissory notes issued by corporations. Master 
notes are demand notes that permit the investment of fluctuating 
amounts of money at varying rates of interest pursuant to arrangements 
with issuers who meet the quality criteria of a Fund. Master notes are 
generally illiquid and therefore subject to a Fund's percentage 
limitations for investments in illiquid securities.
    A Fund may invest in the following types of debt securities in 
addition to those described under ``Principal Investments'' above for 
each Fund: securities issued or guaranteed by the U.S. Government, its 
agencies, instrumentalities, and political subdivisions; securities 
issued or guaranteed by foreign governments, their authorities, 
agencies, instrumentalities and political subdivisions; securities 
issued or guaranteed by supra-national agencies; corporate debt 
securities; time deposits; notes; inflation-indexed securities; and 
repurchase agreements.
    Such debt securities may be investment grade securities or high 
yield securities. Investment grade securities include securities issued 
or guaranteed by the U.S. Government, its agencies and 
instrumentalities, as well as securities rated in one of the four 
highest rating categories by at least two Nationally Recognized 
Statistical Rating Organizations (``NRSROs'') rating that security, 
such as Standard & Poor's Ratings Services (``Standard & Poor's''), 
Moody's Investors Service, Inc. (``Moody's'') or Fitch Ratings Ltd. 
(``Fitch''), or rated in one of the four highest rating categories by 
one NRSRO if it is the only NRSRO rating that security or, if unrated, 
deemed to be of comparable quality by Cambria and traded publicly on 
the world market. The Fund, at the discretion of Cambria, may retain a 
debt security that has been downgraded below the initial investment 
criteria.
    A Fund may invest in securities rated lower than Baa by Moody's, or 
equivalently rated by S&P or Fitch.
    The debt and other fixed income securities in which a Fund may 
invest include fixed and floating rate securities of any maturity. 
Fixed rate securities pay a specified rate of interest or dividends. 
Floating rate securities pay a rate that is adjusted periodically by 
reference to a specified index or market rate. A Fund may invest in 
indexed bonds, which are a type of fixed income security whose 
principal value and/or interest rate is adjusted periodically according 
to a specified instrument, index, or other statistic (e.g., another 
security, inflation index, currency, or commodity).
    A Fund may invest in zero coupon securities.
    The Cambria Sovereign High Yield Bond ETF may gain exposure to 
foreign securities by purchasing U.S. exchange-listed and traded 
American Depositary Receipts (``ADRs'') and each of the Funds may gain 
exposure to foreign securities by purchasing exchange-traded European 
Depositary Receipts (``EDRs'') and Global Depositary Receipts 
(``GDRs'', together with ADRs and EDRs, ``Depositary Receipts'').\12\
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    \12\ Depositary Receipts are receipts, typically issued by a 
bank or trust issuer, which evidence ownership of underlying 
securities issued by a non-U.S. issuer. Generally, ADRs, in 
registered form, are denominated in U.S. dollars and are designed 
for use in the U.S. securities markets. GDRs, in bearer form, are 
issued and designed for use outside the United States and EDRs, in 
bearer form, may be denominated in other currencies and are designed 
for use in European securities markets. ADRs are receipts typically 
issued by a U.S. bank or trust company evidencing ownership of the 
underlying securities. EDRs are European receipts evidencing a 
similar arrangement. GDRs are receipts typically issued by non- 
United States banks and trust companies that evidence ownership of 
either foreign or domestic securities. Not more than 10% of the net 
assets of a Fund in the aggregate invested in exchange-traded equity 
securities shall consist of equity securities whose principal market 
is not a member of the Intermarket Surveillance Group (``ISG'') or 
party to a comprehensive surveillance sharing agreement (``CSSA'') 
with the Exchange.

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[[Page 95255]]

    The Cambria Sovereign High Yield Bond ETF may enter into forward 
foreign currency contracts.
Investment Restrictions
    To respond to adverse market, economic, political or other 
conditions, each of the Funds may invest up to 100% of its total 
assets, without limitation, in high-quality debt securities and money 
market instruments. The Funds may be invested in these instruments for 
extended periods, depending on Cambria's assessment of market 
conditions. Cambria deems high-quality debt securities and money market 
instruments to include commercial paper, certificates of deposit, 
bankers' acceptances, U.S. Government and agency securities, repurchase 
agreements and bonds that are BBB or higher, and registered investment 
companies that invest in such instruments.
    The Funds may invest in the securities of other investment 
companies to the extent that such an investment would be consistent 
with the requirements of Section 12(d)(1) of the 1940 Act, or any rule, 
regulation or order of the Commission or interpretation thereof.
    According to the Registration Statement, each Fund will seek to 
qualify for treatment as a Regulated Investment Company (``RIC'') under 
the Internal Revenue Code.\13\
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    \13\ 26 U.S.C. 851.
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    A Fund may hold up to an aggregate amount of 15% of its net assets 
in illiquid assets (calculated at the time of investment), consistent 
with Commission guidance. Each Fund will monitor its portfolio 
liquidity on an ongoing basis to determine whether, in light of current 
circumstances, an adequate level of liquidity is being maintained, and 
will consider taking appropriate steps in order to maintain adequate 
liquidity if, through a change in values, net assets, or other 
circumstances, more than 15% of a Fund's net assets are held in 
illiquid assets. Illiquid assets include securities subject to 
contractual or other restrictions on resale and other instruments that 
lack readily available markets as determined in accordance with 
Commission staff guidance.\14\
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    \14\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the 1933 Act).
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Initial and Continued Listing
    The Shares will be subject to BZX Rule 14.11(i), which sets forth 
the initial and continued listing criteria applicable to Managed Fund 
Shares. The Exchange represents that, for initial and/or continued 
listing, the Fund must be in compliance with Rule 10A-3 under the 
Act.\15\ A minimum of 100,000 Shares will be outstanding at the 
commencement of listing on the Exchange. The Exchange will obtain a 
representation from the issuer of the Shares that the NAV per Share 
will be calculated daily and that the NAV and the Disclosed Portfolio 
will be made available to all market participants at the same time. 
Each Fund's investments will be consistent with its respective 
investment objective in accordance with the 1940 Act and will not be 
used to enhance leverage.
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    \15\ See 17 CFR 240.10A-3.
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Creation and Redemption of Shares
    According to the Registration Statement, the Funds will sell and 
redeem Shares in aggregations of 50,000 Shares (each, a ``Creation 
Unit'') on a continuous basis through the Distributor, without a sales 
load, at the net asset value (``NAV'') next determined after receipt of 
an order in proper form on any business day. The size of a Creation 
Unit is subject to change.
    The purchase or redemption of Creation Units from a Fund must be 
effected by or through an ``Authorized Participant'' (i.e., either a 
broker-dealer or other participant in the Continuous Net Settlement 
System of the National Securities Clearing Corporation (``NSCC'') or a 
participant in the Depository Trust Company (``DTC'') with access to 
the DTC system, and who has executed an agreement (``Participant 
Agreement'') with the Distributor that governs transactions in a Fund's 
Creation Units.
    The consideration for a Creation Unit of a Fund will be the ``Fund 
Deposit''. The Fund Deposit will consist of the ``In-Kind Creation 
Basket'' and ``Cash Component'', or an all cash payment (``Cash 
Value''), as determined by Cambria to be in the best interest of a 
Fund. The Cash Component will typically include a ``Balancing Amount'' 
reflecting the difference, if any, between the NAV of a Creation Unit 
and the market value of the securities in the ``In-Kind Creation 
Basket''. The Fund Deposit for the Cambria Value and Momentum ETF 
generally will consist of the In-Kind Creation Basket and Cash 
Component and the Fund Deposit for the Cambria Sovereign High Yield 
Bond ETF generally will consist of the Cash Value. If the NAV per 
Creation Unit exceeds the market value of the securities in the In-Kind 
Creation Basket, the purchaser will pay the Balancing Amount to a Fund. 
By contrast, if the NAV per Creation Unit is less than the market value 
of the securities in the In-Kind Creation Basket, a Fund will pay the 
Balancing Amount to the purchaser.
    The Transfer Agent, in a portfolio composition file sent via the 
NSCC, generally will make available on each business day, immediately 
prior to the opening of business on the Exchange (currently 9:30 a.m., 
Eastern time), a list of the names and the required number of shares of 
each security in the In-Kind Creation Basket to be included in the 
current Fund Deposit for each Fund (based on information about a Fund's 
portfolio at the end of the previous business day) (subject to 
amendment or correction). If applicable, the Transfer Agent, through 
the NSCC, also will make available on each business day, the estimated 
Cash Component or Cash Value, effective through and including the 
previous business day, per Creation Unit.
    The announced Fund Deposit will be applicable, subject to any 
adjustments as described below, for purchases of Creation Units of a 
Fund until such time as the next-announced Fund Deposit is made 
available. From day to day, the composition of the In-Kind Creation 
Basket may change as, among other things, corporate actions and 
investment decisions by Cambria are implemented for a Fund's portfolio. 
Each Fund reserves the right to accept a nonconforming (i.e., custom) 
Fund Deposit.
    The Fund may, in its sole discretion, permit or require the 
substitution of an amount of cash (``cash in lieu'') to be added to the 
Cash Component to replace any security in the In-Kind Creation Basket. 
The Fund may permit or require cash in lieu when, for example, the 
securities in the In-Kind Creation Basket

[[Page 95256]]

may not be available in sufficient quantity for delivery or may not be 
eligible for transfer through the systems of DTC. Similarly, a Fund may 
permit or require cash in lieu when, for example, the Authorized 
Participant or its underlying investor is restricted under U.S. or 
local securities law or policies from transacting in one or more 
securities in the In-Kind Creation Basket.\16\
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    \16\ The Adviser represents that, to the extent the Trust 
effects the creation of Shares in cash, such transactions will be 
effected in the same manner for all Authorized Participants.
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    To compensate the Trust for costs incurred in connection with 
creation and redemption transactions, investors will be required to pay 
to the Trust a ``Transaction Fee'' as described in the Registration 
Statement.
    According to the Registration Statement, Fund Shares may be 
redeemed only in Creation Units at their NAV next determined after 
receipt of a redemption request in proper form by a Fund through the 
Transfer Agent and only on a business day. The redemption proceeds for 
a Creation Unit will consist of the ``In-Kind Redemption Basket'' and a 
``Cash Redemption Amount'', or the Cash Value, in all instances equal 
to the value of a Creation Unit. The redemption proceeds for the 
Cambria Value and Momentum ETF generally will consist of the In-Kind 
Redemption Basket and the Cash Redemption Amount and the redemption 
proceeds for the Cambria Sovereign High Yield Bond ETF generally will 
consist of the Cash Value.
    The Cash Redemption Amount will typically include a Balancing 
Amount, reflecting the difference, if any, between the NAV of a 
Creation Unit and the market value of the securities in the In-Kind 
Redemption Basket. If the NAV per Creation Unit exceeds the market 
value of the securities in the In-Kind Redemption Basket, a Fund will 
pay the Balancing Amount to the redeeming investor. By contrast, if the 
NAV per Creation Unit is less than the market value of the securities 
in the In-Kind Redemption Basket, the redeeming investor will pay the 
Balancing Amount to a Fund.
    The composition of the In-Kind Creation Basket will normally be the 
same as the composition of the In-Kind Redemption Basket. Otherwise, 
the In-Kind Redemption Basket will be made available by the Adviser or 
Transfer Agent. The Fund reserves the right to accept a nonconforming 
(i.e., custom) ``Fund Redemption''.
    In lieu of an In-Kind Redemption Basket and Cash Redemption Amount, 
Creation Units may be redeemed consisting solely of cash in an amount 
equal to the NAV of a Creation Unit, which amount is referred to as the 
Cash Value. If applicable, information about the Cash Value will be 
made available by the Adviser or Transfer Agent.
    The right of redemption may be suspended or the date of payment 
postponed: (i) For any period during which the Exchange is closed 
(other than customary weekend and holiday closings); (ii) for any 
period during which trading on the Exchange is suspended or restricted; 
(iii) for any period during which an emergency exists as a result of 
which disposal of the Shares or determination of a Fund's NAV is not 
reasonably practicable; or (iv) in such other circumstances as 
permitted by the Commission.
    A Fund may, in its sole discretion, permit or require the 
substitution of an amount of cash (``cash in lieu'') to be added to the 
Cash Redemption Amount to replace any security in the In-Kind 
Redemption Basket. A Fund may permit or require cash in lieu when, for 
example, the securities in the In-Kind Redemption Basket may not be 
available in sufficient quantity for delivery or may not be eligible 
for transfer through the systems of DTC. Similarly, a Fund may permit 
or require cash in lieu when, for example, the Authorized Participant 
or its underlying investor is restricted under U.S. or local securities 
law or policies from transacting in one or more securities in the In-
Kind Redemption Basket.
    If it is not possible to effect deliveries of the securities in the 
In-Kind Redemption Basket, the Trust may in its discretion exercise its 
option to redeem Shares in cash, and the redeeming beneficial owner 
will be required to receive its redemption proceeds in cash. In 
addition, an investor may request a redemption in cash that a Fund may, 
in its sole discretion, permit. In either case, the investor will 
receive a cash payment equal to the NAV of its Shares based on the NAV 
of Shares of the relevant Fund next determined after the redemption 
request is received in proper form (minus a Transaction Fee, including 
a variable charge, if applicable, as described in the Registration 
Statement).\17\
---------------------------------------------------------------------------

    \17\ The Adviser represents that, to the extent the Trust 
effects the redemption of Shares in cash, such transactions will be 
effected in the same manner for all Authorized Participants.
---------------------------------------------------------------------------

    The Fund may also, in its sole discretion, upon request of a 
shareholder, provide such redeemer a portfolio of securities that 
differs from the exact composition of the In-Kind Redemption Basket, or 
cash in lieu of some securities added to the Cash Component, but in no 
event will the total value of the securities delivered and the cash 
transmitted differ from the NAV. Redemptions of Fund Shares for the In-
Kind Redemption Basket will be subject to compliance with applicable 
federal and state securities laws and a Fund (whether or not it 
otherwise permits cash redemptions) reserves the right to redeem 
Creation Units for cash to the extent that the Trust could not lawfully 
deliver specific securities in the In-Kind Redemption Basket upon 
redemptions or could not do so without first registering the securities 
in the In-Kind Redemption Basket under such laws.
    When cash redemptions of Creation Units are available or specified 
for a Fund, they will be effected in essentially the same manner as in-
kind redemptions. In the case of a cash redemption, the investor will 
receive the cash equivalent of the In-Kind Redemption Basket minus any 
Transaction Fees.
    Additional information regarding creation and redemption procedures 
is included in the Registration Statement.
Net Asset Value
    The NAV of Shares will be calculated each business day by SEI GFS 
as of the close of regular trading on the Exchange, generally 4:00 
p.m., Eastern Time on each day that the Exchange is open. The Fund will 
calculate its NAV per Share by taking the value of its total assets, 
subtracting any liabilities, and dividing that amount by the total 
number of Shares outstanding, rounded to the nearest cent. Expenses and 
fees, including the management fees, will be accrued daily and taken 
into account for purposes of determining NAV.
    When calculating the NAV of a Fund's Shares, expenses will be 
accrued and applied daily and U.S. exchange-traded equity securities 
will be valued at their market value when reliable market quotations 
are readily available. Exchange- traded equity securities will be 
valued at the closing price on the relevant exchange, or, if the 
closing price is not readily available, the mean of the closing bid and 
asked prices. Certain equity securities, debt securities and other 
assets will be valued differently. For instance, fixed-income 
investments maturing in 60 days or less may be valued using the 
amortized cost method or, like those maturing in excess of 60 days, at 
the readily available market price, if available. Investments in 
securities of investment companies (other than ETFs) will be valued at 
NAV.

[[Page 95257]]

    Forward foreign currency contracts generally will be valued based 
on the marked-to-market value of the contract provided by pricing 
services. Pricing services, approved and monitored pursuant to a policy 
approved by the Funds' Board of Trustees (``Board''), provide market 
quotations based on both market prices and indicative bids.
    Sovereign and quasi-sovereign bonds, U.S. government securities, 
corporate debt securities, commercial paper, commercial interests, 
bankers' acceptances, bank certificates of deposit, repurchase 
agreements, fixed and floating rate securities, indexed bonds, master 
notes, zero coupon securities will be valued based on price quotations 
obtained from a third-party pricing service or from a broker-dealer who 
makes markets in such securities.
    U.S. exchange-traded stock index futures contracts and U.S. 
exchange-traded options thereon will be valued at the settlement or 
closing price determined by the applicable U.S. futures exchange.
    If a market quotation is not readily available or is deemed not to 
reflect market value, a Fund will determine the price of the security 
held by a Fund based on a determination of the security's fair value 
pursuant to policies and procedures approved by the Board. In addition, 
a Fund may use fair valuation to price securities that trade on a 
foreign exchange, if any, when a significant event has occurred after 
the foreign exchange closes but before the time at which a Fund's NAV 
is calculated. Such significant events may include, but are not limited 
to: Governmental action that affects securities in one sector or 
country; natural disasters or armed conflicts affecting a country or 
region; or significant domestic or foreign market fluctuations.
Availability of Information
    The Funds' Web site (www.cambriafunds.com), which will be publicly 
available prior to the public offering of Shares, will include a form 
of the prospectus for the Funds that may be downloaded. The Funds' Web 
site will include additional quantitative information updated on a 
daily basis, including, for the Funds (1) the prior business day's NAV 
and the market closing price or mid-point of the bid/ask spread at the 
time of calculation of such NAV (the ``Bid/Ask Price''),\18\ and a 
calculation of the premium and discount of the closing price or 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 
each of the four previous calendar quarters. On each business day, 
before commencement of trading in Shares during Regular Trading 
Hours,\19\ each Fund will disclose on its Web site the Disclosed 
Portfolio as defined in BZX Rule 14.11(i)(3)(B), that will form the 
basis for a Fund's calculation of NAV at the end of the business 
day.\20\
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    \18\ The Bid/Ask Price of the Funds will be determined using the 
midpoint of the highest bid and the lowest offer on the Exchange as 
of the time of calculation of a Fund's NAV. The records relating to 
Bid/Ask Prices will be retained by the Funds and their service 
providers.
    \19\ As defined in Rule 1.5(w), the term ``Regular Trading 
Hours'' means the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
    \20\ Under accounting procedures followed by the Funds, trades 
made on the prior business day (``T'') will be booked and reflected 
in NAV on the current business day (``T+1''). Accordingly, the Funds 
will be able to disclose at the beginning of the business day the 
portfolio that will form the basis for the NAV calculation at the 
end of the business day.
---------------------------------------------------------------------------

    On a daily basis, the Funds will disclose on the Funds' Web site 
the following information regarding each portfolio holding, as 
applicable to the type of holding: Ticker symbol, CUSIP number or other 
identifier, if any; a description of the holding (including the type of 
holding, such as the type of swap); the identity of the security, 
commodity, index or other asset or instrument underlying the holding, 
if any; for options, the option strike price; quantity held (as 
measured by, for example, par value, notional value or number of 
shares, contracts or units); maturity date, if any; coupon rate, if 
any; effective date, if any; market value of the holding; and the 
percentage weighting of the holding in a Fund's portfolio. The Web site 
information will be publicly available at no charge.
    In addition, a basket composition file, which includes the security 
names and share quantities required to be delivered in exchange for a 
Fund's Shares, together with estimates and actual cash components, will 
be publicly disseminated daily prior to the opening of BZX via NSCC. 
The basket represents one Creation Unit of a Fund.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), a Fund's Shareholder Reports, and the Trust's 
Form N-CSR and Form N-SAR, filed twice a year. The Trust's SAI and 
Shareholder Reports are available free upon request from the Trust, and 
those documents and the Form N- CSR and Form N-SAR may be viewed on-
screen or downloaded from the Commission's Web site at www.sec.gov. 
Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services.
    Quotation and last sale information for the Shares will be 
available via the Exchange proprietary quote and trade services and via 
the Consolidated Tape Association (``CTA'') high-speed line.
    Quotation and last sale information for the equity portfolio 
holdings of a Fund that are U.S. exchange listed, including common 
stocks, preferred stocks, ETFs, ETNs, Depositary Receipts, and REITs 
will be available via the CTA high speed line. Quotation and last sale 
information for such U.S. exchange-listed securities, as well as 
futures and options on futures will be available from the exchange on 
which they are listed. Information relating to non-exchange listed 
securities of investment companies will be available from major market 
data vendors.
    Quotation information for sovereign and quasi-sovereign bonds, U.S. 
government securities, corporate debt securities, commercial paper, 
commercial interests, bankers' acceptances, bank certificates of 
deposit, repurchase agreements, fixed and floating rate securities, 
indexed bonds, master notes, zero coupon securities, and forward 
foreign currency contracts may be obtained from brokers and dealers who 
make markets in such securities or through nationally recognized 
pricing services through subscription agreements.
    In addition, the Intraday Indicative Value, as defined in BZX Rule 
14.11(i)(3)(C), will be widely disseminated at least every 15 seconds 
during Regular Trading Hours by one or more major market data 
vendors.\21\ The dissemination of the Intraday Indicative Value, 
together with the Disclosed Portfolio, will allow investors to 
determine the value of the underlying portfolio of a Fund and provide a 
close estimate of that value throughout the trading day.
---------------------------------------------------------------------------

    \21\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available 
Intraday Indicative Values taken from CTA or other data feeds.
---------------------------------------------------------------------------

    Additional information regarding the Trust and the Shares, 
including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings disclosure policies, distributions 
and taxes is included in the Registration Statement. All terms relating 
to a Fund that are referred to, but not defined, in this proposed rule 
change are defined in the Registration Statement.

[[Page 95258]]

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 the Funds.\22\ Trading in Shares of the Funds 
will be halted if the circuit breaker parameters in BZX Rule 11.18 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. These may include: (1) The extent to which trading 
is not occurring in the securities and/or the financial instruments 
comprising the Disclosed Portfolio of the Funds; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present. Trading in the Shares will be 
subject to BZX Rule 11.18, which sets forth circumstances under which 
Shares of a Fund may be halted.
---------------------------------------------------------------------------

    \22\ See BZX Rule 11.18.
---------------------------------------------------------------------------

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. The Exchange will 
allow trading in the Shares from 8:00 a.m. until 5:00 p.m. E.T. The 
Exchange has appropriate rules to facilitate transactions in the Shares 
during all trading sessions. As provided in BZX Rule 14.11(i)(2)(C), 
the minimum price variation for quoting and entry of orders in Managed 
Fund Shares traded on the Exchange is $0.01.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of the Shares on the Exchange during 
all trading sessions and to deter and detect violations of Exchange 
rules and the applicable federal securities laws. Trading of the Shares 
through the Exchange will be subject to the Exchange's surveillance 
procedures for derivative products, including Managed Fund Shares.
    The Exchange will communicate as needed regarding trading in the 
Shares and underlying common stocks, preferred stocks, Depositary 
Receipts, REITs, ETFs, ETNs, futures and options on futures with other 
markets and other entities that are members of the ISG, and the 
Exchange may obtain trading information regarding trading in the Shares 
and underlying common stocks, preferred stocks, Depositary Receipts, 
REITs, ETFs, ETNs, futures and options on futures from such markets and 
other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares and underlying common stocks, preferred 
stocks, Depositary Receipts, REITs, ETFs, ETNs, futures and options on 
futures from markets and other entities that are members of ISG or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement.\23\ In addition, the Exchange is able to access, as needed, 
trade information for certain fixed income instruments reported to 
FINRA's Trade Reporting and Compliance Engine (``TRACE'').
---------------------------------------------------------------------------

    \23\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for each Fund may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    Not more than 10% of the net assets of a Fund in the aggregate 
invested in exchange-traded equity securities shall consist of equity 
securities whose principal market is not a member of the ISG or party 
to a CSSA with the Exchange.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
Information Circular
    Prior to the commencement of listing on the Exchange, the Exchange 
will inform its members in an Information Circular of the special 
characteristics and risks associated with trading the Shares. 
Specifically, the Information Circular will discuss the following: (1) 
The procedures for purchases and redemptions of Shares in Creation 
Units (and that Shares are not individually redeemable); (2) BZX Rule 
3.7, which imposes suitability obligations on Exchange members with 
respect to recommending transactions in the Shares to customers; (3) 
how information regarding the Intraday Indicative Value and the 
Disclosed Portfolio is disseminated; (4) the risks involved in trading 
the Shares during the Pre-Opening \24\ and After Hours Trading Sessions 
\25\ when an updated Intraday Indicative Value will not be calculated 
or publicly disseminated; (5) the requirement that members deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; and (6) trading 
information.
---------------------------------------------------------------------------

    \24\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m. E.T.
    \25\ The After Hours Trading Session is from 4:00 p.m. to 5:00 
p.m. E.T.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Fund. Members purchasing Shares from the Funds for 
resale to investors will deliver a prospectus to such investors. The 
Information Circular will also discuss any exemptive, no-action, and 
interpretive relief granted by the Commission from any rules under the 
Act.
    In addition, the Information Circular will reference that each Fund 
is subject to various fees and expenses described in the Registration 
Statement. The Information Circular will also disclose the trading 
hours of the Shares of each of the Funds and the applicable NAV 
Calculation Time for the Shares. The Information Circular will disclose 
that information about the Shares of the Fund will be publicly 
available on each Fund's Web site. In addition, the Information 
Circular will reference that the Trust is subject to various fees and 
expenses described in each Fund's Registration Statement.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5)\26\ 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.
---------------------------------------------------------------------------

    \26\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change is designed to 
prevent fraudulent and manipulative acts and practices in that the 
Shares will be listed and traded on the Exchange pursuant to the 
applicable initial and continued listing criteria in BZX Rule 14.11(i). 
The Exchange believes that its surveillance procedures are adequate to 
properly monitor the trading of the Shares on the Exchange during all 
trading sessions and to deter and detect violations of Exchange rules 
and the applicable federal securities laws. If the investment adviser 
to the investment company issuing Managed Fund Shares is affiliated 
with a broker-dealer, such investment adviser to the investment company 
shall erect a ``fire wall'' between the investment adviser and the 
broker-dealer with respect to access to information concerning the 
composition and/or changes to such investment company portfolio. The 
Exchange will communicate as needed regarding trading in the Shares and 
underlying common stocks, preferred stocks,

[[Page 95259]]

Depositary Receipts, REITs, ETFs, ETNs, futures and options on futures 
with other markets and other entities that are members of the ISG, and 
the Exchange may obtain trading information regarding trading in the 
Shares and underlying common stocks, preferred stocks, Depositary 
Receipts, REITs, ETFs, ETNs, futures and options on futures from such 
markets and other entities. In addition, the Exchange may obtain 
information regarding trading in the Shares and underlying common 
stocks, preferred stocks, Depositary Receipts, REITs, ETFs, ETNs, 
futures and options on futures from markets and other entities that are 
members of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement.\27\ In addition, the Exchange is able 
to access, as needed, trade information for certain fixed income 
instruments reported to TRACE. Not more than 10% of the net assets of a 
Fund in the aggregate invested in exchange-traded equity securities 
shall consist of equity securities whose principal market is not a 
member of the ISG or party to a CSSA with the Exchange.
---------------------------------------------------------------------------

    \27\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for each Fund may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    The Adviser is not registered as a broker-dealer and is not 
affiliated with a broker-dealer. In the event that (a) the Adviser or 
any sub-adviser becomes registered as, or becomes newly affiliated 
with, a broker-dealer, or (b) any new adviser or sub-adviser is a 
registered broker-dealer or becomes affiliated with a broker-dealer, it 
will implement a fire wall with respect to its relevant personnel or 
broker dealer affiliate, as applicable, regarding access to information 
concerning the composition and/or changes to a portfolio, and will be 
subject to procedures designed to prevent the use and dissemination of 
material non-public information regarding such portfolio. Each Fund may 
hold up to an aggregate amount of 15% of its net assets in illiquid 
securities (calculated at the time of investment), consistent with 
Commission guidance. Each Fund's investments will be consistent with 
its respective investment objective and will not be used to enhance 
leverage.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Exchange will obtain a representation from the issuer of the 
Shares that the NAV per Share will be calculated daily and that the NAV 
and the Disclosed Portfolio will be made available to all market 
participants at the same time. In addition, a large amount of 
information is publicly available regarding the Funds and the Shares, 
thereby promoting market transparency. Moreover, the Intraday 
Indicative Value will be widely disseminated by one or more major 
market data vendors at least every 15 seconds during the Regular 
Trading Hours. On each business day, before commencement of trading in 
Shares in the Regular Trading on the Exchange, the Adviser will 
disclose on its Web site the Disclosed Portfolio that will form the 
basis for the Funds' calculation of NAV at the end of the business day.
    Quotation and last sale information for the equity portfolio 
holdings of a Fund that are U.S. exchange listed, including common 
stocks, preferred stocks, ETFs, ETNs, Depositary Receipts, and REITs 
will be available via the CTA high speed line. Quotation and last sale 
information for such U.S. exchange-listed securities, as well as 
futures and options on futures will be available from the exchange on 
which they are listed. Information relating to non-exchange listed 
securities of investment companies will be available from major market 
data vendors.
    Quotation information for sovereign and quasi-sovereign bonds, U.S. 
government securities, corporate debt securities, commercial paper, 
commercial interests, bankers' acceptances, bank certificates of 
deposit, repurchase agreements, fixed and floating rate securities, 
indexed bonds, master notes, zero coupon securities, and forward 
foreign currency contracts may be obtained from brokers and dealers who 
make markets in such securities or through nationally recognized 
pricing services through subscription agreements. The Web site for the 
Funds will include a form of the prospectus for the Funds and 
additional data relating to NAV and other applicable quantitative 
information.
    Moreover, prior to the commencement of listing on the Exchange, the 
Exchange will inform its Members in an Information Circular of the 
special characteristics and risks associated with trading the Shares. 
Trading in Shares of the Fund will be halted under the conditions 
specified in BZX Rule 11.18. Trading may also be halted because of 
market conditions or for reasons that, in the view of the Exchange, 
make trading in the Shares inadvisable. Finally, trading in the Shares 
will be subject to BZX Rule 14.11(i)(4)(B)(iv), which sets forth 
circumstances under which Shares of the Fund may be halted. As noted 
above, investors will also have ready access to information regarding 
the Fund's holdings, the Intraday Indicative Value, the Disclosed 
Portfolio, and quotation and last sale information of the Shares. The 
proposed rule change is designed to perfect the mechanism of a free and 
open market and, in general, to protect investors and the public 
interest in that it will facilitate the listing and trading of 
additional types of actively-managed exchange- traded products that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace. As noted above, the Exchange may obtain 
information regarding trading in the Shares from markets and other 
entities that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement. In addition, as 
noted above, investors will have ready access to information regarding 
the Funds' holdings, the Intraday Indicative Value, the Disclosed 
Portfolio, and quotation and last sale information for the Shares.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. The Exchange notes that the 
proposed rule change, rather will facilitate the transfer from Arca and 
listing of additional actively-managed exchange-traded products on 
Bats, which will enhance competition among listing venues, to the 
benefit of issuers, investors, and the marketplace more broadly.

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 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, the proposed rule 
change has become

[[Page 95260]]

effective pursuant to Section 19(b)(3)(A) of the Act \28\ and Rule 19b-
4(f)(6) thereunder.\29\
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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and the 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.
---------------------------------------------------------------------------

    Normally, a proposed rule change filed pursuant to Rule 19b-4(f)(6) 
under the Act \30\ does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \31\ 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 proposal may become operative immediately upon filing. The Exchange 
states that waiver of the 30-day operative delay would allow the Shares 
to be listed on the Exchange in December of 2016 and would allow the 
Funds to avoid paying listing fees that the current listing exchange 
will assess for next year, which will be applied at the beginning of 
January. The Commission notes that the Funds are currently listed and 
traded on NYSE Arca and that the Exchange has represented that the 
proposal to list and trade the Funds on the Exchange is substantively 
identical to the proposal, which the Commission approved, to list and 
trade the Funds on NYSE Arca. Accordingly, the Commission believes that 
waiving the 30-day operative delay is consistent with the protection of 
investors and the public interest and hereby waives the operative delay 
and designates the proposal operative upon filing.\32\
---------------------------------------------------------------------------

    \30\ 17 CFR 240.19b-4(f)(6).
    \31\ 17 CFR 240.19b-4(f)(6)(iii).
    \32\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    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 rule-comments@sec.gov. Please include 
File Number SR-BatsBZX-2016-88 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-BatsBZX-2016-88. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-BatsBZX-2016-88 and should 
be submitted on or before January 17, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-31110 Filed 12-23-16; 8:45 am]
 BILLING CODE 8011-01-P