Document ID: SEC-2017-0706-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Investors Exchange LLC
Posted Date: 2017-05-03T04:00Z

[Federal Register Volume 82, Number 84 (Wednesday, May 3, 2017)]
[Notices]
[Pages 20648-20652]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-08902]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80545; File No. SR-IEX-2017-03]

Self-Regulatory Organizations; Investors Exchange LLC; Notice of 
Filing of Amendment No. 1 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 1, To Amend IEX Rule 
16.135 To Adopt Generic Listing Standards for Managed Fund Shares

April 27, 2017.

I. Introduction

    On January 19, 2017, Investors Exchange LLC (``IEX'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend IEX Rule 16.135 to adopt generic listing 
standards for Managed Fund Shares. The proposed

[[Page 20649]]

rule change was published for comment in the Federal Register on 
February 8, 2017.\3\ On March 16, 2017, the Commission designated a 
longer period within which to approve the proposed rule change, 
disapprove the proposed rule change, or institute proceedings to 
determine whether to approve or disapprove the proposed rule change.\4\ 
On March 21, 2017, IEX filed Amendment No. 1 to the proposed rule 
change.\5\ The Commission has received no comments on the proposal. The 
Commission is publishing this notice to solicit comments on Amendment 
No. 1 from interested persons and is approving the proposed rule 
change, as modified by Amendment No. 1, on an accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 79940 (February 2, 
2017), 82 FR 9858.
    \4\ See Securities Exchange Act Release No. 80257, 82 FR 14779 
(Mar. 22, 2017). (designating May 9, 2017 as the date by which the 
Commission shall either approve or disapprove, or institute 
proceedings to determine whether to disapprove, the proposed rule 
change).
    \5\ In Amendment No. 1, the Exchange proposes to add certain 
continued listing requirements for Managed Fund Shares based on 
those adopted by the Nasdaq Stock Market LLC (``Nasdaq''). The 
Exchange also makes technical changes to the requirements in IEX 
Rule 16.135 regarding firewalls and written surveillance procedures. 
Amendment No. 1 is available at: https://www.sec.gov/comments/sr-iex-2017-03/iex201703-1708027-150143.pdf.
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II. Description of the Proposed Rule Change

    The Exchange proposes to adopt generic listing criteria and 
continued listing standards for Managed Fund Shares. The Exchange 
represents that the proposed rule change is substantially identical to 
Nasdaq Rule 5735.\6\
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    \6\ See Amendment No. 1, supra note 5, at 33.
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A. Proposed Generic Listing Criteria

    IEX proposes generic listing criteria that would permit the 
Exchange to list and trade Managed Fund Shares pursuant to Rule 19b-
4(e),\7\ rather than by filing a proposed rule change under Section 
19(b) of the Act.\8\ The Exchange's listing standards establish 
requirements for the various types of assets that may be held in the 
portfolio of a generically listed, actively managed exchange traded 
fund (``Portfolio'').
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    \7\ See 17 CFR 240.19b-4(e). Rule 19b-4(e) permits self-
regulatory organizations (``SROs'') to list and trade new derivative 
securities products that comply with existing SRO trading rules, 
procedures, surveillance programs, and listing standards, without 
submitting a proposed rule change under Section 19(b). See 
Securities Exchange Act Release No. 40761 (Dec. 8, 1998), 63 FR 
70952 (Dec. 22, 1998).
    \8\ The Exchange would file separate proposed rule changes 
before the listing and trading of Managed Fund Shares that do not 
satisfy the proposed generic listing criteria. See proposed IEX Rule 
16.135(b)(1).
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1. Equity Components of the Portfolio
    Proposed IEX Rule 16.135(b)(1)(A) establishes the criteria 
applicable to the equity securities included in a Portfolio. Equity 
securities include the following kinds of securities: U.S. Component 
Stock (defined in IEX Rule 16.105); Non-U.S. Component Stock, (defined 
in IEX Rule 16.105); Exchange Traded Derivative Securities (defined in 
proposed IEX Rule 16.135(c)(6)); \9\ Linked Securities (defined in IEX 
Rule 16.110); and each of the equivalent security types listed on 
another national securities exchange. Additionally, proposed IEX Rule 
16.135(b)(1)(A) provides that no more than 25% of the equity weight of 
the Portfolio can include leveraged or inverse-leveraged Exchange 
Traded Derivative Securities or Linked Securities and that, to the 
extent a Portfolio includes convertible securities, the equity 
securities into which such securities are converted must meet the 
criteria of proposed IEX Rule 16.135(b)(1)(A) after converting.
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    \9\ Proposed IEX Rule 16.135(c)(6) defines ``Exchange Traded 
Derivative Securities'' as the securities described in IEX Rules 
16.105(a) (Portfolio Depository Receipts); 16.105(b) (Index Fund 
Shares); 16.120 (Trust Issued Receipts); 16.111(d) (Commodity-Based 
Trust Shares); 16.111(e) (Currency Trust Shares); 16.111(f) 
(Commodity Index Trust Shares); 16.111(g) (Commodity Futures Trust 
Shares); 16.111(h) (Partnership Units); 16.111(i) (Trust Units); 
16.135 (Managed Fund Shares); and 16.111(j) (Managed Trust 
Securities).
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    Proposed IEX Rule 16.135(b)(1)(A)(i) requires that U.S. Component 
Stocks (except as mentioned below) meet the following criteria 
initially and on a continuing basis:
    (1) Component stocks (excluding Exchange Traded Derivative 
Securities and Linked Securities) that in the aggregate account for at 
least 90% of the equity weight of the Portfolio (excluding Exchange 
Traded Derivative Securities and Linked Securities) each shall have a 
minimum market value of at least $75 million;
    (2) Component stocks (excluding Exchange Traded Derivative 
Securities and Linked Securities) that in the aggregate account for at 
least 70% of the equity weight of the Portfolio (excluding Exchange 
Traded Derivative Securities and Linked Securities) each shall have a 
minimum monthly trading volume of 250,000 shares, or minimum notional 
volume traded per month of $25,000,000, averaged over the previous six 
months;
    (3) The most heavily weighted component stock (excluding Exchange 
Traded Derivative Securities and Linked Securities) must not exceed 30% 
of the equity weight of the Portfolio, and, to the extent applicable, 
the five most heavily weighted component stocks (excluding Exchange 
Traded Derivative Securities and Linked Securities) must not exceed 65% 
of the equity weight of the Portfolio;
    (4) Where the equity portion of the Portfolio does not include Non-
U.S. Component Stocks, the equity portion of the Portfolio shall 
include a minimum of 13 component stocks; provided, however, that there 
would be no minimum number of component stocks if (a) one or more 
series of Exchange Traded Derivative Securities or Linked Securities 
constitute, at least in part, components underlying a series of Managed 
Fund Shares, or (b) one or more series of Exchange Traded Derivative 
Securities or Linked Securities account for 100% of the equity weight 
of the Portfolio of a series of Managed Fund Shares;
    (5) Except as provided in proposed IEX Rule 16.135(b)(1)(A)(i), 
equity securities in the Portfolio must be U.S. Component Stocks listed 
on a national securities exchange and must be NMS Stocks as defined in 
Rule 600 of Regulation NMS; and
    (6) American Depositary Receipts (``ADRs'') may be exchange traded 
or non-exchange traded, but no more than 10% of the equity weight of 
the Portfolio shall consist of non-exchange traded ADRs.
    Proposed IEX Rule 16.135(b)(1)(A)(ii) requires that Non-U.S. 
Component Stocks must meet the following criteria initially and on a 
continuing basis:
    (1) Non-U.S. Component Stocks each shall have a minimum market 
value of at least $100 million;
    (2) Non-U.S. Component Stocks each shall have a minimum global 
monthly trading volume of 250,000 shares, or minimum global notional 
volume traded per month of $25,000,000, averaged over the last six 
months;
    (3) The most heavily weighted Non-U.S. Component Stock shall not 
exceed 25% of the equity weight of the Portfolio, and, to the extent 
applicable, the five most heavily weighted Non-U.S. Component Stocks 
shall not exceed 60% of the equity weight of the Portfolio;
    (4) Where the equity portion of the Portfolio includes Non-U.S. 
Component Stocks, the equity portion of the Portfolio shall include a 
minimum of 20 component stocks; provided, however, that there shall be 
no minimum number of component stocks if (a) one or more series of 
Exchange Traded Derivative Securities or Linked Securities constitute, 
at least in part, components

[[Page 20650]]

underlying a series of Managed Fund Shares, or (b) one or more series 
of Exchange Traded Derivative Securities or Linked Securities account 
for 100% of the equity weight of the Portfolio of a series of Managed 
Fund Shares; and
    (5) Each Non-U.S. Component Stock shall be listed and traded on an 
exchange that has last-sale reporting.
2. Fixed Income Components of the Portfolio
    Proposed IEX Rule 16.135(b)(1)(B) establishes criteria for fixed 
income securities that are included in a Portfolio. Fixed income 
securities are debt securities that are notes, bonds, debentures, or 
evidence of indebtedness that include, but are not limited to, U.S. 
Department of Treasury securities (``Treasury Securities''), 
government-sponsored entity securities (``GSE Securities''), municipal 
securities, trust preferred securities, supranational debt and debt of 
a foreign country or a subdivision thereof, investment grade and high 
yield corporate debt, bank loans, mortgage and asset backed securities, 
and commercial paper.\10\ To the extent that a Portfolio includes 
convertible securities, the fixed income securities into which such 
securities are converted shall meet the criteria of proposed IEX Rule 
16.135(b)(1)(B) after converting.\11\
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    \10\ See proposed IEX Rule 16.135(b)(1)(B).
    \11\ See id.
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    Under proposed IEX Rule 16.135(b)(1)(B), fixed income securities 
that are part of a Portfolio must satisfy the following criteria 
initially and on a continuing basis:
    (1) Components that in the aggregate account for at least 75% of 
the fixed income weight of the Portfolio must each have a minimum 
original principal amount outstanding of $100 million or more;
    (2) No component fixed-income security (excluding Treasury 
Securities and GSE Securities) shall represent more than 30% of the 
fixed income weight of the Portfolio, and the five most heavily 
weighted fixed income securities in the Portfolio (excluding Treasury 
Securities and GSE Securities) shall not in the aggregate account for 
more than 65% of the fixed income weight of the Portfolio;
    (3) A Portfolio that includes fixed income securities (excluding 
exempted securities) shall include a minimum of 13 non-affiliated 
issuers; provided, however, that there shall be no minimum number of 
non-affiliated issuers required for fixed income securities if at least 
70% of the weight of the Portfolio consists of equity securities as 
described in IEX Rule 16.135(b)(1)(A);
    (4) Component securities that in aggregate account for at least 90% 
of the fixed income weight of the Portfolio must be: (a) From issuers 
that are required to file reports pursuant to Sections 13 and 15(d) of 
the Act; (b) from issuers each of which has a worldwide market value of 
its outstanding common equity held by non-affiliates of $700 million or 
more; (c) from issuers each of which has outstanding securities that 
are notes, bonds, debentures, or evidence of indebtedness having a 
total remaining principal amount of at least $1 billion; (d) exempted 
securities as defined in Section 3(a)(12) of the Act; or (e) from 
issuers that are a government of a foreign country or a political 
subdivision of a foreign country; and
    (5) Non-agency, non-GSE, and privately issued mortgage-related and 
other asset-backed securities shall not account, in the aggregate, for 
more than 20% of the weight of the fixed income portion of the 
Portfolio.
3. Cash and Cash Equivalent Portfolio Components
    Proposed IEX Rule 16.135(b)(1)(C) provides that a Portfolio may 
include cash and cash equivalents. Cash equivalents are defined as 
short-term instruments with maturities of less than three months.\12\ 
The Exchange defines short-term instruments to include the following: 
(1) U.S. Government securities, including bills, notes, and bonds 
differing as to maturity and rates of interest, which are either issued 
or guaranteed by the U.S. Treasury or by U.S. Government agencies or 
instrumentalities; (2) certificates of deposit issued against funds 
deposited in a bank or savings and loan association; (3) bankers' 
acceptances, which are short-term credit instruments used to finance 
commercial transactions; (4) repurchase agreements and reverse 
repurchase agreements; (5) bank time deposits, which are monies kept on 
deposit with banks or savings and loan associations for a stated period 
of time at a fixed rate of interest; (6) commercial paper, which are 
short-term unsecured promissory notes; and (7) money market funds.\13\ 
The Exchange does not propose to limit to the amount of cash or cash 
equivalents that may be held in a Portfolio.\14\
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    \12\ See proposed IEX Rule 16.135(b)(1)(C).
    \13\ See proposed IEX Rule 16.135(b)(1)(C)(ii).
    \14\ See proposed IEX Rule 16.135(b)(1)(C)(i).
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4. Derivatives in the Portfolio
    Proposed IEX Rule 16.135(b)(1)(D) establishes criteria for the 
portion of a Portfolio that consists of listed derivatives, such as 
futures, options, and swaps overlying commodities, currencies, 
financial instruments (e.g., stocks, fixed income securities, interest 
rates, and volatility), or a basket or index of any of the foregoing. 
The Exchange does not propose to limit the percentage of a Portfolio 
that may be composed of such holdings, provided that, in the aggregate, 
at least 90% of the weight of holdings in listed derivatives 
(calculated using the aggregate gross notional value) must, on both an 
initial and continuing basis, consist of futures, options, and swaps 
for which the Exchange may obtain information via the Intermarket 
Surveillance Group from other members or affiliates or for which the 
principal market is a market with which the Exchange has a 
comprehensive surveillance sharing agreement (``CSSA'').\15\ 
Additionally, the aggregate gross notional value of listed derivatives 
based on any five or fewer underlying reference assets shall not exceed 
65% of the weight of the Portfolio (including gross notional 
exposures), and the aggregate gross notional value of listed 
derivatives based on any single underlying reference asset shall not 
exceed 30% of the weight of the Portfolio (including gross notional 
exposures).\16\
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    \15\ See proposed IEX Rule 16.135(b)(1)(D)(i).
    \16\ See proposed IEX Rule 16.135(b)(1)(D)(ii).
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    Proposed IEX Rule 16.135(b)(1)(E) establishes a limit on over-the-
counter (``OTC'') derivatives. Specifically, no more than 20% of the 
weight of the Portfolio may be invested in OTC derivatives.\17\ For 
purposes of calculating this limitation, a Portfolio's investment in 
OTC derivatives will be calculated as the aggregate gross notional 
value of the OTC derivatives.\18\
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    \17\ OTC derivatives include: forwards, options, and swaps 
overlying commodities, currencies, financial instruments (e.g., 
stocks, fixed income securities, interest rates, and volatility), or 
a basket or index of any of the foregoing. See proposed IEX Rule 
16.135(b)(1)(E).
    \18\ See id.
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    Finally, proposed IEX Rule 16.135(b)(1)(F) provides that, to the 
extent that listed or OTC derivatives are used to gain exposure to 
individual equities and/or fixed income securities, or to indexes of 
equities and/or fixed income securities, the aggregate gross notional 
value of such exposure shall meet the criteria set forth in IEX Rules 
16.135(b)(1)(A) and 16.135(b)(1)(B), respectively.

[[Page 20651]]

B. Other Proposed Changes to IEX Rule 16.135

    With respect to proposals to list and trade shares of actively 
managed funds that do not satisfy the proposed generic listing 
criteria, proposed IEX Rule 16.135(b)(1) provides that statements or 
representations in those 19b-4s regarding the following constitute 
continued listing standards: (1) The description of the portfolio; (2) 
limitations on portfolio holdings or reference assets; (3) 
dissemination and availability of the reference asset or intraday 
indicative values; or (4) the applicability of IEX rules and 
surveillance procedures.
    The Exchange also proposes to expand to definition of ``Disclosed 
Portfolio'' to require that the Web site for each series of Managed 
Fund Shares must disclose the following information, to the extent 
applicable: ticker symbol, CUSIP or other identifier, a description of 
the holding, identity of the asset upon which the derivative is based, 
the strike price for any options, the quantity of each security or 
other asset held as measured by select metrics, maturity date, coupon 
rate, effective date, market value, and percentage weight of the 
holding in the portfolio.\19\
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    \19\ See proposed IEX Rule 16.135(c)(2).
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    Additionally, the Exchange proposes to amend the continued listing 
requirements in Rule 16.135(d)(2)(A) by changing the requirement that 
an Intraday Indicative Value (``IIV'') for Managed Fund Shares be 
widely disseminated by one or more major market data vendors at least 
every 15 seconds during the time when the Managed Fund Shares trade on 
the Exchange to a requirement that an IIV be widely disseminated by one 
or more major market data vendors at least every 15 seconds during the 
Regular Market Session, as defined in IEX Rule 1.160(gg).
    The Exchange proposes to require that every issue of Managed Fund 
Shares have a stated investment objective and that it be adhered to 
under normal market conditions.\20\
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    \20\ See proposed IEX Rule 16.135(d)(1)(C). ``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 a natural 
or man-made disaster, act of God, armed conflict, act of terrorism, 
riot or labor disruption, or any similar intervening circumstance. 
See proposed IEX Rule 16.135(c)(5).
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    Further, the Exchange also seeks to amend Rule 16.135(d)(2)(C) to 
provide that IEX will consider suspension of trading and will initiate 
delisting proceedings under the IEX Rule Series 14.500 with respect to 
a series of Managed Fund Shares (rather than only considering removing 
a series from listing) under the following new or revised 
circumstances:
    1. If, following the initial twelve-month period after commencement 
of trading on IEX of a series of Managed Fund Shares, there are fewer 
than 50 beneficial holders of the series of Managed Fund Shares.
    2. If an interruption to the dissemination of the value of the IIV 
persists past the trading day in which it occurred or is no longer 
calculated or available.
    3. If the Disclosed Portfolio is not made available to all market 
participants at the same time.
    4. If the series is not in compliance with any statements or 
representations included in the applicable rule proposal under Section 
19(b) of the Act regarding: (a) The description of the portfolio or 
reference assets; (b) limitations on portfolio holdings or reference 
assets; (c) dissemination and availability of the reference asset or 
intraday indicative values; or (d) the applicability of IEX rules and 
surveillance procedures.
    5. If any of the requirements of IEX Rule 16.135 are not 
continuously maintained.
    Further, the Exchange proposes to amend Rule 16.135(g) to provide 
that, if an investment adviser to the investment company issuing 
Managed Fund Shares is affiliated with a broker-dealer, the investment 
adviser must erect and maintain 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.

III. Discussion and Commission's Findings

    After careful review, the Commission finds that the Exchange's 
proposal to amend IEX Rule 16.135 to, among other things, adopt generic 
listing criteria and continued listing requirements, is consistent with 
the Act and the rules and regulations thereunder applicable to a 
national securities exchange.\21\ In particular, the Commission finds 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Act,\22\ which requires, among other things, that the Exchange's rules 
be designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest.
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    \21\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \22\ 15 U.S.C. 78f(b)(5).
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    IEX's proposal is substantively identical with respect to Managed 
Fund Shares to proposals recently approved by the Commission (``Prior 
Orders'').\23\ Accordingly, for the reasons discussed in Prior Orders, 
the Commission finds that the proposed rule change, as modified by 
Amendment No. 1, is consistent with Section 6(b)(5) of the Act \24\ and 
the rules and regulations thereunder applicable to a national 
securities exchange.
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    \23\ See Securities Exchange Act Release Nos. 78918 (Sep. 23, 
2016), 81 FR 67033 (Sep. 29, 2016) (SR-NASDAQ-2016-104); 78396 (Jul. 
22, 2016), 81 FR 49698 (Jul. 28, 2016) (SR-BATS-2015-100); and 78397 
(Jul. 22, 2016), 81 FR 49320 (Jul. 27, 2016) (SR-NYSEArca-2015-110) 
(orders approving generic listing standards for Managed Fund 
Shares). See also Securities Exchange Act Release Nos. 80189 (Mar. 
9, 2017), 82 FR 13889 (Mar. 15, 2017) (SR-NYSEArca-2017-01); 80169 
(Mar. 7, 2017), 82 FR 13536 (Mar. 13, 2017) (SR-BatsBZX-2016-80); 
and 79784 (Jan. 12, 2017), 82 FR 6664 (Jan. 19, 2017) (SR-NASDAQ-
2016-135) (orders approving certain continued listing standards).
    \24\ 15 U.S.C. 78f(b)(5).
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    In support of its proposal, the Exchange represents the following:
    (1) Managed Fund Shares listed and traded on IEX will conform to 
the initial and continued listing criteria under Rule 16.135;
    (2) The Exchange's surveillance procedures are adequate to continue 
to properly monitor the trading of the Managed Fund Shares in all 
trading sessions and to deter and detect violations of Exchange rules; 
\25\
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    \25\ Specifically, the Exchange intends to utilize its existing 
surveillance procedures applicable to derivative products, which 
will include Managed Fund Shares, to monitor trading in the Managed 
Fund Shares.
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    (3) Prior to the commencement of trading of a particular series of 
Managed Fund Shares, the Exchange will inform its members in an 
information circular (``Circular'') of the special characteristics and 
risks associated with trading the Managed Fund Shares, including 
procedures for purchases and redemptions of Managed Fund Shares, 
suitability requirements under Rules 3.150 and 3.170, the risks 
involved in trading the Managed Fund Shares during the Pre-Market and 
Post-Market Sessions when an updated IIV will not be calculated or 
publicly disseminated, information regarding the IIV and the Disclosed 
Portfolio, prospectus delivery requirements, and other trading 
information; \26\
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    \26\ In addition, the Circular will disclose that the Managed 
Fund Shares are subject to various fees and expenses, as described 
in the applicable registration statement, and will discuss any 
exemptive, no-action, and interpretive relief granted by the 
Commission from any rules under the Act. Further, the Circular will 
disclose that the net asset value for the Managed Fund Shares will 
be calculated after 4 p.m., ET, each trading day.

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[[Page 20652]]

    (4) The issuer of a series of Managed Fund Shares will be required 
to comply with Rule 10A-3 under the Act for the initial and continued 
listing of Managed Fund Shares, as provided under the IEX Rule Series 
14.400;
    (5) The Exchange, on a periodic basis and no less than annually, 
will review issues of Managed Fund Shares generically listed pursuant 
to Rule 16.135 and will provide a report to the Regulatory Oversight 
Committee of the Exchange's Board of Directors regarding the Exchange's 
findings;
    (6) The Exchange will provide the Commission staff with a report 
each calendar quarter that includes the following information for 
issues of Managed Fund Shares listed during such calendar quarter under 
Rule 16.135(b)(1): (a) Trading symbol and date of listing on the 
Exchange; (b) the number of active authorized participants and a 
description of any failure of an issue of Managed Fund Shares or of an 
authorized participant to deliver shares, cash, or cash and financial 
instruments in connection with creation or redemption orders; and (c) a 
description of any failure of an issue of Managed Fund Shares to comply 
with Rule 16.135;
    (7) Prior to listing pursuant to proposed Rule 16.135(b)(1), an 
issuer would be required to represent to the Exchange that it will 
advise the Exchange of any failure by a series of Managed Fund Shares 
to comply with the continued listing requirements;
    (8) Pursuant to its obligations under Section 19(g)(1) of the Act, 
the Exchange will monitor for compliance with the continued listing 
requirements; and
    (9) If a managed fund is not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under IEX Rule Series 14.500.

This approval order is based on all of the Exchange's representations, 
including those set forth above and in Amendment No. 1. For the 
foregoing reasons, the Commission finds that the proposed rule change, 
as modified by Amendment No. 1, is consistent with Section 6(b)(5) of 
the Act \27\ and the rules and regulations thereunder applicable to a 
national securities exchange.
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    \27\ 15 U.S.C. 78f(b)(5).
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IV. Accelerated Approval of Amendment No. 1

    As noted above, in Amendment No. 1, the Exchange proposed to adopt 
certain continued listing requirements for Managed Fund Shares. The 
Commission believes that the changes to the Managed Fund Shares listing 
standard proposed in Amendment No. 1: (1) Clarify how the Exchange will 
interpret and administer its listing requirements; (2) make Managed 
Fund Shares listed on the Exchange less susceptible to manipulation by 
adding the firewall provision discussed above; and (3) enhance 
consistency between the Exchange's Managed Fund Shares listing criteria 
and the requirements for Managed Fund Shares recently adopted by other 
national securities exchanges. Accordingly, the Commission finds good 
cause, pursuant to Section 19(b)(2) of the Act, to approve the proposed 
rule change, as modified by Amendment No. 1, on an accelerated basis.

V. Solicitation of Comments on Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning whether Amendment No. 1 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-IEX-2017-03 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-IEX-2017-03. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-IEX-2017-03 and should be 
submitted on or before May 24, 2017.

VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\28\ that the proposed rule change (SR-IEX-2017-03), as modified by 
Amendment No. 1, be, and it hereby is, approved on an accelerated 
basis.\29\
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    \28\ 15 U.S.C. 78s(b)(2).
    \29\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-08902 Filed 5-2-17; 8:45 am]
 BILLING CODE 8011-01-P