Document ID: SEC-2018-1941-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc.
Posted Date: 2018-12-17T05:00Z

[Federal Register Volume 83, Number 241 (Monday, December 17, 2018)]
[Notices]
[Pages 64622-64630]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27206]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84789; File No. SR-CboeBZX-2018-085]

Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To List 
Shares of the Cambria Global Momentum ETF Under Rule 14.11(i), Managed 
Fund Shares

December 11, 2018.
    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 November 28, 2018, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I and II below, which Items 
have been prepared by the Exchange. The Exchange filed the proposal as 
a ``non-controversial'' proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 shares of the Cambria Global Momentum 
ETF (the ``Fund'') under Rule 14.11(i), (``Managed Fund Shares''),\5\ 
which governs the listing and trading of Managed Fund Shares on the 
Exchange.\6\ The Exchange notes that the Fund is currently listed on 
Arca and the Shares are already trading on the Exchange pursuant to 
unlisted trading privileges, as provided in Rule 14.11(j).
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    \5\ The Exchange notes that the Commission previously approved a 
proposal to list and trade shares of the Fund on Arca. See 
Securities Exchange Act Release No. 73004 (September 5, 2014), 79 FR 
54333 (September 11, 2014) (SR-NYSEArca-2014-76) (the ``Prior 
Proposal''). This proposal is substantively identical to the Prior 
Proposal and the issuer represents that all material representations 
contained within the Prior Proposal remain true. As further 
described below, the Exchange believes that its surveillance 
procedures are adequate to properly monitor the trading of the 
Shares on the Exchange during all trading sessions and to deter and 
detect violations of Exchange rules and the applicable federal 
securities laws. Trading of the Shares through the Exchange will be 
subject to the Exchange's surveillance procedures for derivative 
products, including Managed Fund Shares.
    \6\ The Commission approved BZX Rule 14.11(i) in Securities 
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 
(September 6, 2011) (SR-BATS-2011-018).
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    The text of the proposed rule change is also available on the 
Exchange's website (www.cboe.com), at the Exchange's Office of the 
Secretary, and at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to list shares of the Cambria Global Momentum 
ETF (the ``Fund'') under Rule 14.11(i), (``Managed Fund Shares''),\7\ 
which governs the listing and trading of Managed Fund Shares on the 
Exchange.\8\ The Exchange notes that the Fund is currently listed on 
Arca and the Shares are already trading on the Exchange pursuant to 
unlisted trading privileges, as provided in Rule 14.11(j).
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    \7\ The Exchange notes that the Commission previously approved a 
proposal to list and trade shares of the Fund on Arca. See 
Securities Exchange Act Release No. 73004 (September 5, 2014), 79 FR 
54333 (September 11, 2014) (SR-NYSEArca-2014-76) (the ``Prior 
Proposal''). This proposal is substantively identical to the Prior 
Proposal and the issuer represents that all material representations 
contained within the Prior Proposal remain true. As further 
described below, the Exchange believes that its surveillance 
procedures are adequate to properly monitor the trading of the 
Shares on the Exchange during all trading sessions and to deter and 
detect violations of Exchange rules and the applicable federal 
securities laws. Trading of the Shares through the Exchange will be 
subject to the Exchange's surveillance procedures for derivative 
products, including Managed Fund Shares.
    \8\ The Commission approved BZX Rule 14.11(i) in Securities 
Exchange Act Release No. 65225 (August 30, 2011), 76 FR 55148 
(September 6, 2011) (SR-BATS-2011-018).
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    The Shares are offered by the Cambria ETF Trust (the ``Trust''), a 
Delaware statutory trust which is registered with the Commission as an 
open-end management investment company.\9\
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    \9\ The Trust is registered under the 1940 Act. On September 21, 
2018, the Trust filed an amendment to the Trust's registration 
statement on Form N-1A under the Securities Act of 1933 (the ``1933 
Act'') (15 U.S.C. 77a), and under the 1940 Act relating to the Fund 
(File Nos. 333-180879 and 811-22704) (the ``Registration 
Statement''). The description of the operation of the Trust and the 
Fund herein is based, in part, on the Registration Statement. In 
addition, the Commission has issued an order granting certain 
exemptive relief to the Trust under the 1940 Act. See Investment 
Company Act Release No. 30340 (January 4, 2013) (``Exemptive 
Order''). Investments made by the Fund will comply with the 
conditions set forth in the Exemptive Order.
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Description of the Shares and the Fund
    Cambria Investment Management, L.P. (``Cambria'' or the 
``Adviser'') serves as the investment adviser of the Fund. SEI 
Investments Distribution Co. (the ``Distributor'') is the principal

[[Page 64623]]

underwriter and distributor of the Fund's Shares. SEI Investments 
Global Funds Services (``SEI'') serves as the fund accountant and 
administrator of the Fund. Brown Brothers Harriman & Co. serves as the 
Custodian and Transfer Agent of the Fund's assets.
    Rule 14.11(i)(7) provides that, if the investment adviser to the 
investment company issuing Managed Fund Shares is affiliated with a 
broker-dealer, such investment adviser shall erect a ``fire wall'' 
between the investment adviser and the broker-dealer with respect to 
access to information concerning the composition and/or changes to such 
investment company portfolio.\10\ In addition, Rule 14.11(i)(7) further 
requires that personnel who make decisions on the investment company's 
portfolio composition must be subject to procedures designed to prevent 
the use and dissemination of material nonpublic information regarding 
the applicable investment company portfolio. Rule 14.11(i)(7) is 
similar to Rule 14.11(b)(5)(A)(i), however, Rule 14.11(i)(7) in 
connection with the establishment of a ``fire wall'' between the 
investment adviser and the broker-dealer reflects the applicable open-
end fund's portfolio, not an underlying benchmark index, as is the case 
with index-based funds. The Adviser is not registered as a broker-
dealer and is not affiliated with a broker-dealer. In the event that 
(a) the Adviser or any sub-adviser becomes registered as, or becomes 
newly affiliated with, a broker-dealer, or (b) any new adviser or sub-
adviser is a registered broker-dealer or becomes affiliated with a 
broker-dealer, it will implement a fire wall with respect to its 
relevant personnel or broker dealer affiliate, as applicable, regarding 
access to information concerning the composition and/or changes to the 
portfolio, and will be subject to procedures designed to prevent the 
use and dissemination of material non-public information regarding such 
portfolio.
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    \10\ An investment adviser to an open-end fund is required to be 
registered under the Investment Advisers Act of 1940, as amended 
(the ``Advisers Act''). As a result, the Adviser and its related 
personnel are subject to the provisions of Rule 204A-1 under the 
Advisers Act relating to codes of ethics. This Rule requires 
investment advisers to adopt a code of ethics that reflects the 
fiduciary nature of the relationship to clients as well as 
compliance with other applicable securities laws. Accordingly, 
procedures designed to prevent the communication and misuse of non-
public information by an investment adviser must be consistent with 
Rule 204A-1 under the Advisers Act. In addition, Rule 206(4)-7 under 
the Advisers Act makes it unlawful for an investment adviser to 
provide investment advice to clients unless such investment adviser 
has (i) adopted and implemented written policies and procedures 
reasonably designed to prevent violation, by the investment adviser 
and its supervised persons, of the Advisers Act and the Commission 
rules adopted thereunder; (ii) implemented, at a minimum, an annual 
review regarding the adequacy of the policies and procedures 
established pursuant to subparagraph (i) above and the effectiveness 
of their implementation; and (iii) designated an individual (who is 
a supervised person) responsible for administering the policies and 
procedures adopted under subparagraph (i) above.
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Principal Investment Policies
    According to the Registration Statement, the Fund will seek to 
preserve and grow capital from investments in the U.S. and foreign 
equity, fixed income, commodity and currency markets, independent of 
market direction. The Fund will be considered a ``fund of funds'' that 
seeks to achieve its investment objective by primarily investing in 
other 1940 Act-registered exchange-traded funds (``ETFs'') and other 
exchange traded products (``ETPs'') including, but not limited to, 
exchange-traded notes (``ETNs''),\11\ exchange traded currency trusts, 
and closed-end funds (together, ``Underlying Vehicles'') \12\ that 
offer diversified exposure, including inverse exposure, to global 
regions (including emerging markets), countries, styles (i.e., market 
capitalization, value, growth, etc.) and sectors. Under normal market 
conditions,\13\ the Fund will invest at least 80% of its net assets in 
the securities of Underlying Vehicles.
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    \11\ As described in the Registration Statement, ETFs are 
registered investment companies whose shares are exchange-traded and 
give investors a proportional interest in the pool of securities and 
other assets held by the ETF. ETPs are exchange-traded equity 
securities whose value derives from an underlying asset or portfolio 
of assets, which may correlate to a benchmark, such as a commodity, 
currency, interest rate or index. ETFs are one type of ETP. ETNs are 
unsecured and unsubordinated debt securities whose value derives, in 
part, from an underlying asset or benchmark and, in part, from the 
credit quality of the securities' issuer.
    \12\ For purposes of this filing, the term ``Underlying 
Vehicles'' includes Index Fund Shares (as described in BZX Rule 
14.11(c)); Index-Linked Securities (as described in Rule BZX Rule 
14.11(d)); Portfolio Depositary Receipts (as described in BZX Rule 
14.11(b)); Trust Issued Receipts (as described in BZX Rule 
14.11(f)(1)); Commodity-Based Trust Shares (as described in BZX Rule 
14.11(e)(4)); Currency Trust Shares (as described in BZX Rule 
14.11(e)(5)); Commodity Index Trust Shares (as described in BZX Rule 
14.11(e)(6)); Commodity Futures Trust Shares (as described in BZX 
Rule 14.11(e)(7)); Managed Fund Shares (as described in BZX Rule 
14.11(i)); and closed-end funds (as described in BZX Rule 14.8(e)). 
All Underlying Vehicles will be listed and traded in the U.S. on a 
national securities exchange. The Fund will not invest in inverse or 
leveraged (e.g., 2X, -2X, 3X or -3X) Underlying Vehicles.
    \13\ The term ``under normal market conditions'' includes, but 
is not limited to, the absence of extreme volatility or trading 
halts in the equity markets or the financial markets generally; 
operational issues causing dissemination of inaccurate market 
information; or force majeure type events such as systems failure, 
natural or man- made disaster, act of God, armed conflict, act of 
terrorism, riot or labor disruption or any similar intervening 
circumstance.
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    According to the Registration Statement, the Fund will seek to 
preserve and grow capital by producing absolute returns with reduced 
volatility and manageable risk and drawdowns. The Fund will invest in 
Underlying Vehicles spanning all the major world asset classes 
including equities, bonds (including high yield bonds, which are 
commonly referred to as ``junk bonds''), real estate, derivatives, 
commodities, and currencies. The Adviser will actively manage the 
Fund's portfolio utilizing a quantitative strategy with risk management 
controls in an attempt to protect capital. Through Underlying Vehicles, 
the Fund may have exposure to companies in any industry and of any 
market capitalization. Under normal market conditions, the Fund expects 
to invest at least 40% of its net assets, including through investments 
in Underlying Vehicles, in securities of issuers located in at least 
three different countries (including the United States).
    Through Underlying Vehicles, the Fund may invest in shares of real 
estate investment trusts (``REITs''), which are pooled investment 
vehicles that invest primarily in real estate or real estate-related 
loans and trade on a U.S. exchange.
Other Investments
    While, under normal market conditions, the Fund will invest at 
least 80% of its net assets in Underlying Vehicles, as described above, 
the Fund may invest its remaining 20% of net assets in other securities 
and financial instruments, other than Underlying Vehicles, including 
futures contracts, cash and cash equivalents, as described below.
    Exchange-Traded Equity Securities. The Fund may invest in exchange-
traded common stocks. The Fund also may invest in foreign securities by 
purchasing ``Depositary Receipts'', including American Depositary 
Receipts (``ADRs''), European Depositary Receipts (``EDRs'') and Global 
Depositary Receipts (``GDRs'') or other securities convertible into 
securities of issuers based in foreign countries. These securities may 
not necessarily be denominated in the same currency as the securities 
which they represent.\14\
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    \14\ Generally, ADRs, in registered form, are denominated in 
U.S. dollars and are designed for use in the U.S. securities 
markets, GDRs, in bearer form, are issued and designed for use 
outside the United States, and EDRs, in bearer form, may be 
denominated in other currencies and are designed for use in European 
securities markets. ADRs are receipts typically issued by a U.S. 
bank or trust company evidencing ownership of the underlying 
securities. EDRs are European receipts evidencing a similar 
arrangement. GDRs are receipts typically issued by non-United States 
banks and trust companies that evidence ownership of either foreign 
or domestic securities. ADRs may be sponsored or unsponsored, but 
unsponsored ADRs will not exceed 10% of the Fund's net assets.

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[[Page 64624]]

    With respect to its exchange-traded equity securities investments, 
the Fund will normally invest in equity securities that are listed and 
traded on a U.S. exchange or in markets that are members of the 
Intermarket Surveillance Group (``ISG'') or parties to a comprehensive 
surveillance sharing agreement with the Exchange. In any case, not more 
than 10% of the net assets of the Fund in the aggregate invested in 
exchange-traded equity securities will consist of equity securities 
whose principal market is not a member of ISG or a market with which 
the Exchange does not have a comprehensive surveillance sharing 
agreement.
    Fixed Income Securities. The Fund may invest in debt and other 
fixed income securities, as described below. Debt and other fixed 
income securities include fixed and floating rate securities of any 
maturity. Fixed rate securities pay a specified rate of interest or 
dividends. Floating rate securities pay a rate that is adjusted 
periodically by reference to a specified index or market rate. Fixed 
and floating rate securities may be issued by federal, state, local, 
and foreign governments and related agencies, and by a wide range of 
private issuers. The Fund's investments in debt and other fixed income 
securities will be limited to those described below.
    The Fund may invest in indexed bonds, which are a type of fixed 
income security whose principal value and/or interest rate is adjusted 
periodically according to a specified instrument, index, or other 
statistic (e.g., another security, inflation index, currency, or 
commodity).
    The Fund may invest in securities issued or guaranteed by the U.S. 
Government, its agencies, instrumentalities, and political 
subdivisions; \15\ securities issued by foreign governments, their 
authorities, agencies, instrumentalities, and political subdivisions; 
securities issued by supra-national agencies; \16\ corporate debt 
securities; master demand notes; \17\ Yankee dollar and Eurodollar bank 
certificates of deposit; time deposits; bankers' acceptances; 
commercial paper; \18\ and inflation-indexed securities. The Fund may 
invest also in zero coupon securities, which may be issued by a wide 
variety of corporate and governmental issuers.
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    \15\ U.S. Government securities include securities issued or 
guaranteed by the U.S. Government or its authorities, agencies, or 
instrumentalities. Foreign government securities include securities 
issued or guaranteed by foreign governments (including political 
subdivisions) or their authorities, agencies, or instrumentalities 
or by supra-national agencies. Different kinds of U.S. government 
securities and foreign government securities have different kinds of 
government support. For example, some U.S. government securities 
(e.g., U.S. Treasury bonds) are supported by the full faith and 
credit of the U.S. Other U.S. government securities are issued or 
guaranteed by federal agencies or government-chartered or -sponsored 
enterprises but are neither guaranteed nor insured by the U.S. 
government (e.g., debt securities issued by the Federal Home Loan 
Mortgage Corporation (``Freddie Mac''), Federal National Mortgage 
Association (``FNMA'' or ``Fannie Mae''), and Federal Home Loan 
Banks (``FHLBs''). Similarly, some foreign government securities are 
supported by the full faith and credit of a foreign national 
government or political subdivision and some are not.
    \16\ Supra-national agencies are agencies whose member nations 
make capital contributions to support the agencies' activities. 
Examples include the International Bank for Reconstruction and 
Development (the World Bank), the Asian Development Bank, the 
European Coal and Steel Community, and the Inter-American 
Development Bank.
    \17\ The Fund may invest in master demand notes that are 
denominated in U.S. dollars. Master demand notes are demand notes 
that permit the investment of fluctuating amounts of money at 
varying rates of interest pursuant to arrangements with issuers who 
meet the quality criteria of the Fund. The interest rate on a master 
demand note may fluctuate based upon changes in specified interest 
rates, be reset periodically according to a prescribed formula or be 
a set rate. Although there is no secondary market in master demand 
notes, if such notes have a demand future, the payee may demand 
payment of the principal amount of the note upon relatively short 
notice. Master demand notes are generally illiquid and therefore 
subject to the Fund's percentage limitations for investments in 
illiquid securities.
    \18\ Commercial paper consists of short-term promissory notes 
issued by corporations. Commercial paper may be traded in the 
secondary market after its issuance.
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    The Fund may invest in fixed income securities of any credit 
quality, from investment grade securities to high yield securities. 
Investment grade securities are securities rated in one of the four 
highest rating categories by at least two nationally recognized 
statistical rating organizations (``Rating Organizations'') rating that 
security, such as Standard & Poor's Ratings Services (``Standard & 
Poor's'') or Moody's Investors Service, Inc. (``Moody's''), or rated in 
one of the four highest rating categories by one Rating Organization if 
it is the only Rating Organization rating that security, or unrated, if 
deemed to be of comparable quality\19\ by Cambria and traded publicly 
on the world market. The Fund, at the discretion of the Adviser, may 
retain a debt security that has been downgraded below the initial 
investment criteria.\20\
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    \19\ In determining whether a security is of ``comparable 
quality'', the Adviser will consider, for example, whether the 
issuer of the security has issued other rated securities; whether 
the obligations under the security are guaranteed by another entity 
and the rating of such guarantor (if any); whether and (if 
applicable) how the security is collateralized; other forms of 
credit enhancement (if any); the security's maturity date; liquidity 
features (if any); relevant cash flow(s); valuation features; other 
structural analysis; macroeconomic analysis and sector or industry 
analysis.
    \20\ Securities rated lower than Baa by Moody's, or equivalently 
rated by S&P or Fitch, are sometimes referred to as ``high yield 
securities'' or ``junk bonds.''
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    For securities that carry a rating assigned by a Rating 
Organization, Cambria will use the highest rating assigned by the 
Rating Organization to determine a security's credit rating. Commercial 
paper must be rated at least ``A-1'' or equivalent by a Rating 
Organization. Corporate debt obligations must be rated at least ``B-
''or equivalent by a Rating Organization. For securities that are not 
rated by a Rating Organization, Cambria's internal credit rating will 
apply and be subject to equivalent rating minimums.
    Futures. The Fund may invest in futures contracts on indices, 
currencies and commodities. The Fund will trade only futures contracts 
that are listed and traded on a U.S. board of trade. According to the 
Registration Statement, the Fund's investments in futures, will be 
subject to the limits on leverage imposed by the 1940 Act. Section 
18(f) of the 1940 Act and related Commission guidance limit the amount 
of leverage that an investment company, such as the Fund, can obtain.
    Cash and Cash Equivalents. The Fund may temporarily invest a 
portion of its assets in cash or cash equivalents pending other 
investments or to maintain liquid assets required in connection with 
some of the Fund's investments. Cash and cash equivalents include money 
market instruments, such as obligations issued or guaranteed by the 
U.S. Government, its agencies and/or instrumentalities (including 
government-sponsored enterprises), bankers' acceptances, bank 
certificates of deposit, repurchase agreements \21\ and investment 
companies that invest primarily in such instruments (i.e., money market 
funds). The Fund may hold funds in bank deposits in U.S. or foreign 
currency, including during the completion of investment programs.
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    \21\ A repurchase agreement is an agreement under which 
securities are acquired by the Fund from a securities dealer or bank 
subject to resale at an agreed upon price on a later date. The Fund 
may enter into repurchase agreements with banks and broker-dealers.
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    Investments in Other Investment Companies. The Fund may invest in 
the securities of other investment companies to the extent permitted by 
law. The Fund may make significant

[[Page 64625]]

investments in money market funds. In addition, the Trust intends to 
enter into agreements with unaffiliated ETFs that permit such 
unaffiliated ETFs to sell, and the Fund to purchase, the unaffiliated 
ETFs' shares in excess of the limits imposed by Sections 12(d)(1)(A) 
and (B) of the 1940 Act.
    Temporary Defensive Position. To respond to adverse market, 
economic, political or other conditions, the Fund may invest 100% of 
its total assets, without limitation, in high-quality debt securities 
(i.e., BBB or higher) and money market instruments (as described 
above). The Fund may be invested in these instruments for extended 
periods, depending on Cambria's assessment of market conditions.
Investment Restrictions
    The Fund may invest in the securities of other investment companies 
to the extent that such an investment would be consistent with the 
requirements of Section 12(d)(1) of the 1940 Act, or any rule, 
regulation or order of the Commission or interpretation thereof.\22\
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    \22\ 15 U.S.C. 80a-12(d)(1).
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    According to the Registration Statement, the Fund will seek to 
qualify for treatment as a Regulated Investment Company (``RIC'') under 
the Internal Revenue Code.\23\
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    \23\ 26 U.S.C. 851.
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    The Fund may hold up to an aggregate amount of 15% of its net 
assets in illiquid assets (calculated at the time of investment), 
including Rule 144A securities deemed illiquid by the Adviser \24\ and 
master demand notes, consistent with Commission guidance. The 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 assets. Illiquid assets include 
securities subject to contractual or other restrictions on resale and 
other instruments that lack readily available markets as determined in 
accordance with Commission staff guidance.\25\
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    \24\ In reaching liquidity decisions, the Adviser may consider 
the following factors: the frequency of trades and quotes for the 
security; the number of dealers willing 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 trades (e.g., the time 
needed to dispose of the security, the method of soliciting offers, 
and the mechanics of transfer).
    \25\ The Commission has stated that long-standing Commission 
guidelines have required open-end funds to hold no more than 15% of 
their net assets in illiquid securities and other illiquid assets. 
See Investment Company Act Release No. 28193 (March 11, 2008), 73 FR 
14618 (March 18, 2008), footnote 34. See also, Investment Company 
Act Release No. 5847 (October 21, 1969), 35 FR 19989 (December 31, 
1970) (Statement Regarding ``Restricted Securities''); Investment 
Company Act Release No. 18612 (March 12, 1992), 57 FR 9828 (March 
20, 1992) (Revisions of Guidelines to Form N-1A). A fund's portfolio 
security is illiquid if it cannot be disposed of in the ordinary 
course of business within seven days at approximately the value 
ascribed to it by the fund. See Investment Company Act Release No. 
14983 (March 12, 1986), 51 FR 9773 (March 21, 1986) (adopting 
amendments to Rule 2a-7 under the 1940 Act); Investment Company Act 
Release No. 17452 (April 23, 1990), 55 FR 17933 (April 30, 1990) 
(adopting Rule 144A under the 1933 Act).
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    The Fund's investments will be consistent with the Fund's 
investment objective and will not be used to achieve inverse returns or 
leveraged returns (i.e., 2Xs and 3Xs) of the Fund's broad-based 
securities market index (as defined in Form N-1A).\26\
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    \26\ The Fund's broad-based securities market index is the 
Cambria Global Value Index.
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Net Asset Value
    The net asset value (``NAV'') of Shares will be calculated each 
business day by SEI as of the close of regular trading on the New York 
Stock Exchange (``NYSE''), generally 4:00 p.m., Eastern Time on each 
day that the NYSE is open. The Fund will calculate its NAV per Share by 
taking the value of its total assets, subtracting any liabilities, and 
dividing that amount by the total number of Shares outstanding, rounded 
to the nearest cent. Expenses and fees, including the management fees, 
will be accrued daily and taken into account for purposes of 
determining NAV.
    When calculating the NAV of the Fund's Shares, investments will 
generally be valued using market valuations. Market valuations are 
generally valuations (i) obtained from an exchange, a pricing service 
or a major market maker (or dealer) or (ii) based on a price quotation 
or other equivalent indication of a value supplied by an exchange, a 
pricing service or a major market maker (or dealer), in each case as 
approved by the Trust's Board of Trustees pursuant to the Trust's 
valuation policies and procedures. Thus, to the extent that the Fund 
uses a pricing vendor approved for the Trust by the Board, whether the 
pricing vendor bases valuations upon dealer quotes, a proprietary 
analysis of the relevant market, matrix pricing, sensitivity analysis, 
a combination of the above or any other means, the price provided by 
the pricing vendor may be considered a market valuation.
    Exchange-traded equity securities, including Underlying Vehicles, 
common stocks and sponsored Depositary Receipts, as well as futures 
contracts, will be valued at the official closing price on their 
principal exchange or board of trade, or, lacking any current reported 
sale at the time of valuation, at the mean of the most recent bid and 
asked quotations on their principal exchange or board of trade. 
Unsponsored Depositary Receipts, fixed income securities (including 
bonds; U.S. Government obligations; corporate debt securities; 
securities issued by foreign governments and supra-national agencies; 
master-demand notes; Yankee dollar and Eurodollar bank certificates of 
deposit; time deposits; bankers' acceptances; commercial paper; 
inflation-indexed securities; zero coupon securities; and money market 
instruments) will be valued at the mean between the most recent bid and 
asked quotations.
    Repurchase agreements will be valued at cost. Fixed-income 
instruments maturing in 60 days or less will be valued at amortized 
cost and those maturing in excess of 60 days will be valued at the 
midpoint of bid and asked quotations. Investments in non-exchange-
traded investment companies (including money market funds) will be 
valued at their NAV.
    Any assets or liabilities denominated in currencies other than the 
U.S. dollar will be converted into U.S. dollars at the current exchange 
rate on the date of valuation as quoted by one or more third parties.
    If a market quotation is not readily available or is deemed not to 
reflect an instrument's market value, the Fund will determine its fair 
value pursuant to policies and procedures approved by the Board. The 
Fund may use fair valuation to price securities that trade on a foreign 
exchange, if any, when a significant event has occurred after the 
foreign exchange closes but before the time at which the Fund's NAV is 
calculated. In such cases, the Fund may use various criteria, including 
an evaluation of U.S. market moves after the close of foreign markets, 
in determining whether a foreign security's market price is reflective 
of market value and, if not, the fair value of the security. In 
general, in determining an instrument's fair value, the Fund may 
consider, among other things, price comparisons among multiple sources, 
corporate actions and news events, other financial indicators. Fair 
value pricing involves subjective judgments.
    Accordingly, it is possible that the fair value determination for 
an instrument is materially different than the value that could be 
realized upon its sale.

[[Page 64626]]

Creation and Redemption of Shares
    According to the Registration Statement, the Fund will sell and 
redeem Shares in aggregations of 50,000 Shares (each, a ``Creation 
Unit'') on a continuous basis through the Distributor, without a sales 
load, at the NAV next determined after receipt of an order in proper 
form on any business day. The size of a Creation Unit is subject to 
change.
    The purchase or redemption of Creation Units from the Fund must be 
effected by or through an ``Authorized Participant'' (i.e., either a 
broker-dealer or other participant in the Continuous Net Settlement 
System of the National Securities Clearing Corporation (``NSCC'')) or a 
participant in the Depository Trust Company (``DTC'') with access to 
the DTC system, and who has executed an agreement (``Participant 
Agreement'') with the Distributor that governs transactions in the 
Fund's Creation Units.
    The consideration for a Creation Unit of the Fund will be the 
``Fund Deposit''. The Fund Deposit will consist of the ``In-Kind 
Creation Basket'' and ``Cash Component'', or an all cash payment 
(``Cash Value''), as determined by Cambria to be in the best interest 
of the Fund. The Cash Component will typically include a ``Balancing 
Amount'' reflecting the difference, if any, between the NAV of a 
Creation Unit and the market value of the securities in the ``In-Kind 
Creation Basket''.
    If the NAV per Creation Unit exceeds the market value of the 
securities in the In-Kind Creation Basket, the purchaser will pay the 
Balancing Amount to the Fund. By contrast, if the NAV per Creation Unit 
is less than the market value of the securities in the In-Kind Creation 
Basket, the Fund will pay the Balancing Amount to the purchaser.
    The Transfer Agent, in a portfolio composition file sent via the 
NSCC, generally will make available on each business day, immediately 
prior to the opening of business on the Exchange (currently 9:30 a.m., 
Eastern time), a list of the names and the required number of shares of 
each security in the In-Kind Creation Basket to be included in the 
current Fund Deposit for the Fund (based on information about the 
Fund's portfolio at the end of the previous business day) (subject to 
amendment or correction). If applicable, the Transfer Agent, through 
the NSCC, also will make available on each business day, the estimated 
Cash Component or Cash Value, effective through and including the 
previous business day, per Creation Unit.
    The announced Fund Deposit will be applicable, subject to any 
adjustments as described below, for purchases of Creation Units of the 
Fund until such time as the next-announced Fund Deposit is made 
available. From day to day, the composition of the In-Kind Creation 
Basket may change as, among other things, corporate actions and 
investment decisions by Cambria are implemented for the Fund's 
portfolio. The Fund reserves the right to accept a nonconforming (i.e., 
custom) Fund Deposit.
    The Fund may, in its sole discretion, permit or require the 
substitution of an amount of cash (``cash in lieu'') to be added to the 
Cash Component to replace any security in the In-Kind Creation Basket. 
The Fund may permit or require cash in lieu when, for example, the 
securities in the In-Kind Creation Basket may not be available in 
sufficient quantity for delivery or may not be eligible for transfer 
through the systems of DTC. Similarly, the Fund may permit or require 
cash in lieu when, for example, the Authorized Participant or its 
underlying investor is restricted under U.S. or local securities law or 
policies from transacting in one or more securities in the In-Kind 
Creation Basket.\27\
---------------------------------------------------------------------------

    \27\ The Adviser represents that, to the extent the Trust 
effects the creation of Shares in cash, such transactions will be 
effected in the same manner for all Authorized Participants.
---------------------------------------------------------------------------

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

[[Page 64627]]

based on the NAV of Shares of the relevant Fund next determined after 
the redemption request is received in proper form (minus a Transaction 
Fee, including a variable charge, if applicable, as described in the 
Registration Statement).\28\
---------------------------------------------------------------------------

    \28\ The Adviser represents that, to the extent the Trust 
effects the redemption of Shares in cash, such transactions will be 
effected in the same manner for all Authorized Participants.
---------------------------------------------------------------------------

    The Fund may also, in its sole discretion, upon request of a 
shareholder, provide such redeemer a portfolio of securities that 
differs from the exact composition of the In-Kind Redemption Basket, or 
cash in lieu of some securities added to the Cash Component, but in no 
event will the total value of the securities delivered and the cash 
transmitted differ from the NAV. Redemptions of Fund Shares for the In-
Kind Redemption Basket will be subject to compliance with applicable 
federal and state securities laws and the Fund (whether or not it 
otherwise permits cash redemptions) reserves the right to redeem 
Creation Units for cash to the extent that the Trust could not lawfully 
deliver specific securities in the In-Kind Redemption Basket upon 
redemptions or could not do so without first registering the securities 
in the In-Kind Redemption Basket under such laws.
    When cash redemptions of Creation Units are available or specified 
for the Fund, they will be effected in essentially the same manner as 
in-kind redemptions. In the case of a cash redemption, the investor 
will receive the cash equivalent of the In-Kind Redemption Basket minus 
any Transaction Fees.
Availability of Information
    The Fund's website (www.cambriafunds.com), which will be publicly 
available prior to the public offering of Shares, will include a form 
of the prospectus for the Fund that may be downloaded. The Fund's 
website will include additional quantitative information updated on a 
daily basis, including, for the Fund (1) the prior business day's NAV 
and the market closing price or mid-point of the bid/ask spread at the 
time of calculation of such NAV (the ``Bid/Ask Price''),\29\ and a 
calculation of the premium and discount of the closing price or Bid/Ask 
Price against the NAV, and (2) data in chart format displaying the 
frequency distribution of discounts and premiums of the daily closing 
price or Bid/Ask Price against the NAV, within appropriate ranges, for 
each of the four previous calendar quarters. On each business day, 
before commencement of trading in Shares during Regular Trading 
Hours,\30\ the Fund will disclose on its website the Disclosed 
Portfolio as defined in BZX Rule 14.11(i)(3)(B), that will form the 
basis for the Fund's calculation of NAV at the end of the business 
day.\31\
---------------------------------------------------------------------------

    \29\ The Bid/Ask Price of the Fund will be determined using the 
midpoint 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 the Fund and their service 
providers.
    \30\ As defined in Rule 1.5(w), the term ``Regular Trading 
Hours'' means the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
    \31\ Under accounting procedures followed by the Fund, trades 
made on the prior business day (``T'') will be booked and reflected 
in NAV on the current business day (``T+1''). Accordingly, the Fund 
will be able to disclose at the beginning of the business day the 
portfolio that will form the basis for the NAV calculation at the 
end of the business day.
---------------------------------------------------------------------------

    On a daily basis, the Fund will disclose on its website the 
following information regarding each portfolio holding, as applicable 
to the type of holding: ticker symbol, CUSIP number or other 
identifier, if any; a description of the holding (including the type of 
holding); the identity of the security, commodity, index or other asset 
or instrument underlying the holding, if any; 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.
    In addition, a basket composition file, which includes the security 
names and share quantities required to be delivered in exchange for the 
Fund's Shares, together with estimates and actual cash components, will 
be publicly disseminated daily prior to the opening of BZX via NSCC. 
The basket represents one Creation Unit of the Fund.
    Investors can also obtain the Trust's Statement of Additional 
Information (``SAI''), a Fund's Shareholder Reports, and the Trust's 
Form N-CSR and Form N-SAR, filed twice a year. The Trust's SAI and 
Shareholder Reports are available free upon request from the Trust, and 
those documents and the Form N-CSR and Form N-SAR may be viewed on-
screen or downloaded from the Commission's website at www.sec.gov. 
Information regarding market price and trading volume of the Shares 
will be continually available on a real-time basis throughout the day 
on brokers' computer screens and other electronic services.
    Quotation and last sale information for the Shares will be 
available via the Exchange proprietary quote and trade services and via 
the Consolidated Tape Association (``CTA'') high-speed line.
    Intra-day price quotations on the securities and other assets held 
by the Fund will be available from major broker-dealer firms. Intra-day 
price information on such assets will also be available through free 
and subscription services that can be accessed by Authorized 
Participants and other investors. For example, pricing information for 
exchange-traded instruments (including exchange-traded equity 
securities (such as common stocks, ETNs, closed-end funds, and 
Underlying Vehicles), futures contracts and sponsored Depositary 
Receipts), will be readily available from the websites of the exchanges 
or boards of trade trading such securities or futures contracts, 
automated quotation systems, published or other public sources, and 
subscription services such as Bloomberg or Reuters. Information 
regarding the previous day's closing price and trading volume 
information for the Shares will be published daily in the financial 
section of newspapers. Pricing information for unsponsored Depositary 
Receipts, non-exchange-traded investment company securities, fixed 
income securities (including bonds; U.S. Government obligations; 
corporate debt securities; securities issued by foreign governments and 
supra-national agencies; master-demand notes; Yankee dollar and 
Eurodollar bank certificates of deposit; time deposits; bankers' 
acceptances; commercial paper; inflation-indexed securities; and zero 
coupon securities), repurchase agreements, and money market instruments 
will be available through brokers and dealers and/or subscription 
services, such as Markit, Bloomberg and Thompson Reuters. In addition, 
the Intraday Indicative Value, as defined in BZX Rule 14.11(i)(3)(C), 
will be widely disseminated at least every 15 seconds during Regular 
Trading Hours by one or more major market data vendors.\32\ The 
dissemination of the Intraday Indicative Value, together with the 
Disclosed Portfolio, will allow investors to determine the value of the 
underlying portfolio of the Fund and provide a close estimate of that 
value throughout the trading day.
---------------------------------------------------------------------------

    \32\ Currently, it is the Exchange's understanding that several 
major market data vendors display and/or make widely available 
Intraday Indicative Values taken from CTA or other data feeds.
---------------------------------------------------------------------------

    Additional information regarding the Trust and the Shares, 
including investment strategies, risks, creation and redemption 
procedures, fees, portfolio holdings, disclosure policies,

[[Page 64628]]

distributions and taxes is included in the Registration Statement.
Trading Halts
    With respect to trading halts, the Exchange may consider all 
relevant factors in exercising its discretion to halt or suspend 
trading in the Shares of the Fund.\33\ Trading in Shares of the Fund 
will be halted if the circuit breaker parameters in BZX Rule 11.18 have 
been reached. Trading also may be halted because of market conditions 
or for reasons that, in the view of the Exchange, make trading in the 
Shares inadvisable. These may include: (1) The extent to which trading 
is not occurring in the securities and/or the financial instruments 
comprising the Disclosed Portfolio of the Funds; or (2) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present. Trading in the Shares will be 
subject to BZX Rule 11.18, which sets forth circumstances under which 
Shares of the Fund may be halted.
---------------------------------------------------------------------------

    \33\ See BZX Rule 11.18.
---------------------------------------------------------------------------

Trading Rules
    The Exchange deems the Shares to be equity securities, thus 
rendering trading in the Shares subject to the Exchange's existing 
rules governing the trading of equity securities. The Exchange will 
allow trading in the Shares from 8:00 a.m. until 5:00 p.m. Eastern 
Time. The Exchange has appropriate rules to facilitate transactions in 
the Shares during all trading sessions. As provided in BZX Rule 
14.11(i)(2)(C), the minimum price variation for quoting and entry of 
orders in Managed Fund Shares traded on the Exchange is $0.01. The 
Trust is required to comply with Rule 10A-3 under the Act for the 
initial and continued listing of the Shares of the Fund. At least 
100,000 Shares will be outstanding upon the commencement of trading.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of the Shares on the Exchange during 
all trading sessions and to deter and detect violations of Exchange 
rules and the applicable federal securities laws. Trading of the Shares 
through the Exchange will be subject to the Exchange's surveillance 
procedures for derivative products, including Managed Fund Shares.
    The Exchange will communicate as needed regarding trading in the 
Shares, Underlying Vehicles, other exchange-traded equity securities, 
and futures with other markets and other entities that are members of 
the ISG, and FINRA, on behalf of the Exchange, may obtain trading 
information regarding trading in the Shares and Underlying Vehicles, 
other exchange-traded equity securities, and futures from such markets 
and other entities. In addition, the Exchange may obtain information 
regarding trading in the Shares, Underlying Vehicles, other exchange-
traded equity securities, and futures from markets and other entities 
that are members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.\34\ In addition, the 
Exchange is able to access, as needed, trade information for certain 
fixed income instruments reported to FINRA's Trade Reporting and 
Compliance Engine (``TRACE'').
---------------------------------------------------------------------------

    \34\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for each Fund may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    Not more than 10% of the net assets of the Fund in the aggregate 
invested in exchange-traded equity securities shall consist of equity 
securities whose principal market is not a member of the ISG or party 
to a CSSA with the Exchange.
    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
Information Circular
    Prior to the commencement of listing on the Exchange, the Exchange 
will inform its members in an Information Circular of the special 
characteristics and risks associated with trading the Shares. 
Specifically, the Information Circular will discuss the following: (1) 
The procedures for purchases and redemptions of Shares in Creation 
Units (and that Shares are not individually redeemable); (2) BZX Rule 
3.7, which imposes suitability obligations on Exchange members with 
respect to recommending transactions in the Shares to customers; (3) 
how information regarding the Intraday Indicative Value and the 
Disclosed Portfolio is disseminated; (4) the risks involved in trading 
the Shares during the Pre-Opening \35\ and After Hours Trading Sessions 
\36\ when an updated Intraday Indicative Value will not be calculated 
or publicly disseminated; (5) the requirement that members deliver a 
prospectus to investors purchasing newly issued Shares prior to or 
concurrently with the confirmation of a transaction; and (6) trading 
information.
---------------------------------------------------------------------------

    \35\ The Pre-Opening Session is from 8:00 a.m. to 9:30 a.m. 
Eastern Time.
    \36\ The After Hours Trading Session is from 4:00 p.m. to 5:00 
p.m. Eastern Time.
---------------------------------------------------------------------------

    In addition, the Information Circular will advise members, prior to 
the commencement of trading, of the prospectus delivery requirements 
applicable to the Fund. Members purchasing Shares from the Fund for 
resale to investors will deliver a prospectus to such investors. The 
Information Circular will also discuss any exemptive, no-action, and 
interpretive relief granted by the Commission from any rules under the 
Act.
    In addition, the Information Circular will reference that the Fund 
is subject to various fees and expenses described in the Registration 
Statement. The Information Circular will also disclose the trading 
hours of the Shares of the Fund and the applicable NAV Calculation Time 
for the Shares. The Information Circular will disclose that information 
about the Shares of the Fund will be publicly available on the Fund 
website. In addition, the Information Circular will reference that the 
Trust is subject to various fees and expenses described in the Fund 
Registration Statement.
2. Statutory Basis
    The basis under the Act for this proposed rule change is the 
requirement under Section 6(b)(5) \37\ that an exchange have rules that 
are designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to, and perfect the mechanism of a free and open market 
and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \37\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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

[[Page 64629]]

information concerning the composition and/or changes to such 
investment company portfolio. The Exchange will communicate as needed 
regarding trading in the Shares, the Underlying Vehicles, other 
exchange-traded equity securities, and futures with other markets and 
other entities that are members of the ISG, and the Exchange may obtain 
trading information regarding trading in the Shares, the Underlying 
Vehicles, other exchange-traded equity securities, and futures from 
such markets and other entities. In addition, the Exchange may obtain 
information regarding trading in the Shares, the Underlying Vehicles, 
other exchange-traded equity securities, and futures from markets and 
other entities that are members of ISG or with which the Exchange has 
in place a comprehensive surveillance sharing agreement.\38\ In 
addition, the Exchange is able to access, as needed, trade information 
for certain fixed income instruments reported to TRACE. Not more than 
10% of the net assets of the Fund in the aggregate invested in 
exchange-traded equity securities shall consist of equity securities 
whose principal market is not a member of the ISG or party to a CSSA 
with the Exchange.
---------------------------------------------------------------------------

    \38\ For a list of the current members of ISG, see 
www.isgportal.org. The Exchange notes that not all components of the 
Disclosed Portfolio for the Fund may trade on markets that are 
members of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
---------------------------------------------------------------------------

    In addition, the Exchange also has a general policy prohibiting the 
distribution of material, non-public information by its employees.
    The Adviser is not registered as a broker-dealer and is not 
affiliated with a broker-dealer. In the event that (a) the Adviser or 
any sub-adviser becomes registered as, or becomes newly affiliated 
with, a broker-dealer, or (b) any new adviser or sub-adviser is a 
registered broker-dealer or becomes affiliated with a broker-dealer, it 
will implement a fire wall with respect to its relevant personnel or 
broker dealer affiliate, as applicable, regarding access to information 
concerning the composition and/or changes to the portfolio, and will be 
subject to procedures designed to prevent the use and dissemination of 
material non-public information regarding such portfolio. The Fund may 
hold up to an aggregate amount of 15% of its net assets in illiquid 
securities (calculated at the time of investment), consistent with 
Commission guidance. The Fund's investments will be consistent with its 
respective investment objective and will not be used to enhance 
leverage.
    The proposed rule change is designed to promote just and equitable 
principles of trade and to protect investors and the public interest in 
that the Exchange will obtain a representation from the issuer of the 
Shares that the NAV per Share will be calculated daily and that the NAV 
and the Disclosed Portfolio will be made available to all market 
participants at the same time. In addition, a large amount of 
information is publicly available regarding the Funds and the Shares, 
thereby promoting market transparency. Moreover, the Intraday 
Indicative Value will be widely disseminated by one or more major 
market data vendors at least every 15 seconds during the Regular 
Trading Hours. On each business day, before commencement of trading in 
Shares in the Regular Trading on the Exchange, the Adviser will 
disclose on its website the Disclosed Portfolio that will form the 
basis for the Fund's calculation of NAV at the end of the business day.
    Quotation and last sale information for the Shares will be 
available via the Exchange proprietary quote and trade services and via 
the CTA high-speed line. Intra-day price quotations on the securities 
and other assets held by the Fund will be available from major broker-
dealer firms. Intra-day price information on such assets will also be 
available through free and subscription services that can be accessed 
by Authorized Participants and other investors. For example, pricing 
information for exchange-traded securities (including exchange-traded 
equity securities (such as common stocks and Underlying Vehicles), 
futures contracts and sponsored Depositary Receipts), will be readily 
available from the websites of the exchanges or boards of trade trading 
such securities or futures contracts, automated quotation systems, 
published or other public sources, and subscription services such as 
Bloomberg or Reuters. Information regarding the previous day's closing 
price and trading volume information for the Shares will be published 
daily in the financial section of newspapers. Pricing information for 
unsponsored Depositary Receipts, non-exchange-traded investment company 
securities, fixed income securities (including bonds; U.S. Government 
obligations; corporate debt securities; securities issued by foreign 
governments and supra-national agencies; masterdemand [sic] notes; 
Yankee dollar and Eurodollar bank certificates of deposit; time 
deposits; bankers' acceptances; commercial paper; inflation-indexed 
securities; and zero coupon securities), repurchase agreements, and 
money market instruments will be available through brokers and dealers 
and/or subscription services. Moreover, prior to the commencement of 
listing on the Exchange, the Exchange will inform its Members in an 
Information Circular of the special characteristics and risks 
associated with trading the Shares. Trading in Shares of the Fund will 
be halted under the conditions specified in BZX Rule 11.18. Trading may 
also be halted because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the Shares inadvisable. Finally, 
trading in the Shares will be subject to BZX Rule 14.11(i)(4)(B)(iv), 
which sets forth circumstances under which Shares of the Fund may be 
halted. As noted above, investors will also have ready access to 
information regarding the Fund's holdings, the Intraday Indicative 
Value, the Disclosed Portfolio, and quotation and last sale information 
of the Shares. The proposed rule change is designed to perfect the 
mechanism of a free and open market and, in general, to protect 
investors and the public interest in that it will facilitate the 
listing and trading of additional types of actively-managed exchange-
traded products that will enhance competition among market 
participants, to the benefit of investors and the marketplace. As noted 
above, the Exchange may obtain information regarding trading in the 
Shares from markets and other entities that are members of ISG or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement. In addition, as noted above, investors will have ready 
access to information regarding the Fund's holdings, the Intraday 
Indicative Value, the Disclosed Portfolio, and quotation and last sale 
information for the Shares.

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

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

[[Page 64630]]

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

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

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

    Because the proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \39\ and Rule 19b-4(f)(6) thereunder.\40\
---------------------------------------------------------------------------

    \39\ 15 U.S.C. 78s(b)(3)(A).
    \40\ 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.
---------------------------------------------------------------------------

    The Exchange has asked the Commission to waive the 30-day operative 
delay so that the proposal may become operative immediately upon 
filing. The Commission notes that BZX is requesting approval to list a 
series of Managed Fund Shares that was previously approved by the 
Commission to list and trade, and is currently listed and traded, on 
Arca and that the Exchange has represented that this proposal is 
substantively identical to the Prior Proposal, and the issuer 
represents that all material representations contained within the Prior 
Proposal remain true.\41\ Accordingly, the Commission believes that the 
proposal raises no new or novel regulatory issues and that waiver of 
the 30-day operative delay is consistent with the protection of 
investors and the public interest. The Commission therefore waives the 
30-day operative delay and designates the proposed rule change to be 
operative upon filing.\42\
---------------------------------------------------------------------------

    \41\ See supra note 7.
    \42\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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-CboeBZX-2018-085 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
    All submissions should refer to File Number SR-CboeBZX-2018-085. 
This file number should be included on the subject line if email is 
used. To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's internet website (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for website 
viewing and printing in the Commission's Public Reference Room, 100 F 
Street NE, Washington, DC 20549 on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be 
available for inspection and copying at the principal office of the 
Exchange. All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CboeBZX-2018-085 and should 
be submitted on or before January 7, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\43\
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    \43\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27206 Filed 12-14-18; 8:45 am]
 BILLING CODE 8011-01-P