Document ID: SEC-2018-0167-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Nasdaq Stock Market, LLC
Posted Date: 2018-01-26T05:00Z

[Federal Register Volume 83, Number 18 (Friday, January 26, 2018)]
[Notices]
[Pages 3842-3845]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-01418]

[[Page 3842]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82564; File No. SR-NASDAQ-2017-123]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order 
Granting Approval of a Proposed Rule Change, as Modified by Amendment 
No. 1, To List and Trade Shares of the Causeway International Value 
NextSharesTM and the Causeway Global Value 
NextSharesTM Under Nasdaq Rule 5745

January 22, 2018.

I. Introduction

    On November 28, 2017, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to list and trade common shares (``Shares'') of 
the Causeway International Value NextSharesTM 
(``International Value NextShares'') and the Causeway Global Value 
NextSharesTM (``Global Value NextShares'') (each, a 
``Fund,'' and collectively, the ``Funds'') under Nasdaq Rule 5745. The 
proposed rule change was published for comment in the Federal Register 
on December 15, 2017.\3\ On January 4, 2018, the Exchange filed 
Amendment No. 1 to the proposed rule change, which replaced and 
superseded the original filing.\4\ The Commission received no comments 
on the proposed rule change. This order grants approval of the proposed 
rule change, as modified by Amendment No. 1.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 82290 (December 11, 
2017), 82 FR 59687.
    \4\ In Amendment No. 1, the Exchange: (a) Clarified the 
investments of the Funds; (b) stated that it will obtain a 
representation from the issuer of the Shares that the Funds' net 
asset value (``NAV'') will be made available to all market 
participants at the same time; and (c) made other technical, non-
substantive changes in the proposed rule change. Amendment No. 1 is 
available at: https://www.sec.gov/comments/sr-nasdaq-2017-123/nasdaq2017123-2872828-161765.pdf. Because Amendment No. 1 does not 
materially alter the substance of the proposed rule change or raise 
unique or novel regulatory issues, Amendment No. 1 is not subject to 
notice and comment.
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II. Exchange's Description of the Proposed Rule Change, as Modified by 
Amendment No. 1

    The Exchange proposes to list and trade the Shares of the Funds 
under Nasdaq Rule 5745, which governs the listing and trading of 
Exchange-Traded Managed Fund Shares, as defined in Nasdaq Rule 
5745(c)(1). Each Fund is a series of the Causeway ETMF Trust 
(``Trust''). The Exchange represents that the Trust is registered with 
the Commission as an open-end investment company and that it has filed 
a registration statement on Form N-1A (``Registration Statement'') with 
the Commission with respect to the Funds.\5\
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    \5\ See initial Registration Statement on Form N-1A for Causeway 
ETMF Trust dated September 20, 2017 (File Nos. 333-220536 and 811-
23294). According to the Exchange, the Commission has issued an 
order granting the Trust and certain affiliates exemptive relief 
under the Investment Company Act of 1940 (``1940 Act''). See 
Investment Company Act Release No. 32485 (February 22, 2017) (File 
No. 812-14729). In compliance with Nasdaq Rule 5745(b)(5), which 
applies to Shares based on an international or global portfolio, the 
Trust's application for exemptive relief under the 1940 Act states 
that the Trust will comply with the federal securities laws in 
accepting securities for deposits and satisfying redemptions with 
securities, including that the securities accepted for deposits and 
the securities used to satisfy redemption requests are sold in 
transactions that would be exempt from registration under the 
Securities Act of 1933, as amended.
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    Causeway Capital Management LLC (``Adviser'') will be the adviser 
to the Funds. SEI Investments Distribution Co. (``SIDCO'') will be the 
principal underwriter and distributor of each Fund's Shares; SEI 
Investments Global Funds Services, Inc. will act as the administrator 
and accounting agent to each Fund; The Bank of New York Mellon will act 
as transfer agent and custodian to the Funds; and ICE Data Indices, LLC 
will calculate intraday indicative values (``IIVs'') for each Fund.
    The Exchange has made the following representations and statements 
in describing the Funds.\6\ According to the Exchange, each Fund will 
be actively managed and will pursue the principal investment strategies 
described below.\7\
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    \6\ The Commission notes that additional information regarding 
the Trust, the Funds, and the Shares, including investment 
strategies, risks, creation and redemption procedures, calculation 
of NAV, fees, distributions, and taxes, among other things, can be 
found in Amendment No. 1 and the Registration Statement, as 
applicable. See supra notes 4 and 5, respectively.
    \7\ According to the Exchange, additional information regarding 
the Funds will be available on a free public website for the Funds 
(www.causewayfunds.com, which may contain links for certain 
information to www.nextshares.com) and in the Registration Statement 
for the Funds.
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A. Principal Investment Strategies

International Value NextShares
    The investment objective of the International Value NextShares is 
to seek long-term growth of capital and income. Under normal market 
conditions, the International Value NextShares will invest primarily in 
equity securities of companies in developed countries outside the U.S. 
Normally, the International Value NextShares will invest at least 80% 
of its total assets in equity securities of companies in a number of 
foreign countries and normally will invest the majority of its total 
assets in equity securities of companies that pay dividends or 
repurchase their shares. The International Value NextShares may invest 
in equity securities of companies in emerging (less developed) markets. 
The International Value NextShares considers a country to be an 
emerging market if the country is included in the MSCI Emerging Markets 
Index. The International Value NextShares may invest in equity 
securities of companies of any market capitalization, and will not be 
required to invest a minimum amount and will not be limited to 
investing a maximum amount in any particular country.
Global Value NextShares
    The investment objective of the Global Value NextShares is to seek 
long-term growth of capital and income. Under normal market conditions, 
the Global Value NextShares will invest primarily in equity securities 
of companies in developed and emerging or frontier countries outside 
the U.S. and of companies in the U.S. Normally, the Global Value 
NextShares will invest the majority of its total assets in equity 
securities of companies that pay dividends or repurchase their shares. 
Under normal circumstances, the Global Value NextShares will invest at 
least 40% of its total assets in a number of countries outside the U.S. 
The Global Value NextShares may invest in equity securities of 
companies in emerging (less developed) markets. The Global Value 
NextShares considers a country to be an emerging market if the country 
is included in the MSCI Emerging Markets Index. The Global Value 
NextShares may also invest in equity securities of companies in 
frontier markets. The Global Value NextShares considers a country to be 
a frontier market if the country is classified by MSCI, based on a 
country's economic development, size, liquidity and market 
accessibility, as a frontier market. The Global Value NextShares may 
invest in equity securities of companies of any market capitalization, 
and will not be required to invest a minimum amount and will not be 
limited to investing a maximum amount in any particular country.

B. Portfolio Disclosure and Composition File

    Consistent with the disclosure requirements that apply to 
traditional open-end investment companies, a

[[Page 3843]]

complete list of current portfolio positions for each Fund will be made 
available at least once each calendar quarter, with a reporting lag of 
not more than 60 days. A Fund may provide more frequent disclosures of 
portfolio positions at its discretion.
    As defined in Nasdaq Rule 5745(c)(3), the Composition File is the 
specified portfolio of securities and/or cash that a Fund will accept 
as a deposit in issuing a creation unit of Shares, and the specified 
portfolio of securities and/or cash that a Fund will deliver in a 
redemption of a creation unit of Shares. The Composition File will be 
disseminated through the National Securities Clearing Corporation once 
each business day before the open of trading in Shares on such day and 
also will be made available to the public each day on a free public 
website.\8\ Because each Fund seeks to preserve the confidentiality of 
its current portfolio trading program, a Fund's Composition File 
generally will not be a pro rata reflection of the Fund's investment 
positions. Each security included in the Composition File will be a 
current holding of the relevant Fund, but the Composition File 
generally will not include all of the securities in that Fund's 
portfolio or match the weightings of the included securities in the 
portfolio. Securities that the Adviser is in the process of acquiring 
for a Fund generally will not be represented in the Fund's Composition 
File until the purchase has been completed. Similarly, securities that 
are held in a Fund's portfolio but are in the process of being sold may 
not be removed from its Composition File until the sale is 
substantially completed. To the extent that a Fund creates or redeems 
Shares in kind, it will use cash amounts to supplement the in-kind 
transactions to the extent necessary to ensure that creation units are 
purchased and redeemed at NAV. The Composition File also may consist 
entirely of cash, in which case it will not include any of the 
securities in a Fund's portfolio.
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    \8\ The Exchange represents that the free public website 
containing the Composition File will be www.nextshares.com.
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C. IIV

    An estimated value of an individual Share, defined in Nasdaq Rule 
5745(c)(2) as the IIV, will be calculated and disseminated at intervals 
of not more than 15 minutes throughout the Regular Market Session \9\ 
when Shares trade on the Exchange. The Exchange will obtain a 
representation from the issuer of the Shares that the IIV for each Fund 
will be calculated on an intraday basis and provided to Nasdaq for 
dissemination via the Nasdaq Global Index Service. The IIV for each 
Fund will be based on current information regarding the value of the 
securities and other assets held by a Fund.\10\ The purpose of the IIV 
for each Fund is to enable investors to estimate the next-determined 
NAV so they can determine the number of Shares to buy or sell if they 
want to transact in an approximate dollar amount.\11\
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    \9\ See Nasdaq Rule 4120(b)(4) (describing the three trading 
sessions on the Exchange: (1) Pre-Market Session from 4:00 a.m. to 
9:30 a.m. Eastern Time (``E.T.''); (2) Regular Market Session from 
9:30 a.m. to 4:00 p.m. or 4:15 p.m. E.T.; and (3) Post-Market 
Session from 4:00 p.m. or 4:15 p.m. to 8:00 p.m. E.T.).
    \10\ The IIVs for each Fund disseminated throughout each trading 
day would be based on the same portfolio as used to calculate that 
day's NAV. A Fund will reflect purchases and sales of portfolio 
positions in its NAV the next business day after trades are 
executed.
    \11\ In NAV-Based Trading (as referenced herein), prices of 
executed trades are not determined until the reference NAV is 
calculated, so buyers and sellers of Shares during the trading day 
will not know the final value of their purchases and sales until the 
end of the trading day. The Exchange represents that the 
Registration Statement, the Funds' free public website, and any 
advertising or marketing materials will include prominent disclosure 
of this fact. The Exchange states that although the IIV for a Fund 
may provide useful estimates of the value of intraday trades, it 
cannot be used to calculate with precision the dollar value of the 
Shares to be bought or sold.
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D. NAV-Based Trading

    Because Shares will be listed and traded on the Exchange, Shares 
will be available for purchase and sale on an intraday basis. Shares 
will be purchased and sold in the secondary market at prices directly 
linked to a Fund's next-determined NAV using a trading protocol called 
``NAV-Based Trading.'' All bids, offers, and execution prices of Shares 
will be expressed as a premium/discount (which may be zero) to a Fund's 
next-determined NAV (e.g., NAV-$0.01, NAV+$0.01).\12\ A Fund's NAV will 
be determined daily (on each day the New York Stock Exchange is open 
for trading), as of 4:00 p.m. E.T. Trade executions will be binding at 
the time orders are matched on Nasdaq's facilities, with the 
transaction prices contingent upon the determination of NAV. The 
Exchange represents that all Shares listed on the Exchange will have a 
unique identifier associated with their ticker symbols, which will 
indicate that the Shares are traded using NAV-Based Trading.
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    \12\ According to the Exchange, the premium or discount to NAV 
at which Share prices are quoted and transactions are executed will 
vary depending on market factors, including the balance of supply 
and demand for Shares among investors, transaction fees, and other 
costs in connection with creating and redeeming creation units of 
Shares, the cost and availability of borrowing Shares, competition 
among market makers, the Share inventory positions and inventory 
strategies of market makers, the profitability requirements and 
business objectives of market makers, and the volume of Share 
trading.
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    According to the Exchange, member firms will utilize certain 
existing order types and interfaces to transmit Share bids and offers 
to Nasdaq, which will process Share trades like trades in shares of 
other listed securities.\13\ In the systems used to transmit and 
process transactions in Shares, a Fund's next-determined NAV will be 
represented by a proxy price (e.g., 100.00) and a premium/discount of a 
stated amount to the next-determined NAV will be represented by the 
same increment/decrement from the proxy price used to denote NAV (e.g., 
NAV-$0.01 would be represented as 99.99; NAV+$0.01 as 100.01).
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    \13\ According to the Exchange, all orders to buy or sell Shares 
that are not executed on the day the order is submitted will be 
automatically cancelled as of the close of trading on that day. 
Prior to the commencement of trading in a Fund, the Exchange will 
inform its members in an Information Circular of the effect of this 
characteristic on existing order types.
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    To avoid potential investor confusion, the Exchange represents that 
it will work with member firms and providers of market data services to 
seek to ensure that representations of intraday bids, offers, and 
execution prices of Shares that are made available to the investing 
public follow the ``NAV-$0.01/NAV+$0.01'' (or similar) display format. 
Nasdaq makes available to member firms and market data services certain 
proprietary data feeds that are designed to supplement the market 
information disseminated through the consolidated tape (``Consolidated 
Tape''). Specifically, the Exchange will use the Nasdaq Basic and 
Nasdaq Last Sale data feeds to disseminate intraday price and quote 
data for Shares in real time in the ``NAV-$0.01/NAV+$0.01'' (or 
similar) display format. Member firms may use the Nasdaq Basic and 
Nasdaq Last Sale data feeds to source intraday Share prices for 
presentation to the investing public in the ``NAV-$0.01/NAV+$0.01'' (or 
similar) display format.
    Alternatively, member firms may source intraday Share prices in 
proxy price format from the Consolidated Tape and other Nasdaq data 
feeds (e.g., Nasdaq TotalView and Nasdaq Level 2) and use a simple 
algorithm to convert prices into the ``NAV-$0.01/NAV+$0.01'' (or 
similar) display format. Prior to the commencement of trading in a 
Fund, the Exchange will inform its members in an Information Circular 
of the identities of the specific Nasdaq data

[[Page 3844]]

feeds from which intraday Share prices in proxy price format may be 
obtained.

III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's 
proposal to list and trade the Shares is consistent with the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\14\ In particular, the Commission finds that the 
proposed rule change, as modified by Amendment No. 1, is consistent 
with Section 6(b)(5) of the Act,\15\ which requires, among other 
things, that the Exchange's rules 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 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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    \14\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \15\ 15 U.S.C. 78f(b)(5).
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    The Shares will conform to the initial and continued listing 
criteria applicable to Exchange-Traded Managed Fund Shares set forth in 
Nasdaq Rule 5745. A minimum of 50,000 Shares for each Fund and no less 
than two creation units of each Fund will be outstanding at the 
commencement of trading on the Exchange.
    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. Every order to trade 
Shares of a Fund is subject to the proxy price protection threshold of 
plus/minus $1.00, which determines the lower and upper thresholds for 
the life of the order and provides that the order will be cancelled at 
any point if it exceeds $101.00 or falls below $99.00.\16\ With certain 
exceptions, each order also must contain the applicable order 
attributes, including routing instructions and time-in-force 
information, as described in Nasdaq Rule 4703.\17\
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    \16\ See Nasdaq Rule 5745(g).
    \17\ See Nasdaq Rule 5745(b)(6).
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    The Exchange represents that trading in the Shares will be subject 
to the existing trading surveillances, administered by both Nasdaq and 
the Financial Industry Regulatory Authority, Inc. (``FINRA'') on behalf 
of the Exchange, which are designed to detect violations of Exchange 
rules and applicable federal securities laws.\18\ The Exchange 
represents that these surveillance procedures are adequate to properly 
monitor trading of Shares on the Exchange and to deter and detect 
violations of Exchange rules and applicable federal securities laws. 
FINRA, on behalf of the Exchange, will communicate as needed with, and 
may obtain information from, other markets and other entities that are 
members of the Intermarket Surveillance Group (``ISG'') regarding 
trading in the Shares, and in exchange-traded securities and 
instruments held by a Fund (to the extent those exchange-traded 
securities and instruments are known through the publication of the 
Composition File and periodic public disclosures of a Fund's portfolio 
holdings). In addition, the Exchange may obtain information regarding 
trading in the Shares, and in exchange-traded securities and 
instruments held by a Fund (to the extent those exchange-traded 
securities and instruments are known through the publication of the 
Composition File and periodic public disclosures of a Fund's portfolio 
holdings), from markets and other entities that are members of ISG, or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.
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    \18\ The Exchange states that FINRA provides surveillance of 
trading on the Exchange pursuant to a regulatory services agreement 
and that the Exchange is responsible for FINRA's performance under 
this regulatory services agreement.
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    Prior to the commencement of trading in a Fund, the Exchange will 
inform its members in an Information Circular of the special 
characteristics and risks associated with trading the Shares of each 
Fund. Specifically, the Information Circular will discuss the 
following: (a) The procedures for purchases and redemptions of Shares 
in creation units (and that Shares are not individually redeemable); 
(b) Nasdaq Rule 2111A, which imposes suitability obligations on Nasdaq 
members with respect to recommending transactions in the Shares to 
customers; (c) how information regarding the IIV and Composition File 
is disseminated; (d) the requirement that members deliver a prospectus 
to investors purchasing Shares prior to or concurrently with the 
confirmation of a transaction; and (e) information regarding NAV-Based 
Trading protocols.
    The Information Circular also will identify the specific Nasdaq 
data feeds from which intraday Share prices in proxy price format may 
be obtained. As noted above, all orders to buy or sell Shares that are 
not executed on the day the order is submitted will be automatically 
cancelled as of the close of trading on that day, and the Information 
Circular will discuss the effect of this characteristic on existing 
order types. In addition, Nasdaq intends to provide its members with a 
detailed explanation of NAV-Based Trading through a Trader Alert issued 
prior to the commencement of trading in Shares on the Exchange.
    The Exchange represents that the Adviser is not a registered 
broker-dealer and is not affiliated with a broker-dealer, and that 
personnel who make decisions on a Fund's portfolio composition must be 
subject to procedures designed to prevent the use and dissemination of 
material non-public information regarding the portfolio.\19\ In the 
event that (a) the Adviser registers as a broker-dealer or becomes 
newly affiliated with a broker-dealer, or (b) any new adviser or sub-
adviser to a Fund is a registered broker-dealer or is affiliated with a 
broker-dealer, such adviser or sub-adviser will implement and will 
maintain a fire wall with respect to its relevant personnel and/or such 
broker-dealer affiliate, as applicable, regarding access to information 
concerning the composition of, and/or changes to, a Fund's portfolio 
and will be subject to procedures designed to prevent the use and 
dissemination of material non-public information regarding the 
portfolio. The Reporting Authority \20\ will implement and maintain, or 
will ensure that the Composition File will be subject to, procedures 
designed to prevent the use and dissemination of material non-public 
information regarding a Fund's portfolio positions and changes in the 
positions. In addition, the Exchange represents that it has a general 
policy prohibiting the distribution of material non-public information 
by its employees.
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    \19\ The Exchange also represents that an investment adviser to 
an open-end fund is required to be registered under the Investment 
Advisers Act of 1940.
    \20\ See Nasdaq Rule 5745(c)(4).
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    The Commission finds that the proposal to list and trade the Shares 
on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of the 
Act,\21\ which sets forth Congress's finding that it is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers, and investors of information with respect to 
quotations for, and transactions in, securities. Information regarding 
NAV-Based Trading prices, best bids and offers for Shares, and volume 
of Shares traded will be continuously available on a real-time

[[Page 3845]]

basis throughout each trading day on brokers' computer screens and 
other electronic services. All bids and offers for Shares and all Share 
trade executions will be reported intraday in real time by the Exchange 
to the Consolidated Tape \22\ and separately disseminated to member 
firms and market data services through Exchange data feeds.
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    \21\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \22\ Due to systems limitations, the Consolidated Tape will 
report intraday execution prices and quotes for Shares using a proxy 
price format. Nasdaq has represented that it will separately report 
real-time execution prices and quotes to member firms and providers 
of market data services in the ``NAV-$0.01/NAV+$0.01'' (or similar) 
display format, and will otherwise seek to ensure that 
representations of intraday bids, offers, and execution prices for 
Shares that are made available to the investing public follow the 
same display format.
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    The Commission notes that once a Fund's daily NAV has been 
calculated and disseminated, Nasdaq will price each Share trade entered 
into during the day at the relevant Fund's NAV plus/minus the trade's 
executed premium/discount. Using the final trade price, each executed 
Share trade will then be disseminated to member firms and market data 
services via a File Transfer Protocol (``FTP'') file \23\ that will be 
created for exchange-traded managed funds and will be confirmed to the 
member firms participating in the trade to supplement the previously 
provided information with final pricing.
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    \23\ According to Nasdaq, FTP is a standard network protocol 
used to transfer computer files on the internet. Nasdaq will arrange 
for the daily dissemination of an FTP file with executed Share 
trades to member firms and market data services.
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    The Exchange will obtain a representation from the issuer of the 
Shares that the NAV per Share will be calculated daily (on each day the 
New York Stock Exchange is open for trading) and that the NAV will be 
made available to all market participants at the same time and provided 
to Nasdaq via the Mutual Fund Quotation Service (``MFQS'') by the fund 
accounting agent. As soon as the NAV is entered into MFQS, Nasdaq will 
disseminate the NAV to market participants and market data vendors via 
the Mutual Fund Dissemination Service so that all firms will receive 
the NAV per Share at the same time.
    The Exchange further represents that it may consider all relevant 
factors in exercising its discretion to halt or suspend trading in the 
Shares. The Exchange will halt trading in the Shares under the 
conditions specified in Nasdaq Rules 4120 and 5745(d)(2)(D). 
Additionally, Nasdaq may cease trading the Shares if other unusual 
conditions or circumstances exist that, in the opinion of Nasdaq, make 
further dealings on Nasdaq detrimental to the maintenance of a fair and 
orderly market. To manage the risk of a non-regulatory Share trading 
halt, Nasdaq has in place back-up processes and procedures to ensure 
orderly trading.
    Prior to the commencement of market trading in the Shares, each 
Fund will be required to establish and maintain a free public website 
through which its current prospectus may be downloaded.\24\ The free 
public website will include directly or through a link additional 
information concerning the Funds updated on a daily basis, including 
the prior business day's NAV, and the following trading information for 
that business day expressed as premiums/discounts to NAV: (a) Intraday 
high, low, average, and closing prices of Shares in Exchange trading; 
(b) the midpoint of the highest bid and lowest offer prices as of the 
close of Exchange trading, expressed as a premium/discount to NAV 
(``Closing Bid/Ask Midpoint''); and (c) the spread between highest bid 
and lowest offer prices as of the close of Exchange trading (``Closing 
Bid/Ask Spread.'').\25\ The free public website will also contain 
charts showing the frequency distribution and range of values of 
trading prices, Closing Bid/Ask Midpoints, and Closing Bid/Ask Spreads 
over time.
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    \24\ The Exchange represents that the free public website 
containing this information will be www.causewayfunds.com.
    \25\ The Exchange represents that the free public website 
containing a Fund's NAV will be www.causewayfunds.com and all other 
information listed will be made available on www.nextshares.com, 
which can be accessed directly and via a link on 
www.causewayfunds.com.
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    The Exchange represents that all statements and representations 
made in the filing regarding (a) the description of the portfolios or 
reference assets, (b) limitations on portfolio holdings or reference 
assets, (c) dissemination and availability of the reference asset or 
intraday indicative values, or (d) the applicability of Exchange 
listing rules shall constitute continued listing requirements for 
listing the Shares on the Exchange. The issuer has represented to the 
Exchange that it will advise the Exchange of any failure by either Fund 
to comply with the continued listing requirements, and, pursuant to its 
obligations under Section 19(g)(1) of the Act, the Exchange will 
monitor for compliance with the continued listing requirements.\26\ If 
a Fund is not in compliance with the applicable listing requirements, 
the Exchange will commence delisting procedures under the Nasdaq 5800 
Series.
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    \26\ The Commission notes that certain proposals for the listing 
and trading of exchange-traded products include a representation 
that the exchange will ``surveil'' for compliance with the continued 
listing requirements. See, e.g., Securities Exchange Act Release No. 
77499 (April 1, 2016), 81 FR 20428, 20432 (April 7, 2016) (SR-BATS-
2016-04). In the context of this representation, it is the 
Commission's view that ``monitor'' and ``surveil'' both mean ongoing 
oversight of a fund's compliance with the continued listing 
requirements. Therefore, the Commission does not view ``monitor'' as 
a more or less stringent obligation than ``surveil'' with respect to 
the continued listing requirements.
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    This approval order is based on all of the Exchange's 
representations, including those set forth above and in Amendment No. 
1.\27\ In particular, the Commission notes that, although the Shares 
will be available for purchase and sale on an intraday basis, the 
Shares will be purchased and sold at prices directly linked to the 
relevant Fund's next-determined NAV. Further, the Commission notes that 
the Funds and the Shares must comply with the requirements of Nasdaq 
Rule 5745 and the conditions set forth in this proposed rule change to 
be listed and traded on the Exchange on an initial and continuing 
basis.
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    \27\ See supra note 4.
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    For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 1, is consistent with Section 
6(b)(5) \28\ and Section 11A(a)(1)(C)(iii) \29\ of the Act, and the 
rules and regulations thereunder applicable to a national securities 
exchange.
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    \28\ 15 U.S.C. 78f(b)(5).
    \29\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\30\ that the proposed rule change (SR-NASDAQ-2017-123), as 
modified by Amendment No. 1, be, and it hereby is, approved.
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    \30\ 15 U.S.C. 78s(b)(2).
    \31\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\31\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-01418 Filed 1-25-18; 8:45 am]
 BILLING CODE 8011-01-P