Document ID: SEC-2019-1326-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2019-09-16T04:00Z

[Federal Register Volume 84, Number 179 (Monday, September 16, 2019)]
[Notices]
[Pages 48677-48687]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-19903]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86922; File No. SR-NASDAQ-2019-070]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
List and Trade the Common Shares of Beneficial Interest of Invesco 
BulletShares ETFs

September 10, 2019.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on August 30, 2019, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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\ 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 proposes to list and trade the common shares of 
beneficial interest of the Invesco BulletShares 2021 Municipal Bond 
ETF, Invesco BulletShares 2022 Municipal Bond ETF, Invesco BulletShares 
2023 Municipal Bond ETF, Invesco BulletShares 2024 Municipal Bond ETF, 
Invesco BulletShares 2025 Municipal Bond ETF, Invesco BulletShares 2026 
Municipal Bond ETF, Invesco BulletShares 2027 Municipal Bond ETF, 
Invesco BulletShares 2028 Municipal Bond ETF and Invesco BulletShares 
2029 Municipal Bond ETF (each a ``Fund'' or, collectively, the 
``Funds''), all of which are series of Invesco Exchange-Traded Self-
Indexed Fund Trust (the ``Trust''), under Nasdaq Rule 5705 (``Rule 
5705''). The common shares of beneficial interest of the Funds are 
referred to herein as the ``Shares.''
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaq.cchwallstreet.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 aspects of such 
statements.

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

1. Purpose
    The Exchange proposes to list and trade the Shares under Rule 5705, 
which rule governs the listing and trading of Index Fund Shares \3\ on 
the Exchange.\4\ As discussed below, the Exchange is submitting this 
proposed rule change because each underlying index that the Funds seek 
to track (each an ``Underlying Index,'' and collectively, the 
``Underlying Indexes'' \5\) does not meet all of the ``generic'' 
listing requirements of Rule 5705(b)(4) applicable to the listing of 
Index Fund Shares based on fixed income securities indexes. Each 
Underlying Index meets all such requirements except for those set forth 
in Rule 5705(b)(4)(A)(ii).\6\
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    \3\ An ``Index Fund Share'' is a security that is issued by an 
open-end management investment company based on a portfolio of 
stocks or fixed income securities or a combination thereof, that 
seeks to provide investment results that correspond generally to the 
price and yield performance or total return performance of a 
specified foreign or domestic stock index, fixed income securities 
index or combination thereof. See Rule 5705(b)(1)(A).
    \4\ The Exchange notes that the Commission has already published 
immediately effective rule filings allowing the listing and trading 
of shares of series of Index Fund Shares substantially similar to 
the Funds. See Securities Exchange Act Release No. 85370 (March 20, 
2019), 84 FR 11364 (March 26, 2019) (SR-CboeBZX-2019-017) (Notice of 
Filing and Immediate Effectiveness of a Proposed Rule to List and 
Trade Shares of iShares iBonds Dec 2026 Term Muni Bond ETF, iShares 
iBonds Dec 2027 Term Muni Bond ETF, and iShares iBonds Dec 2028 Term 
Muni Bond ETF Under BZX Rule 14.11(c)(4))(the ``Comparable 
Filing''). See also Securities Exchange Act Release No. 84107 
(September 13, 2018), 83 FR 47210 (September 18, 2018) (SR-CboeBZX-
2018-070). Further, the Commission previously has approved proposed 
rule changes relating to listing and trading of funds based on 
municipal bond indexes. See Securities Exchange Act Release No. 
79381 (November 22, 2016), 81 FR 86044 (November 29, 2016) (SR-
BatsBZX-2016-48) (Order Granting Accelerated Approval of a Proposed 
Rule Change, as Modified by Amendments No. 1 and No. 2 Thereto, To 
List and Trade Shares of the iShares iBonds Dec 2023 Term Muni Bond 
ETF and iShares iBonds Dec 2024 Term Muni Bond ETF of the iShares 
U.S. ETF Trust Pursuant to BZX Rule 14.11(c)(4)). See also 
Securities Exchange Act Release No. 78329 (July 14, 2016), 81 FR 
47217 (July 20, 2016) (SR-BatsBZX-2016-01) (order approving the 
listing and trading of the VanEck Vectors AMT-Free 6-8 Year 
Municipal Index ETF, VanEck Vectors AMT-Free 8-12 Year Municipal 
Index ETF, and VanEck Vectors AMT-Free 12-17 Year Municipal Index 
ETF). The Exchange believes the proposed rule change raises no 
significant issues not previously addressed in those prior 
Commission orders.
    \5\ See ``The Funds'' below for the list of Underlying Indexes.
    \6\ Rule 5705(b)(4)(A)(ii) provides that Fixed Income Components 
that in aggregate account for at least 75% of the Fixed Income 
Securities portion of the weight of the index or portfolio each must 
have a minimum original principal amount outstanding of $100 million 
or more. As further described herein, due to the nature of municipal 
bonds and variable rate demand obligation bonds (``VRDOs''), of 
which the Underlying Indexes are composed, and the way in which they 
are typically issued, most such instruments do not have original 
principal amounts outstanding of $100 million or more.

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[[Page 48678]]

Description of the Shares and the Funds
    The Shares will be offered by the respective Funds, each of which 
will be a passively-managed exchange-traded fund (``ETF''). Each Fund 
is a series of the Trust. The Trust was established as a Delaware 
statutory trust on October 30, 2015. The Trust is registered with the 
Commission as an open-end management investment company and has filed a 
post-effective amendment to its registration statement on Form N-1A 
(the ``Registration Statement'') with the Commission to register the 
Funds and their Shares under the Investment Company Act of 1940, as 
amended, (the ``1940 Act'') and the Securities Act of 1933.\7\
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    \7\ See Post-Effective Amendment No. 43 to Registration 
Statement for the Trust, filed on May 24, 2019 (File Nos. 333-221046 
and 811-23304). The descriptions of the Trust, the Funds and the 
Shares contained herein are based, in part, on information in the 
Registration Statement. In addition, the Commission has issued an 
order granting certain exemptive relief to the Trust under the 1940 
Act. See PowerShares Exchange-Traded Self-Indexed Fund Trust et al., 
SEC Rel. No. IC-31995 (Feb. 11, 2016) (notice); SEC Rel. No. IC-
32025 (March 8, 2016) (order) (``Exemptive Order'').
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    Invesco Capital Management LLC will serve as the investment adviser 
(the ``Adviser'') to each Fund. Invesco Distributors, Inc. will serve 
as the principal underwriter and distributor of the Shares (the 
``Distributor''). The Bank of New York Mellon will act as the 
custodian, transfer agent and fund accounting agent for the Funds (the 
``Custodian''). The Bank of New York Mellon will also serve as the 
administrator for the Funds (the ``Administrator'').
    Nasdaq Rule 5705(b)(4)(B)(i) provides that, if an investment 
company issuing Index Fund Shares tracks an index that is maintained by 
a broker-dealer or fund advisor, such broker-dealer or fund advisor 
shall erect and maintain a ``fire wall'' around the personnel who have 
access to information concerning changes and adjustments to the index 
and the index shall be calculated by a third party who is not a broker-
dealer or fund advisor. In addition, Nasdaq Rule 5705 further requires 
that any advisory committee, supervisory board, or similar entity that 
makes decisions on the index composition, methodology and related 
matters, must implement and maintain, or be subject to, procedures 
designed to prevent the use and dissemination of material non-public 
information regarding the applicable index.
    The index provider for the Underlying Indexes is Invesco Indexing 
LLC (the ``Index Provider''). The Index Provider is not a broker-dealer 
or fund advisor, but it is affiliated with the Distributor, a broker-
dealer, the Adviser, a fund advisor, and other affiliates that are 
broker-dealers and fund advisors. The Index Provider has therefore 
implemented and will maintain a fire wall around the personnel who have 
access to information concerning changes and adjustments to the 
Underlying Indexes. In the event a Fund changes its underlying index to 
an index maintained by a different index provider, such index provider 
will implement and maintain a fire wall as required. The Index Provider 
has also implemented policies and procedures designed to prevent the 
use and dissemination of material non-public information regarding the 
applicable index by Index Provider personnel that make decisions on 
each Underlying Index's composition, methodology and related matters.
    Additionally, the calculation agent for each Underlying Index is 
ICE Data Indices, LLC (``ICE''), a third party who is not a broker-
dealer or fund advisor. ICE does not participate in the composition or 
methodology of the Underlying Indexes.
    The Adviser is not a broker-dealer, but is affiliated with a 
broker-dealer and has implemented and will maintain a ``fire wall'' 
with respect to its broker-dealer affiliate regarding access to 
information concerning the composition and/or changes to each Fund's 
portfolio. In the event (a) the Adviser becomes newly affiliated with a 
different broker-dealer (or becomes a registered broker-dealer itself), 
or (b) any new adviser or sub-adviser to a Fund is a registered broker-
dealer or becomes affiliated with a broker-dealer, each will implement 
and 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 and/or changes to each Fund's 
portfolio and will be subject to procedures designed to prevent the use 
and dissemination of material non-public information regarding each 
Fund's portfolio.
The Funds
    Each of the Funds will be a passively-managed ETF with investment 
objective to seek to track the investment results (before fees and 
expenses) of the following Underlying Indexes.\8\
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    \8\ Unless otherwise noted, all statistics related to the 
Underlying Indexes presented hereafter were accurate of May 31, 
2019.

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                  Fund                           Underlying Index
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Invesco BulletShares 2021 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2021 Index (the
                                          ``2021 Index'').
Invesco BulletShares 2022 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2022 Index (the
                                          ``2022 Index'').
Invesco BulletShares 2023 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2023 Index (the
                                          ``2023 Index'').
Invesco BulletShares 2024 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2024 Index (the
                                          ``2024 Index'').
Invesco BulletShares 2025 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2025 Index (the
                                          ``2025 Index'').
Invesco BulletShares 2026 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2026 Index (the
                                          ``2026 Index'').
Invesco BulletShares 2027 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2027 Index (the
                                          ``2027 Index'').
Invesco BulletShares 2028 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2028 Index (the
                                          ``2028 Index'').
Invesco BulletShares 2029 Municipal      Invesco BulletShares[supreg]
 Bond ETF.                                Municipal Bond 2029 Index (the
                                          ``2029 Index'').
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Principal Investments
    Each Fund will seek to achieve its investment objective by 
investing, under normal market conditions,\9\ at least 80% of its total 
assets in securities that comprise its Underlying Index (the ``Index 
Tracking Policy''). Each Underlying Index is designed to measure the 
performance of a maturity-targeted segment of the investment grade 
municipal bond market. The Index Provider allocates bonds from a

[[Page 48679]]

universe of U.S. dollar-denominated bonds (``Municipal Bonds'') issued 
by U.S. states, state agencies, territories and possessions of the 
United States, the District of Columbia, or local government \10\ 
meeting certain eligibility criteria into each Underlying Index based 
on the bond's maturity or, in some cases, effective maturity date.\11\ 
Effective maturity is an assessment of a bond's likely call date or 
maturity (if not called by the issuer). With respect to establishing 
the effective maturity of a bond, if no embedded issuer call option 
exists for a bond, then the Index Provider deems effective maturity to 
be the actual year of maturity. If a bond contains an embedded issuer 
call option, with the first call date within 13 months of maturity and 
a par call price, then the Index Provider also deems effective maturity 
to be the actual year of maturity. In other cases, the Index Provider 
deems effective maturity to be the actual year of maturity, unless the 
yield to next call date is less than the yield to maturity, in which 
case the bond's effective maturity is deemed to be the year of the next 
call date. The Index Provider deems the effective maturity of eligible 
pre-refunded Municipal Bonds with a known pre-refunding date as the 
year of the pre-refunded date.
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    \9\ The term ``normal market conditions'' includes, but is not 
limited to, the absence of trading halts in the applicable financial 
markets generally; operational issues (e.g., systems failure) 
causing dissemination of inaccurate market information; or force 
majeure type events such as natural or manmade disaster, act of God, 
armed conflict, act of terrorism, riot or labor disruption or any 
similar intervening circumstance.
    \10\ As used herein, VRDOs are separate from, and not included 
in the definition of, Municipal Bonds.
    \11\ For example, bonds contained in the Invesco 
BulletShares[supreg] Municipal Bond 2021 Index will have actual or 
effective maturities in the year 2021.
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    To be included in the Underlying Indexes, a Municipal Bond must (i) 
be exempt from federal income tax; (ii) be rated at least BBB- by S&P 
Global Ratings, a division of S&P Global Inc. (``S&P'') or Fitch 
Ratings Inc. (``Fitch''), or at least Baa3 by Moody's Investors 
Service, Inc. (``Moody's''); and (iii) have at least $15 million in 
face value outstanding (if a bond has already been included in an 
Underlying Index, then it need only have at least 80% of the initial 
minimum face value qualification ($12 million in face value 
outstanding) to remain within the Underlying Index at rebalance). Bonds 
selected for inclusion in an Underlying Index are market value 
weighted, and the bonds of individual issuers are collectively limited 
to a maximum weighting of 5% prior to the final year of maturity of the 
Underlying Index.
    Prior to the final year of maturity of an Underlying Index (i.e., 
the year of the maturity or effective maturity of all Municipal Bonds 
within the Underlying Index), each Underlying Index is rebalanced 
monthly, at which time: (i) New bonds that meet the eligibility and 
maturity (or effective maturity \12\) criteria above are added to the 
Underlying Index; (ii) existing bonds that no longer meet the 
eligibility requirements are removed; and (iii) weights of Underlying 
Index components are reset to reflect current market value. The Index 
Provider only reevaluates the effective maturity date of bonds already 
included in the investment universe semi-annually, as part of the June 
and December rebalances, at which time in addition to bonds being added 
or removed from the Underlying Indexes pursuant to the eligibility 
screening described in the previous paragraph, bonds also may be added 
or removed from the Underlying Indexes due to any changes in effective 
maturity (i.e., they no longer have an effective maturity in the year 
indicated by the Underlying Index's name).
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    \12\ Effective maturity is established at each monthly rebalance 
only for new bonds that have been issued since the last rebalance. 
Effective maturity for all other bonds currently in the investment 
universe are not reevaluated, except during the June and December 
rebalances.
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    If a bond is removed from an Underlying Index during any monthly 
rebalance, such bond will be excluded for the next three monthly 
rebalances (including the current rebalance).
    During the final year of maturity (i.e., the year of the maturity 
or effective maturity of all Municipal Bonds within the Underlying 
Index), the Underlying Indexes do not rebalance or add new Municipal 
Bonds. As Municipal Bonds included in the Underlying Indexes are called 
or mature, the Underlying Indexes will transition to VRDOs. To be 
included in the Underlying Index, such VRDOs must have an investment 
grade credit rating (based on an average of ratings from S&P, Fitch and 
Moody's) and have at least $10 million in face value outstanding. Each 
Fund's portfolio is rebalanced in accordance with its applicable 
Underlying Index.
    The Municipal Bonds in which a Fund invests have an actual or 
effective year of maturity in the year indicated by its name, and each 
Fund will terminate on or about December 15 of such year. For example, 
the Invesco BulletShares 2021 Municipal Bond ETF will terminate on or 
about December 15, 2021. The Board of Trustees of the Trust (the 
``Board'') may change the termination date to an earlier or later date 
without shareholder approval. In the final year of operation, when the 
Municipal Bonds held by a Fund are called or mature, the proceeds will 
not be reinvested in the Municipal Bonds within the Underlying Index 
but instead, in connection with the Underlying Index's transition to 
VRDOs, the Fund's portfolio will transition to any combination of 
VRDOs,\13\ certain derivatives,\14\ ETFs,\15\ including ETFs advised by 
the Adviser, cash and cash equivalents, including shares of money 
market funds advised by the Adviser or its affiliates and investment 
grade short-term commercial paper,\16\ as well as Municipal Bonds not 
included in its respective Underlying Index, but which the Adviser 
believes will help the Fund track the Underlying Index.
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    \13\ VRDOs are tax-exempt obligations issued by U.S. states, 
state agencies, territories and possessions of the United States, 
the District of Columbia, or local government that contain a 
floating or variable interest rate adjustment formula and a right of 
demand on the part of the holder thereof to receive payment of the 
unpaid principal balance plus accrued interest upon a short notice 
period not to exceed seven days.
    \14\ The Funds may invest in the following derivative 
instruments: Exchange-traded futures on fixed income securities, 
fixed income security indices, interest rates and currencies; 
exchange-traded and over-the-counter (``OTC'') options on fixed 
income securities, interest rates, currencies, interest rate futures 
contracts, and fixed income security indices; exchange-traded and 
OTC interest rate and inflation swaps; and OTC total return swaps 
and forwards on fixed income securities, fixed income security 
indices, and fixed income security futures. See ``Other Investments 
of the Funds'' for additional information on the Funds' investments 
in derivatives. At least 90% of each Fund's net assets that are 
invested in listed derivatives will be invested in instruments that 
trade in markets that are members or affiliates of members of the 
Intermarket Surveillance Group (``ISG'') or are parties to a 
comprehensive surveillance sharing agreement with the Exchange.
    \15\ The ETFs in which a Fund may invest include Index Fund 
Shares (as described in Nasdaq Rule 5705(b)), Portfolio Depositary 
Receipts (as described in Nasdaq Rule 5705(a)), and Managed Fund 
Shares (as described in Nasdaq Rule 5735). The shares of ETFs in 
which a Fund may invest will be limited to securities that trade in 
markets that are members of the ISG, which includes all U.S. 
national securities exchanges, or exchanges that are parties to a 
comprehensive surveillance sharing agreement with the Exchange. A 
Fund will not invest in leveraged or inverse-leveraged ETFs. A Fund 
will not invest in non-U.S. exchanged-listed ETFs.
    \16\ In addition to general commercial paper, the Funds may hold 
short-term tax-exempt notes (such as bond anticipation notes (BANs), 
tax anticipation notes (TANs), tax and revenue anticipation notes 
(TRANs) and revenue anticipation notes (RANs)). Such instruments are 
short-term notes issued by U.S. states, state agencies, territories 
and possessions of the United States, the District of Columbia, or 
local government and payable from a defined source of anticipated 
revenues (e.g., BANs are repaid from the proceeds of issuance of 
long-term bonds whereas TRANs are repaid from future tax receipts 
and revenues of the government unit). Although the index methodology 
for each Underlying Index does not contemplate the inclusion of 
commercial paper or municipal notes in the Underlying Indexes, the 
Adviser may utilize such instruments in furtherance of a Funds' 
investment strategy.
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    Each Fund has elected and intends to qualify each year as a 
``regulated investment company'' (sometimes referred to as a ``RIC'') 
under Subchapter M of Chapter 1 of Subtitle A of the

[[Page 48680]]

Internal Revenue Code of 1986, as amended.\17\
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    \17\ 26 U.S.C. 851.
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Other Investments of the Funds
    While under normal market conditions a Fund will invest at least 
80% of its assets pursuant to the Index Tracking Policy described 
above, each Fund may invest its remaining assets in VRDOs, certain 
derivatives, ETFs, including ETFs advised by the Adviser, cash and cash 
equivalents, including shares of money market funds advised by the 
Adviser or its affiliates and short-term investment grade commercial 
paper,\18\ as well as Municipal Bonds not included in its respective 
Underlying Index, but which the Adviser believes will help the Fund 
track the Underlying Index.
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    \18\ See supra footnotes 13-16 for descriptions of all such 
instruments.
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Investment Restrictions of the Funds
    Each Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid assets (calculated at the time of investment), 
including commercial instruments deemed illiquid by the Adviser.\19\ 
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 the Fund's 
net assets are held in illiquid securities or other illiquid assets. 
Illiquid securities and other illiquid assets shall be determined in 
accordance with Commission staff guidance.\20\
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    \19\ In reaching liquidity decisions, the Adviser may consider 
the following factors: The frequency of trades and quotes for the 
security; the number of dealers wishing to purchase or sell the 
security and the number of other potential purchasers; dealer 
undertakings to make a market in the security; and the nature of the 
security and the nature of the marketplace in which it trades (e.g., 
the time needed to dispose of the security, the method of soliciting 
offers and the mechanics of transfer).
    \20\ 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), FN 
34. See also Investment Company Act Release Nos. 5847 (October 21, 
1969), 35 FR 19989 (December 31, 1970) (Statement Regarding 
``Restricted Securities''); and 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 
Nos. 14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); and 17452 (April 23, 
1990), 55 FR 17933 (April 30, 1990) (adopting Rule 144A under the 
Securities Act of 1933).
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    Each Fund's investments will be consistent with the Fund's 
investment objective. A Fund's investments will not be used to enhance 
leverage. That is, while a Fund will be permitted to borrow as 
permitted under the 1940 Act, no Fund will be operated as a ``leveraged 
ETF,'' i.e., it will not be operated in a manner designed to seek a 
multiple or inverse multiple of the performance of the Fund's 
Underlying Index (as defined in its investment objective).
Descriptions of the Underlying Indexes
    Each Fund will seek to track the investment results (before fees 
and expenses) of its Underlying Index. The Exchange is submitting this 
proposed rule change because the Underlying Index for each Fund does 
not meet all of the ``generic'' listing requirements of Rule 
5705(b)(4)(A) applicable to the listing of Index Fund Shares based on 
fixed income securities indexes. Each Underlying Index (both prior to 
its final year of maturity, and as it transitions to VRDOs in its final 
year) meets all such requirements except for those set forth in Rule 
5705(b)(4)(A)(ii).\21\ Although the Underlying Indexes do not meet the 
requirements of Rule 5705(b)(4)(A)(ii), they each have substitute 
characteristics that support their listing, as discussed below for each 
Underlying Index.
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    \21\ Supra footnote 6.
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2021 Index
    As of May 31, 2019, 94.34% of the weight of the 2021 Index 
components was comprised of individual bonds that were part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate. In addition, the aggregate face amount outstanding of 
bonds in the 2021 Index was approximately $94.63 billion, the total 
market value of the bonds was approximately $102.44 billion, and the 
average face amount outstanding per bond in the 2021 Index was 
approximately $38.40 million. Further, the most heavily weighted 
component represented 0.85% of the weight of the 2021 Index and the 
aggregate weight of the five most heavily weighted components 
represented 2.85% of the weight of the 2021 Index.\22\
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    \22\ Rule 5705(b)(4)(A)(iv) provides that no component fixed-
income security (excluding Treasury Securities) will represent more 
than 30% of the Fixed Income Securities portion of the weight of the 
index or portfolio, and the five highest weighted component fixed-
income securities do not in the aggregate account for more than 65% 
of the Fixed Income Securities portion of the weight of the index or 
portfolio.
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    Given these statistics, and the fact that the 2021 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2021 Index was 
composed of 2,464 bonds from issuers in 52 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2021 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2021 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (94.34%) of the 2021 Index weight is 
comprised of bonds that were part of a larger municipal offering with a 
total minimum original principal amount outstanding of $100 million or 
more in aggregate, and in view of the substantial aggregate face amount 
outstanding of the bonds and the average face amount outstanding per 
2021 Index component, as referenced above.\23\ Further, 58.96% of the 
2021 Index weight consisted of bonds with a rating of AA/Aa2 or higher.
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    \23\ The Adviser represents that when bonds are close 
substitutes for one another, pricing vendors can use executed trade 
information from all similar bonds as pricing inputs for an 
individual security. This can make individual securities more 
liquid.
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2022 Index
    As of May 31, 2019, 93.74% of the weight of the 2022 Index 
components was comprised of individual bonds that were part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate. In addition, the aggregate face amount outstanding of 
bonds in the 2022 Index was approximately $110.53 billion, the total 
market value of the bonds was approximately $121.58 billion, and the 
average face amount outstanding per bond in the 2022 Index was 
approximately $38.46 million. Further, the most heavily weighted 
component represented 0.45% of the weight of the 2022 Index and the 
aggregate weight of the five most heavily weighted components 
represented 2.03% of the weight of the 2022 Index.
    Given these statistics, and the fact that the 2022 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2022 Index was 
composed of 2,874 bonds from issuers in 51 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2022 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2022 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (93.74%) of the 2022 Index weight is 
comprised of bonds that were part of a larger municipal offering

[[Page 48681]]

with a total minimum original principal amount outstanding of $100 
million or more in aggregate, and in view of the substantial aggregate 
face amount outstanding of the bonds and the average face amount 
outstanding per 2022 Index component, as referenced above. Further, 
49.71% of the 2022 Index weight consisted of bonds with a rating of AA/
Aa2 or higher.
2023 Index
    As of May 31, 2019, 92.87% of the weight of the 2023 Index 
components was comprised of individual bonds that were part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate. In addition, the aggregate face amount outstanding of 
bonds in the 2023 Index was approximately $98.34 billion, the total 
market value of the bonds was approximately $111.13 billion, and the 
average face amount outstanding per bond in the 2023 Index was 
approximately $40.24 million. Further, the most heavily weighted 
component represented 0.61% of the weight of the 2023 Index and the 
aggregate weight of the five most heavily weighted components 
represented 2.80% of the weight of the 2023 Index.
    Given these statistics, and the fact that the 2023 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2023 Index was 
composed of 2,444 bonds from issuers in 49 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2023 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2023 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (92.87%) of the 2023 Index weight is 
comprised of bonds that were part of a larger municipal offering with a 
total minimum original principal amount outstanding of $100 million or 
more in aggregate, and in view of the substantial aggregate face amount 
outstanding of the bonds and the average face amount outstanding per 
2023 Index component, as referenced above. Further, 48.68% of the 2023 
Index weight consisted of bonds with a rating of AA/Aa2 or higher.
2024 Index
    As of May 31, 2019, 94.81% of the weight of the 2024 Index 
components was comprised of individual bonds that were part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate. In addition, the aggregate face amount outstanding of 
bonds in the 2024 Index was approximately $95.12 billion, the total 
market value of the bonds was approximately $109.47 billion, and the 
average face amount outstanding per bond in the 2024 Index was 
approximately $38.78 million. Further, the most heavily weighted 
component represented 0.53% of the weight of the 2024 Index and the 
aggregate weight of the five most heavily weighted components 
represented 2.38% of the weight of the 2024 Index.
    Given these statistics, and the fact that the 2024 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2024 Index was 
composed of 2,453 bonds from issuers in 48 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2024 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2024 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (94.81%) of the 2024 Index weight is 
comprised of bonds that were part of a larger municipal offering with a 
total minimum original principal amount outstanding of $100 million or 
more in aggregate, and in view of the substantial aggregate face amount 
outstanding of the bonds and the average face amount outstanding per 
2024 Index component, as referenced above. Further, 54.14% of the 2024 
Index weight consisted of bonds with a rating of AA/Aa2 or higher.
2025 Index
    As of May 31, 2019, 93.72% of the weight of the 2025 Index 
components was comprised of individual bonds that were part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate. In addition, the aggregate face amount outstanding of 
bonds in the 2025 Index was approximately $101.69 billion, the market 
value of the bonds was approximately $118.29 billion, and the average 
face amount outstanding per bond in the 2025 Index was approximately 
$37.73 million. Further, the most heavily weighted component 
represented 0.57% of the weight of the 2025 Index and the aggregate 
weight of the five most heavily weighted components represented 2.11% 
of the weight of the 2025 Index.
    Given these statistics, and the fact that the 2025 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2025 Index was 
composed of 2,695 bonds from issuers in 48 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2025 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2025 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (93.72%) of the 2025 Index weight is 
comprised of bonds that were part of a larger municipal offering with a 
total minimum original principal amount outstanding of $100 million or 
more in aggregate, and in view of the substantial aggregate face amount 
outstanding of the bonds and the average face amount outstanding per 
2025 Index component, as referenced above. Further, 52.78% of the 2025 
Index weight consisted of bonds with a rating of AA/Aa2 or higher.
2026 Index
    As of May 31, 2019, 95.07% of the weight of the 2026 Index 
components was comprised of individual bonds that were part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate. In addition, the aggregate face amount outstanding of 
bonds in the 2026 Index was approximately $112.32 billion, the total 
market value of the bonds was approximately $131.57 billion, and the 
average face amount outstanding per bond in the 2026 Index was 
approximately $36.74 million. Further, the most heavily weighted 
component represented 0.43% of the weight of the 2026 Index and the 
aggregate weight of the five most heavily weighted components 
represented 1.66% of the weight of the 2026 Index.
    Given these statistics, and the fact that the 2026 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2026 Index was 
composed of 3,057 bonds from issuers in 47 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2026 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2026 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (95.07%) of the 2026 Index weight is 
comprised of bonds that were part of a larger municipal offering with a 
total minimum original principal amount outstanding of $100 million or 
more in aggregate, and in view of the substantial aggregate face amount 
outstanding of the bonds and the average face amount outstanding per 
2026 Index component, as referenced above. Further, 50.35% of the 2026 
Index weight consisted of bonds with a rating of AA/Aa2 or higher.
2027 Index
    As of May 31, 2019, 94.90% of the weight of the 2027 Index 
components was comprised of individual bonds that

[[Page 48682]]

were part of a larger Municipal Bond offering with a total minimum 
original principal amount outstanding of $100 million or more for all 
bonds within the offering in aggregate. In addition, the aggregate face 
amount outstanding of bonds in the 2027 Index was approximately $100.30 
billion, the total market value of the bonds was approximately $118.71 
billion, and the average face amount outstanding per bond in the 2027 
Index was approximately $38.30 million. Further, the most heavily 
weighted component represented 0.71% of the weight of the 2027 Index 
and the aggregate weight of the five most heavily weighted components 
represented 2.58% of the weight of the 2027 Index.
    Given these statistics, and the fact that the 2027 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2027 Index was 
composed of 2,619 bonds from issuers in 51 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2027 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2027 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (94.90%) of the 2027 Index weight is 
comprised of bonds that were part of a larger municipal offering with a 
total minimum original principal amount outstanding of $100 million or 
more in aggregate, and in view of the substantial aggregate face amount 
outstanding of the bonds and the average face amount outstanding per 
2027 Index component, as referenced above. Further, 52.90% of the 2027 
Index weight consisted of bonds with a rating of AA/Aa2 or higher.
2028 Index
    As of May 31, 2019, 94.63% of the weight of the 2028 Index 
components was comprised of individual bonds that were part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate. In addition, the aggregate face amount outstanding of 
bonds in the 2028 Index was approximately $74.66 billion, the total 
market value of the bonds was approximately $89.17 billion, and the 
average face amount outstanding per bond in the 2028 Index was 
approximately $42.13 million. Further, the most heavily weighted 
component represented 0.68% of the weight of the 2028 Index and the 
aggregate weight of the five most heavily weighted components 
represented 2.71% of the weight of the 2028 Index.
    Given these statistics, and the fact that the 2028 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2028 Index was 
composed of 1,772 bonds from issuers in 48 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2028 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2028 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (94.63%) of the 2028 Index weight is 
comprised of bonds that were part of a larger municipal offering with a 
total minimum original principal amount outstanding of $100 million or 
more in aggregate, and in view of the substantial aggregate face amount 
outstanding of the bonds and the average face amount outstanding per 
2028 Index component, as referenced above. Further, 54.39% of the 2028 
Index weight consisted of bonds with a rating of AA/Aa2 or higher.
2029 Index
    As of May 31, 2019, 96.28% of the weight of the 2029 Index 
components was comprised of individual bonds that were part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate. In addition, the aggregate face amount outstanding of 
bonds in the 2029 Index was approximately $24.27 billion, the total 
market value of the bonds was approximately $29.19 billion, and the 
average face amount outstanding per bond in the 2029 Index was 
approximately $39.15 million. Further, the most heavily weighted 
component represented 1.18% of the weight of the 2029 Index and the 
aggregate weight of the five most heavily weighted components 
represented 5.13% of the weight of the 2029 Index.
    Given these statistics, and the fact that the 2029 Index is 
comprised of over 500 bonds (as of May 31, 2019, the 2029 Index was 
composed of 620 bonds from issuers in 39 different states or U.S. 
territories), the Exchange believes that, notwithstanding that the 2029 
Index does not satisfy the criterion in Rule 5705(b)(4)(A)(ii), the 
2029 Index is sufficiently broad-based to deter potential manipulation. 
In addition, a substantial portion (96.28%) of the 2029 Index weight is 
comprised of bonds that were part of a larger municipal offering with a 
total minimum original principal amount outstanding of $100 million or 
more in aggregate, and in view of the substantial aggregate face amount 
outstanding of the bonds and the average face amount outstanding per 
2029 Index component, as referenced above. Further, 50.47% of the 2029 
Index weight consisted of bonds with a rating of AA/Aa2 or higher.
All Underlying Indexes
    Each Underlying Index will, on a continuous basis, contain at least 
500 component securities. In addition, prior to its final year, at 
least 90% of the weight of each Underlying Index will be comprised of 
Municipal Bonds that have an outstanding face amount per bond of at 
least $10 million and were issued as part of a larger Municipal Bond 
offering with a total minimum original principal amount outstanding of 
$100 million or more for all bonds within the offering in aggregate. 
During its final year, each Underlying Index will transition to VRDOs 
and, in doing so, at least 90% of the weight of the VRDO components of 
each Underlying Index will have an outstanding face amount per VRDO of 
at least $10 million and at least 40% of the weight of the VRDO 
components of each Underlying Index will have been issued as part of a 
larger VRDO offering with a total minimum original principal amount 
outstanding of $100 million or more for all VRDOs within the offering 
in aggregate.\24\
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    \24\ The Commission previously has approved a proposed rule 
change relating to listing and trading of an ETF based on a VRDO 
index. See Securities Exchange Act Release No. 82295 (December 12, 
2017), 82 FR 60056 (December 18, 2017) (SR-NYSEArca-2017-56) (notice 
of filing of Amendment No. 3 and order granting accelerated approval 
of a proposed rule change, as modified by Amendment No. 3, to list 
and trade shares of twelve series of investment company units 
pursuant to NYSE Arca Rule 5.2-E(j)(3)) (the ``Comparable VRDO 
Filing'').
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    Further, as each Underlying Index transitions to VRDOs in its final 
year, the Municipal Bond components that have not been called or 
matured (and therefore remain in the Underlying Index) will continue to 
meet the criteria discussed above (i.e., 90% of the weight of the 
Municipal Bond components will have an outstanding face amount of at 
least $10 million and will have been issued as part of a larger 
Municipal Bond offering with a total minimum original principal amount 
outstanding of $100 million or more for all bonds within the offering 
in aggregate).
    Each Underlying Index value, calculated and disseminated at least 
once daily, will be available from major market data vendors. The top 
ten constituents of each Underlying Index, including their coupon 
rates, maturity dates and weightings, as of the last day of the prior 
month are disclosed on the Index Provider's website at 
www.invescoindexing.com. The rules governing the Underlying Indexes are 
also available on the Index Provider's

[[Page 48683]]

website and described in each Fund's prospectus. In addition, as more 
fully described below, the portfolio of securities held by each Fund 
will be disclosed daily on the Funds' website at www.invesco.com/ETFs.
Discussion
    Based on the characteristics of the Underlying Indexes and the 
representations made in the Descriptions of the Underlying Indexes and 
All Underlying Indexes sections above, the Exchange believes it is 
appropriate to allow the listing and trading of the Shares. The 
Underlying Indexes and Funds (both prior to its final year of maturity, 
and as it transitions to VRDOs in its final year) each satisfy all of 
the generic listing requirements of Rule 5705(b)(4)(A) applicable to 
the listing of Index Fund Shares based on fixed income securities 
indexes, except for the minimum principal amount outstanding 
requirement of Rule 5705(b)(4)(A)(ii). The Exchange notes that the 
representations in the Descriptions of the Underlying Indexes and All 
Underlying Indexes sections include substantially similar 
representations: (i) Regarding the Municipal Bond components of the 
Underlying Indexes, to the representations that appear in the 
Comparable Filing with respect to the S&P AMT-Free Municipal Callable 
Factor Adjusted 2026 Series Index, the S&P AMT-Free Municipal Callable 
Factor Adjusted 2027 Series Index, and the S&P AMT-Free Municipal 
Callable Factor Adjusted 2028 Series Index (collectively, with the S&P 
AMT-Free Municipal Callable Factor Adjusted 2026 Series Index and the 
S&P AMT-Free Municipal Callable Factor Adjusted 2027 Series Index, the 
``Comparable Indexes''); and (ii) regarding the VRDO components of the 
Underlying Indexes, to the representations that appear in the 
Comparable VRDO Filing with respect to the Bloomberg US Municipal AMT-
Free Weekly VRDO Index (the ``Comparable VRDO Index''). \25\
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    \25\ Although the Comparable Indexes and Comparable VRDO Index 
differ in certain respects from the Municipal Bond components and 
VRDO components of the Underlying Indexes, respectively, including 
differences in certain criteria for inclusion, the Exchange believes 
that the Underlying Indexes and Funds provide substantially similar 
protections against index manipulation to those protections 
discussed in the Comparable Filing and Comparable VRDO Filing.
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    The Comparable Filing included the representation that a bond must 
be investment-grade and must have an outstanding par value of at least 
$2 million in order to be included in the Comparable Indexes. Further, 
the Comparable Filing included a representation that each Comparable 
Index will have at least 500 constituents on a continuous basis. 
Similarly, the Comparable VRDO Filing included the representation that 
at least 90% of the weight of the Comparable VRDO Index would be 
comprised of securities that have a minimum amount outstanding of $10 
million and, further, that the Comparable VRDO Index will have at least 
500 constituents on a continuous basis. As noted above, each Underlying 
Index requires that, in order to remain in the Underlying Index, 
Municipal Bonds must be investment-grade and maintain a face value 
outstanding of over $12 million and, as each Underlying Index 
transitions to VRDOs in its final year, such VRDO components must be 
investment-grade and maintain a face value outstanding of over $10 
million.
    In addition, as stated above: (i) Prior to its final year, at least 
90% of the weight of each Underlying Index will be comprised of 
Municipal Bonds that have an outstanding face amount per bond of at 
least $10 million and were issued as part of a larger Municipal Bond 
offering with a total minimum original principal amount outstanding of 
$100 million or more for all bonds within the offering in aggregate; 
and (ii) during its final year, as each Underlying Index transitions to 
VRDOs, at least 90% of the weight of the VRDO components of each 
Underlying Index will have an outstanding face amount per VRDO of at 
least $10 million and at least 40% of the weight of the VRDO components 
of each Underlying Index will have been issued as part of a larger VRDO 
offering with a total minimum original principal amount outstanding of 
$100 million or more for all VRDOs within the offering in aggregate. 
Further, the Adviser has represented that each Underlying Index will 
have at least 500 constituents on a continuous basis.
    As such, the Exchange believes that the proposal is consistent with 
the Exchange Act because the representations regarding the quality and 
size of the issuances included in each Underlying Index provide a 
strong degree of protection against index manipulation that is 
consistent with other proposals that have either been approved for 
listing and trading by the Commission or were effective upon filing.
Availability of Information
    The Funds' website www.invesco.com/ETFs, which is publicly 
available at no charge, will include the prospectus for each Fund that 
may be downloaded. On each Business Day, before commencement of trading 
in Shares in the Regular Market Session \26\ on the Exchange, the 
Adviser will disclose on the Funds' website the identities and 
quantities of the portfolio of securities and other assets in the daily 
disclosed portfolio held by the Funds that will form the basis for each 
Fund's calculation of net asset value (``NAV'') at the end of the 
Business Day (the ``Disclosed Portfolio''). The Disclosed Portfolio 
will include, as applicable: 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, 
security 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 the Fund's portfolio. The website 
information will be publicly available at no charge.
---------------------------------------------------------------------------

    \26\ See Nasdaq Rule 4120(b)(4) (describing the three trading 
sessions on the Exchange: (1) Pre-Market Session from 4 a.m. to 9:30 
a.m. E.T.; (2) Regular Market Session from 9:30 a.m. to 4 p.m. or 
4:15 p.m. E.T.; and (3) Post-Market Session from 4 p.m. or 4:15 p.m. 
to 8 p.m. E.T.).
---------------------------------------------------------------------------

    The Funds' website will also include the ticker symbol for the 
Shares, CUSIP and exchange information, along with additional 
quantitative information updated on a daily basis, including, for each 
Fund: (1) Daily trading volume, the prior Business Day's reported NAV, 
closing price and mid-point of the bid/ask spread at the time of 
calculation of such NAV (the ``Bid/Ask Price''),\27\ and a calculation 
of the premium and discount of the Bid/Ask Price against the NAV; and 
(2) data in chart format displaying the frequency distribution of 
discounts and premiums of the daily Bid/Ask Price against the NAV, 
within appropriate ranges, for the most recently completed calendar 
year and each of the four most recently completed calendar quarters 
since that year (or the life of the Fund if shorter).
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    \27\ The Bid/Ask Price of each Fund will be determined using the 
mid-point of the highest bid and the lowest offer on the Exchange as 
of the time of calculation of the Fund's NAV. The records relating 
to Bid/Ask Prices will be retained by each Fund and its service 
providers.
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    Information regarding the Intra-day Indicative Value (``IIV'') of 
the Shares is disseminated at least every 15 seconds throughout each 
trading day by the Reporting Authority (as that term is defined in Rule 
5705(b)(1)(C)), including through the Nasdaq Information LLC 
proprietary index data service. However, the IIV should not be

[[Page 48684]]

viewed as a ``real-time'' update of a Fund's NAV. The dissemination of 
the IIV, together with the Disclosed Portfolio, will allow investors to 
determine the value of the underlying portfolio of a Fund on a daily 
basis and will provide a close estimate of that value throughout the 
trading day.
    Intraday executable price quotations on Municipal Bonds and VRDOs 
held by a Fund and other assets held by a Fund not traded on an 
exchange, including OTC derivatives (OTC options, swaps and forwards) 
and cash equivalents will be available from major broker-dealer firms 
or market data vendors, as well as from automated quotation systems, 
published or other public sources, or online information services. 
Intra-day and closing price information related to cash and cash 
equivalents, including money market funds, investment grade short-term 
commercial paper and investment grade short-term tax-exempt notes, held 
by each Fund also will be available through subscription services, such 
as Bloomberg, Markit and Thomson Reuters, which can be accessed by 
Authorized Participants and other investors. The Municipal Securities 
Rulemaking Board's (``MSRB'') Electronic Municipal Market Access 
(``EMMA'') will be a source of price information for Municipal Bonds. 
For exchange-traded assets, including ETFs, futures, certain options 
and swaps, such intraday information is available directly from the 
applicable listing exchange. In addition, price information for U.S. 
exchange-traded options will be available from the Options Price 
Reporting Authority.
    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, and 
quotation and last-sale information for the Shares will be available 
via Nasdaq proprietary quote and trade services, as well as in 
accordance with the Unlisted Trading Privileges (``UTP'') plan and the 
Consolidated Tape Association (``CTA'') plans for the Shares. 
Information regarding the previous day's closing price and trading 
volume for the Shares will be published daily in the financial section 
of newspapers.
    Additional information regarding the Funds and the Shares, 
including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings disclosure policies, distributions 
and taxes, will be included in the Registration Statement. Investors 
also will be able to obtain the Funds' Statement of Additional 
Information (``SAI'') and its Trust's Form N-CEN, each of which is 
filed at least annually. Further, investors will be able to obtain each 
Fund's Shareholder Reports and its Trust's Form N-CSR, each of which is 
filed twice a year. The Funds' SAI and Shareholder Reports will be 
available free upon request from the Trust, and those documents and the 
Form N-CSR and Form N-CEN may be viewed on-screen or downloaded from 
the Commission's website at www.sec.gov.
Initial and Continued Listing of the Fund's Shares
    The Shares will conform to the initial and continued listing 
criteria applicable to Index Fund Shares, as set forth under Rule 5705, 
except Rule 5705(b)(4)(A)(ii). The Exchange represents that, for 
initial and continued listing, each Fund will be in compliance with 
Rule 10A-3 \28\ under the Securities Exchange Act of 1934, as amended 
(the ``Exchange Act''). A minimum of 100,000 Shares will be outstanding 
for each Fund at the commencement of trading on the Exchange. The 
Exchange will obtain a representation from the issuer of the Shares 
that the NAV per Share for each Fund will be calculated daily and that 
the NAV and the Disclosed Portfolio of each Fund will be made available 
to all market participants at the same time.
---------------------------------------------------------------------------

    \28\ See 17 CFR 240.10A-3.
---------------------------------------------------------------------------

Trading Halts of the Funds' Shares
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of a Fund. Nasdaq will halt trading in the Shares 
under the conditions specified in Nasdaq Rules 4120 and 4121, including 
the trading pauses under Nasdaq Rules 4120(a)(12). 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 constituting the Disclosed 
Portfolio of a Fund; or (2) whether other unusual conditions or 
circumstances detrimental to the maintenance of a fair and orderly 
market are present. Trading in the Shares also will be subject to 
Nasdaq Rule 5705(b)(9), which sets forth circumstances under which 
Index Fund Shares may be halted.
Trading Rules
    Nasdaq deems the Shares to be equity securities, thus rendering 
trading in the Shares subject to Nasdaq's existing rules governing the 
trading of equity securities. Regular market session trading, in 
accordance with Nasdaq Rule 5705(b)(7), will occur between 9:30 a.m. 
and either 4:00 p.m. or 4:15 p.m. for each series of Index Fund Shares, 
as specified by Nasdaq. In addition, Nasdaq may designate each series 
of Index Fund Shares for trading during a pre-market session beginning 
at 4:00 a.m. and/or a post-market session ending at 8:00 p.m. The 
Exchange has appropriate rules to facilitate transactions in the Shares 
during all trading sessions.
Surveillance
    The Exchange represents that trading in the Shares will be subject 
to the existing trading surveillances, administered by the Exchange and 
also by FINRA, on behalf of the Exchange.\29\ Such trading 
surveillances are designed to detect violations of Exchange rules and 
applicable federal securities laws. The Exchange represents that these 
procedures are adequate to properly monitor Exchange trading of the 
Shares in all trading sessions and to deter and detect violations of 
Exchange rules and applicable federal securities laws.
---------------------------------------------------------------------------

    \29\ FINRA surveils trading on the Exchange pursuant to a 
regulatory services agreement. The Exchange is responsible for 
FINRA's performance under this regulatory services agreement.
---------------------------------------------------------------------------

    The surveillances referred to above generally focus on detecting 
securities trading outside their normal patterns, which could be 
indicative of manipulative or other violative activity. When such 
situations are detected, surveillance analysis follows and 
investigations are opened, where appropriate, to review the behavior of 
all relevant parties for all relevant trading violations. FINRA, on 
behalf of the Exchange, will communicate as needed regarding trading in 
the Shares and exchange-traded securities and instruments held by the 
Funds with other markets and other entities that are members of the 
ISG,\30\ and FINRA may obtain trading information regarding trading in 
the Shares and exchange-traded securities and instruments held by a 
Fund (including ETFs and exchange-traded derivatives) from such markets 
and other entities. Moreover, FINRA, on behalf of the Exchange, will be 
able to access, as needed, trade information for certain debt 
securities held by each Fund reported to FINRA's TRACE, or the MSRB.
---------------------------------------------------------------------------

    \30\ For a list of the current members of ISG, see 
www.isgportal.org.
---------------------------------------------------------------------------

    In addition, the Exchange will communicate as needed and may obtain 
information regarding trading in the Shares and exchange-traded 
securities and instruments held by a Fund from markets and other 
entities that are

[[Page 48685]]

members of ISG, which includes securities exchanges, or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.\31\
---------------------------------------------------------------------------

    \31\ 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.
    In addition, the Exchange represents that the Shares will comply 
with all other requirements applicable to Index Fund Shares, which 
includes requirements relating to the dissemination of key information 
such as the Underlying Index value, the NAV, and the IIV, rules 
governing the trading of equity securities, trading hours, trading 
halts, fire walls for the Index Provider and Adviser, surveillance, and 
the Information Bulletin, as set forth in Exchange rules applicable to 
Index Fund Shares and the orders approving such rules.
Information Circular
    Prior to the commencement of trading, 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) Nasdaq Rule 2111A, which imposes 
suitability obligations on Nasdaq members with respect to recommending 
transactions in the Shares to customers; (3) how information regarding 
the IIV and the Disclosed Portfolio is disseminated; (4) the risks 
involved in trading the Shares during the Pre-Market and Post-Market 
Sessions when an updated IIV will not be calculated or publicly 
disseminated; (5) the requirement that members purchasing Shares from 
the Funds for resale to investors deliver a prospectus to investors 
purchasing newly issued Shares prior to or concurrently with the 
confirmation of a transaction; and (6) trading information.
    In addition, the Information Circular will advise members, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to each 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 
Exchange Act.
    Additionally, the Information Circular will reference that each 
Fund is subject to various fees and expenses. The Information Circular 
will also disclose the trading hours of the Shares and the applicable 
NAV calculation time for the Funds. The Information Circular will 
disclose that information about the Shares will be publicly available 
on the Funds' website.
Continued Listing Representations
    All statements and representations made in this filing regarding 
(a) index composition; (b) the description of the portfolios; (c) 
limitations on portfolio holdings or reference assets, (d) 
dissemination and availability of the indexes or intraday indicative 
values, or (e) the applicability of Exchange listing rules specified in 
this rule filing shall constitute continued listing requirements for 
listing the Shares on the Exchange. In addition, the issuer has 
represented to the Exchange that it will advise the Exchange of any 
failure by a 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. If a Fund is not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under the Nasdaq 5800 Series.
2. Statutory Basis
    Nasdaq believes that the proposal is consistent with Section 6(b) 
of the Exchange Act, in general, and Section 6(b)(5) \32\ of the 
Exchange Act, in particular, in that it is 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, and to 
remove impediments to, and perfect the mechanism of a free and open 
market and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78(f)(b)(5).
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    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 
initial and continued listing criteria in Nasdaq Rule 5705 (with the 
exception of Rule 5705(b)(4)(A)(ii)). The Exchange represents that 
trading in the Shares will be subject to the existing trading 
surveillances, administered by the Exchange and also by FINRA, on 
behalf of the Exchange. Such trading surveillances are designed to 
deter and detect violations of Exchange rules and applicable federal 
securities laws and are adequate to properly monitor trading in the 
Shares in all trading sessions.
    The Adviser is not a broker-dealer, but is affiliated with a 
broker-dealer and has implemented and will maintain a ``fire wall'' 
with respect to its broker-dealer affiliate regarding access to 
information concerning the composition and/or changes to each Fund's 
portfolio. In the event (a) the Adviser becomes newly affiliated with a 
different broker-dealer (or becomes a registered broker-dealer itself), 
or (b) any new adviser or sub-adviser to a Fund is a registered broker-
dealer or becomes affiliated with a broker-dealer, each will implement 
and 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 and/or changes to each Fund's 
portfolio and will be subject to procedures designed to prevent the use 
and dissemination of material non-public information regarding each 
Fund's portfolio.
    In addition, Nasdaq Rule 5705(b)(4)(B)(i) requires that if an Index 
Fund Share's underlying index maintained by a broker-dealer or fund 
advisor, the broker-dealer or fund advisor shall erect and maintain a 
``fire wall'' around the personnel who have access to information 
concerning changes and adjustments to the index and the index shall be 
calculated by a third party who is not a broker-dealer or fund advisor. 
In addition, Nasdaq Rule 5705 further requires that any advisory 
committee, supervisory board, or similar entity that makes decisions on 
the index composition, methodology and related matters, must implement 
and maintain, or be subject to, procedures designed to prevent the use 
and dissemination of material non-public information regarding the 
applicable index. As noted above, the Index Provider has implemented 
and will continue to maintain the fire wall required.
    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 passively-managed exchange-traded products that 
will enhance competition among market participants, to the benefit of 
investors and the marketplace.
    As addressed above, the Exchange believes that, notwithstanding 
that the Underlying Indexes do not satisfy the criterion in Rule 
5705(b)(4)(A)(ii), the

[[Page 48686]]

Underlying Indexes are, and would remain, sufficiently broad-based to 
deter potential manipulation; each Underlying Index will, on a 
continuous basis, contain at least 500 component securities. Whereas 
Rule 5705(b)(4)(A)(v) requires that an index contain securities from a 
minimum of 13 non-affiliated issuers, as of May 31, 2019, the 
Underlying Indexes each include securities issued by municipal entities 
in at least 39 states or U.S. territories. Further, whereas the generic 
listing rules permit a single component fixed-income security to 
represent up to 30% of the fixed income securities portion of the 
weight of an index and the top five components to, in aggregate, 
represent up to 65% of the fixed income securities portion of the 
weight of an index, the largest component security in each Underlying 
Index constitutes no more than 1.18% of the weight of an Underlying 
Index and the largest five component securities represent no more than 
5.13% of the weight of an Underlying Index.
    The Exchange believes that this significant diversification and the 
lack of concentration among constituent securities provide each 
Underlying Index with a strong degree of protection against index 
manipulation. Each Underlying Index and Fund satisfy all of the generic 
listing requirements for Index Fund Shares based on a fixed income 
index, except for the minimum principal amount outstanding requirement 
of Rule 5705(b)(4)(A)(ii). With this in mind, the Exchange notes that 
the representations in the Descriptions of the Underlying Indexes and 
All Underlying Indexes sections are substantially similar to the 
representations made regarding the Comparable Indexes and the 
Comparable VRDO Index in the Comparable Filing and Comparable VRDO 
Filing, respectively.
    The Comparable Filing included the representation that a bond must 
be investment-grade and must have an outstanding par value of at least 
$2 million in order to be included in the Comparable Indexes. Further, 
the Comparable Filing included a representation that each Comparable 
Index will have at least 500 constituents on a continuous basis. 
Similarly, the Comparable VRDO Filing included the representation that 
at least 90% of the weight of the Comparable VRDO Index would be 
comprised of securities that have a minimum amount outstanding of $10 
million and, further, that the Comparable VRDO Index will have at least 
500 constituents on a continuous basis. As noted above, each Underlying 
Index requires that, in order to remain in the Underlying Index, 
Municipal Bonds must be investment-grade and maintain a face value 
outstanding of over $12 million and, as the Underlying Indexes 
transition to VRDOs in their final year, VRDO components of the 
Underlying Indexes must also be investment grade and have a face value 
outstanding of over $10 million.
    In addition, as stated above: (i) Prior to its final year, at least 
90% of the weight of each Underlying Index will be comprised of 
Municipal Bonds that have an outstanding face amount per bond of at 
least $10 million and were issued as part of a larger Municipal Bond 
offering with a total minimum original principal amount outstanding of 
$100 million or more for all bonds within the offering in aggregate; 
and (ii) during its final year, as each Underlying Index transitions to 
VRDOs, at least 90% of the weight of the VRDO components of each 
Underlying Index will have an outstanding face amount per VRDO of at 
least $10 million and at least 40% of the weight of the VRDO components 
of each Underlying Index will have been issued as part of a larger VRDO 
offering with a total minimum original principal amount outstanding of 
$100 million or more for all VRDOs within the offering in aggregate. 
Further, the Adviser has represented that each Underlying Index will 
have at least 500 constituents on a continuous basis.
    As such, the Exchange believes that the proposal is consistent with 
the Exchange Act because the representations regarding the quality and 
size of the issuances included in each Underlying Index provide a 
strong degree of protection against index manipulation that is 
consistent with other proposals that have either been approved for 
listing and trading by the Commission or were effective upon filing.
    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 every day that 
the Funds are traded, 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 will be publicly available 
regarding the Funds and the Shares, thereby promoting market 
transparency. Moreover, the IIV, available on the Nasdaq Information 
LLC proprietary index data service, will be widely disseminated by one 
or more major market data vendors at least every 15 seconds during the 
Exchange's Regular Market Session. On each Business Day, before 
commencement of trading in Shares in the Regular Market Session on the 
Exchange, the Adviser will disclose on the Funds' website the Disclosed 
Portfolios of the Funds that will form the basis for each Fund's 
calculation of NAV at the end of the Business Day.
    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, and 
quotation and last-sale information for the Shares will be available 
via Nasdaq proprietary quote and trade services, as well as in 
accordance with the UTP plan and the CTA plans for the Shares.
    The Funds' website will include a form of the prospectus for each 
Fund and additional data relating to NAV and other applicable 
quantitative information. Moreover, prior to the commencement of 
trading, 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 Funds will be halted under 
the conditions specified in Nasdaq Rules 4120 and 4121 or because of 
market conditions or for reasons that, in the view of the Exchange, 
make trading in the Shares inadvisable. In addition, as noted above, 
investors will have ready access to information regarding each Fund's 
holdings, the IIV, the Disclosed Portfolio, and quotation and last sale 
information for the Shares.
    For the above reasons, Nasdaq believes the proposed rule change is 
consistent with the requirements of Section 6(b)(5) of the Exchange 
Act.

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 purposes of the Exchange Act. The Exchange 
believes that the proposed rule change will facilitate the listing and 
trading of additional types of passively-managed exchange-traded 
products that will enhance competition among market participants, to 
the benefit of investors and the marketplace.

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

    No written comments were either solicited or received.

[[Page 48687]]

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \33\ and Rule 19b-
4(f)(6) thereunder.\34\
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    \33\ 15 U.S.C. 78s(b)(3)(A).
    \34\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
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 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.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \35\ normally 
does not become operative for 30 days after the date of the filing. 
However, pursuant to Rule 19b-4(f)(6)(iii),\36\ the Commission may 
designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has asked 
the Commission to waive the 30-day operative delay to allow the Funds 
to begin listing and trading on the Exchange without delay. The 
Exchange states that its representations regarding the requirements for 
each Underlying Index are substantially similar to those included in 
relation to the Comparable Indexes and Comparable VRDO Index in the 
Comparable Filing and Comparable VRDO Filing, respectively. Moreover, 
according to the Exchange, waiver of the 30-day operative delay will 
more quickly facilitate the listing and trading of additional exchange-
traded products that will enhance competition among market 
participants, to the benefit of investors and the marketplace. For 
these reasons, the Commission believes that waiver of the 30-day 
operative delay is consistent with the protection of investors and the 
public interest. Accordingly, the Commission waives the 30-day 
operative delay and designates the proposed rule change operative upon 
filing.\37\
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    \35\ 17 CFR 240.19b-4(f)(6).
    \36\ 17 CFR 240.19b-4(f)(6)(iii).
    \37\ 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).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule 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-NASDAQ-2019-070 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-NASDAQ-2019-070. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2019-070, and should be submitted 
on or before October 7, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\38\
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    \38\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-19903 Filed 9-13-19; 8:45 am]
BILLING CODE 8011-01-P