[Federal Register Volume 83, Number 183 (Thursday, September 20, 2018)]
[Notices]
[Pages 47659-47662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20432]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84143; File No. SR-CboeBZX-2018-019]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order 
Granting Approval of a Proposed Rule Change, as Modified by Amendment 
No. 3, To List and Trade Shares of Eighteen ADRPLUS Funds of the 
Precidian ETFs Trust Under Rule 14.11(i), Managed Fund Shares

September 14, 2018.

I. Introduction

    On March 5, 2018, Cboe BZX Exchange, Inc. (``Exchange'' or ``BZX'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
list and trade shares (``Shares'') of eighteen ADRPLUS Funds of the 
Precidian ETFs Trust (``Trust''), under Exchange Rule 14.11(i) 
(``Managed Fund Shares''). The proposed rule change was published for 
comment in the Federal Register on March 21, 2018.\3\ On April 25, 
2018, the Commission extended the time 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\ Also on April 25, 2018, the Exchange filed 
Amendment No. 1 to the proposed rule change.\5\ On May 17, 2018, the 
Exchange filed Amendment No. 2 to the proposed rule change.\6\ On June 
19, 2018, the Commission instituted proceedings under Section 
19(b)(2)(B) of the Act \7\ to determine whether to approve or 
disapprove the proposed rule change.\8\ On August 14, 2018, the 
Exchange filed Amendment No. 3 to the proposed rule change.\9\ The 
Commission has received no comments on the proposed rule change. This 
order grants approval of the proposed rule change, as modified by 
Amendment No. 3.
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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. 82881 (March 15, 
2018), 83 FR 12449.
    \4\ See Securities Exchange Act Release No. 83102, 83 FR 19126 
(May 1, 2018).
    \5\ Amendment No. 1, which amended and replaced the proposed 
rule change in its entirety, is available at: https://www.sec.gov/comments/sr-cboebzx-2018-019/cboebzx2018019-3551361-162325.pdf.
    \6\ Amendment No. 2, which amended and replaced the proposed 
rule change in its entirety, is available at: https://www.sec.gov/comments/sr-cboebzx-2018-019/cboebzx2018019-3665011-162423.pdf.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 83467, 83 FR 29589 
(June 25, 2018).
    \9\ In Amendment No. 3, which amended and replaced, in its 
entirety, the proposed rule change as modified by Amendment No. 2, 
the Exchange: (a) Specified that the derivatives in which the Funds 
may invest are over-the-counter (``OTC'') currency swaps; (b) 
corrected references to, and specified with greater particularity, 
the Exchange requirements the Funds would not meet; (c) deleted a 
representation that the Funds may not meet the requirement of 
Exchange Rule 14.11(i)(4)(C)(iv)(b) that 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); (d) modified a trading halt 
representation to state that the Exchange will also halt trading in 
the Shares where a market-wide trading halt is declared in the 
associated Unhedged ADR (as defined herein) and that trading in the 
Shares will remain halted until trading in the Unhedged ADR resumes; 
(e) represented that Shares of the Funds would meet and be subject 
to Exchange Rule 14.11(i)(2)(C); (f) stated that each Fund expects 
to invest in excess of 95% of its net assets in the Unhedged ADRs, 
and each Fund expects that the gross notional value of the Currency 
Hedge (as defined herein) would be equal to the value of the 
Unhedged ADRs, which would be approximately 50% of the weight of the 
portfolio (including gross notional exposures); (g) addressed policy 
concerns related to the Currency Hedge held by the Funds in excess 
of the limit as provided in the Exchange Rule 14.11(i)(4)(C)(v); (h) 
modified a representation to state that the Exchange will suspend 
trading and commence delisting proceedings pursuant to Exchange Rule 
14.12 for the Shares if the Unhedged ADR held by a Fund has been 
suspended from trading or delisted by the Unhedged ADR's listing 
exchange; (i) stated that the Exchange or Financial Industry 
Regulatory Authority, Inc. (``FINRA''), on behalf of the Exchange, 
are able to access, as needed, trade information for certain fixed 
income instruments reported to the Trade Reporting and Compliance 
Engine (``TRACE''); (j) clarified a criterion regarding when an 
order to redeem creation units of a Fund would be deemed received by 
the distributor; (k) specified that the Information Circular (as 
discussed herein) will discuss how information regarding the 
Disclosed Portfolio (as defined in Exchange Rule 14.11(i)(3)(B)) is 
disseminated; and (l) made other non-substantive, technical, and 
clarifying corrections to the proposal. Because Amendment No. 3 
clarifies the derivatives in which the Funds may invest, adds 
specificity to certain requirements, made additional 
representations, and otherwise does not materially alter the 
substance of the proposed rule change or raise unique or novel 
regulatory issues under the Act, Amendment No. 3 is not subject to 
notice and comment. Amendment No. 3 to the proposed rule change is 
available at: https://www.sec.gov/comments/sr-cboebzx-2018-019/cboebzx2018019-4290642-173190.pdf.
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II. The Exchange's Description of the Proposal, as Modified by 
Amendment No. 3 \10\
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    \10\ Additional information regarding the Funds, the Trust, and 
the Shares can be found in Amendment No. 3 and the Registration 
Statement. See supra note 9 and infra note 11.
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    The Exchange proposes to list and trade the Shares under Exchange 
Rule 14.11(i), which governs the listing and trading of Managed Fund 
Shares. The Funds are a series of, and the Shares will be offered by, 
the Trust.\11\ Precidian Funds LLC (``Adviser'') will serve as the 
investment adviser to the Funds.\12\
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    \11\ The Trust is registered under the Investment Company Act of 
1940 (``1940 Act''). See Registration Statement on Form N-1A for the 
Trust, dated June 14, 2017 (File Nos. 333-171987 and 811-22524) 
(``Registration Statement''). In addition, the Exchange states that 
the Commission has issued an order granting certain exemptive relief 
to the Trust under the 1940 Act. See Investment Company Act Release 
No. 32622 (May 2, 2017) (File No. 812-14584).
    \12\ The Exchange represents that the Adviser is not a 
registered broker-dealer and is not affiliated with a broker-dealer. 
In addition, Adviser personnel who make decisions regarding a Fund's 
portfolio are subject to procedures designed to prevent the use and 
dissemination of material nonpublic information regarding the Fund's 
portfolio. The Exchange states that in the event that (a) the 
Adviser becomes registered as a broker-dealer or 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 and maintain a fire wall with respect to its 
relevant personnel or such 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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A. Description of the ADRPLUS Funds

    According to the Exchange, each Fund seeks to provide investment 
results that correspond generally, before fees and expenses, to the 
price and yield performance of a particular American Depositary 
Receipt, hedged against

[[Page 47660]]

fluctuations in the exchange rate between the U.S. dollar and the local 
currency of the foreign security underlying the American Depositary 
Receipt (``Local Currency''). For example, the Anheuser-Busch InBev SA/
NV ADRPLUS Fund seeks to provide investment results that correspond 
generally, before fees and expenses, to the price and yield performance 
of Anheuser-Busch InBev SA/NV (ADR), hedged against fluctuations in the 
exchange rate between the U.S. dollar and the euro. The following chart 
includes the underlying company and the Local Currency for each of the 
Funds.

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                Fund name                          Underlying company                   Local currency
----------------------------------------------------------------------------------------------------------------
Anheuser-Busch InBev SA/NV ADRPLUS Fund..  Anheuser-Busch InBev SA/NV.......  Euro.
AstraZeneca PLC ADRPLUS Fund.............  AstraZeneca PLC..................  British pound.
Banco Santander, S.A. ADRPLUS Fund.......  Banco Santander, S.A.............  Euro.
BP P.L.C. ADRPLUS Fund...................  BP p.l.c.........................  British pound.
British American Tobacco p.l.c. ADRPLUS    British American Tobacco p.l.c...  British pound.
 Fund.
Diageo plc ADRPLUS Fund..................  Diageo plc.......................  British pound.
GlaxoSmithKline plc ADRPLUS Fund.........  GlaxoSmithKline plc..............  British pound.
HSBC Holdings Plc ADRPLUS Fund...........  HSBC Holdings Plc................  British pound.
Mitsubishi UFJ Financial Group, Inc.       Mitsubishi UFJ Financial Group,    Japanese yen.
 ADRPLUS Fund.                              Inc.
Novartis AG ADRPLUS Fund.................  Novartis AG......................  Swiss franc.
Novo Nordisk A/S (B Shares) ADRPLUS Fund.  Novo Nordisk A/S (B Shares)......  Danish krone.
Royal Dutch Shell plc (Class A) ADRPLUS    Royal Dutch Shell plc (Class A)..  Euro.
 Fund.
Royal Dutch Shell plc (Class B) ADRPLUS    Royal Dutch Shell plc (Class B)..  British pound.
 Fund.
Sanofi ADRPLUS Fund......................  Sanofi...........................  Euro.
SAP AG ADRPLUS Fund......................  SAP AG...........................  Euro.
Total S.A. ADRPLUS Fund..................  Total S.A........................  Euro.
Toyota Motor Corporation ADRPLUS Fund....  Toyota Motor Corporation.........  Japanese yen.
Vodafone Group Plc ADRPLUS Fund..........  Vodafone Group Plc...............  British pound.
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    According to the Exchange, each Fund will hold only: (i) Shares of 
an American Depositary Receipt (``Unhedged ADR'') listed on a U.S. 
national securities exchange; (ii) OTC currency swaps that hedge 
against fluctuations in the exchange rate between the U.S. dollar and 
the Local Currency (``Currency Hedge''); and (iii) cash and cash 
equivalents.\13\
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    \13\ For purposes of this filing and consistent with Exchange 
Rule 14.11(i)(4)(C)(iii), cash equivalents are short-term 
instruments with maturities of less than three months that include 
only the following: (i) 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; (ii) certificates of 
deposit issued against funds deposited in a bank or savings and loan 
association; (iii) bankers acceptances, which are short-term credit 
instruments used to finance commercial transactions; (iv) repurchase 
agreements and reverse repurchase agreements; (v) 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; (vi) commercial paper, which are short-term unsecured 
promissory notes; and (vii) money market funds.
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    The Trust is required to comply with Rule 10A-3 under the Act \14\ 
for the initial and continued listing of the Shares of each Fund. In 
addition, the Exchange represents that the Shares of each Fund will 
meet and be subject to all other requirements of the Generic Listing 
Standards, as defined below, and other applicable continued listing 
requirements for Managed Fund Shares under Exchange Rule 14.11(i), such 
as the listing requirements regarding the Disclosed Portfolio 
(including the requirement that the Disclosed Portfolio and the net 
asset value (``NAV'') will be made available to all market participants 
at the same time); \15\ and the requirements regarding intraday 
indicative value,\16\ suspension of trading or removal,\17\ trading 
halts,\18\ disclosure,\19\ firewalls,\20\ and surveillance.\21\ 
Further, at least 100,000 Shares of each Fund will be outstanding upon 
the commencement of trading.\22\
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    \14\ 17 CFR 240.10A-3.
    \15\ See Exchange Rules 14.11(i)(4)(A)(ii) and 
14.11(i)(4)(B)(ii).
    \16\ See Exchange Rule 14.11(i)(4)(B)(i).
    \17\ See Exchange Rule 14.11(i)(4)(B)(iii).
    \18\ See Exchange Rule 14.11(i)(4)(B)(iv). The Exchange will 
also halt trading in a Fund where a market-wide trading halt is 
declared in the associated Unhedged ADR and trading in the Fund will 
remain halted until trading in the Unhedged ADR resumes.
    \19\ See Exchange Rule 14.11(i)(6).
    \20\ See Exchange Rule 14.11(i)(7).
    \21\ See Exchange Rule 14.11(i)(2)(C).
    \22\ See Exchange Rule 14.11(i)(4)(A)(i).
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B. The Exchange's Policy Discussion

    According to the Exchange, the Funds will provide investors with 
the opportunity to easily eliminate currency exposure that they may not 
even realize exists with Unhedged ADRs without having to transact in 
the currency derivatives market. The Exchange believes that this would 
confer a significant benefit to investors and the broader marketplace 
by adding transparency and simplifying the process of eliminating risk 
from an investor's portfolio.
    The Exchange believes that while the Funds would not meet the 
generic listing standards for Managed Fund Shares (``Generic Listing 
Standards''), in particular Exchange Rules 14.11(i)(4)(C)(i)(a)(3)-(4) 
\23\ and 14.11(i)(4)(C)(v),\24\ the policy issues that those rules are 
intended to address are otherwise mitigated by the structure, holdings, 
and purpose of the Funds.\25\ According to the Exchange, Exchange Rule 
14.11(i)(4)(C)(i)(a)(3) is intended to ensure that no single equity 
security constitutes too concentrated of a position in a series of 
Managed Fund Shares, and Exchange Rule 14.11(i)(4)(C)(i)(a)(4) is 
similarly intended to diversify the holdings of a series of Managed 
Fund Shares. The Exchange believes that these policy concerns are 
mitigated as they relate to the Funds because: (i) The Unhedged ADR 
will meet the market cap and liquidity requirements of Exchange Rules 
14.11(i)(4)(C)(i)(a)(1) and (2); and

[[Page 47661]]

(ii) the intended function of the Funds is to eliminate currency 
exposure risk for a single security, which means that the Funds are 
necessarily concentrated. The Exchange also believes that the creation 
and redemption mechanism will provide a near frictionless arbitrage 
opportunity that would minimize the risk of manipulation of either the 
Unhedged ADR or the applicable Fund and, thus, mitigate the 
manipulation concerns that Exchange Rules 14.11(i)(4)(C)(i)(a)(3) and 
(4) were intended to address. According to the Exchange, the policy 
issues that Exchange Rule 14.11(i)(4)(C)(v) is intended to address are 
also mitigated by the way that the Funds would use OTC currency swaps. 
The Exchange states that the rule is intended to mitigate concerns 
regarding the manipulability of a particular underlying reference asset 
or derivatives contract and to minimize counterparty risk. While the 
Currency Hedge positions taken by the Funds would not meet the Generic 
Listing Standards related to OTC derivatives holdings, the Exchange 
believes that the policy concerns about limiting exposure to 
potentially manipulable underlying reference assets that the Generic 
Listing Standards are intended to address are otherwise mitigated by 
the liquidity in the underlying spot currency market. The Exchange 
represents that the Funds will attempt to limit counterparty risk in 
OTC currency swaps by: (i) Entering into such contracts only with 
counterparties the Advisor believes are creditworthy; (ii) limiting a 
Fund's exposure to each counterparty; and (iii) monitoring the 
creditworthiness of each counterparty and the Fund's exposure to each 
counterparty on an ongoing basis. The Exchange believes that 
counterparty risk associated with OTC currency swaps is further 
mitigated because the currency swaps are settled on a daily basis and, 
thus, the counterparty risk for any particular swap is limited in two 
ways--first, counterparty credit exposure is always limited to a 24 
hour period and, second, the exposure of the swap is only to the 
movement in the currencies over that same 24 hour period.
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    \23\ The Exchange represents that the Funds will not meet: (i) 
The requirement under Exchange Rule 14.11(i)(4)(C)(i)(a)(3) that the 
most heavily weighted component stock shall not exceed 30% of the 
equity weight of the portfolio; and (ii) the requirement under 
Exchange Rule 14.11(i)(4)(C)(i)(a)(4) that the equity portion of the 
portfolio shall include a minimum of 13 component stocks.
    \24\ The Exchange represents that the Funds may not meet the 
requirement under Exchange Rule 14.11(i)(4)(C)(v) that the aggregate 
gross notional value of OTC derivatives shall not exceed 20% of the 
weight of the portfolio (including gross notional exposures).
    \25\ The Exchange represents that each Fund expects to invest in 
excess of 95% of its net assets in the Unhedged ADRs. Each Fund 
expects that the gross notional value of the Currency Hedge would be 
equal to the value of the Unhedged ADRs, which would be 
approximately 50% of the weight of the portfolio (including gross 
notional exposures).
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the Exchange's 
proposal to list and trade the Shares, as modified by Amendment No. 3, 
is consistent with the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\26\ In particular, the 
Commission finds that the proposed rule change is consistent with 
Section 6(b)(5) of the Act,\27\ 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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    \26\ 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).
    \27\ 15 U.S.C. 78f(b)(5).
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    The Commission also finds that the proposal to list and trade the 
Shares on the Exchange is consistent with Section 11A(a)(1)(C)(iii) of 
the Act \28\ which sets forth Congress' finding that it is in the 
public interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure the availability to 
brokers, dealers and investors of information with respect to 
quotations for and transactions in securities. As noted above, each 
Fund will comply with the requirements for Managed Fund Shares under 
Exchange Rule 14.11(i) related to Disclosed Portfolio, NAV (including 
the requirement that the Disclosed Portfolio and the NAV will be made 
available to all market participants at the same time), and the 
intraday indicative value. The intraday, closing and settlement prices 
of exchange-traded portfolio assets, which include only Unhedged ADRs, 
will be readily available from the securities exchanges on which such 
Unhedged ADRs are traded, automated quotation systems, published or 
other public sources, or online information services such as Bloomberg 
or Reuters. Intraday price quotations on OTC currency swaps are 
available from major broker-dealer firms and from third-parties, which 
may provide prices free with a time delay or in real-time for a paid 
fee. Price information for cash equivalents will be available from 
major market data vendors. Each Fund's Disclosed Portfolio will be 
available on the issuer's website (www.precidian.com) free of charge. 
Information regarding market price and trading volume of the Shares 
will be continuously available throughout the day on brokers' computer 
screens and other electronic services. Information regarding the 
previous day's closing price and trading volume for the Shares will be 
published daily in the financial section of newspapers. Each Fund's 
website will include the prospectus for the applicable Fund and 
additional information related to NAV and other applicable quantitative 
information.
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    \28\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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    The Commission further believes that the proposal to list and trade 
the Shares is reasonably designed to promote fair disclosure of 
information that may be necessary to price the Shares appropriately and 
to prevent trading when a reasonable degree of transparency cannot be 
assured. Trading in the Shares may be halted for market conditions or 
for reasons that, in the view of the Exchange, make trading 
inadvisable. The Exchange will also halt trading in a Fund where a 
market-wide trading halt is declared in the associated Unhedged ADR, 
and trading in the Fund will remain halted until trading in the 
Unhedged ADR resumes.
    In addition, the Exchange represents that the Adviser is not a 
registered broker-dealer and is not affiliated with a broker-
dealer.\29\
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    \29\ See supra note 12. The Commission also notes that that an 
investment adviser to an open-end fund is required to be registered 
under the Investment Advisers Act of 1940 (``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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    Trading in the Shares will be subject to the Exchange's 
surveillance procedures, which 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. The Exchange represents that trading in the 
Shares will be subject to the Exchange's existing rules governing the 
trading of equity securities.
    All Unhedged ADRs will be listed on a U.S. national securities 
exchange, all of which are members of the Intermarket Surveillance 
Group (``ISG'') or are exchanges with which the Exchange has in place a 
comprehensive surveillance

[[Page 47662]]

sharing agreement.\30\ The Exchange may obtain information regarding 
trading in the Funds and Unhedged ADRs held by each Fund via the ISG, 
from other exchanges that are members or affiliates of the ISG, or with 
which the Exchange has entered into a comprehensive surveillance 
sharing agreement. Additionally, the Exchange or FINRA, on behalf of 
the Exchange, are able to access, as needed, trade information for 
certain fixed income instruments reported to TRACE.
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    \30\ For a list of the current members and affiliate members of 
ISG, see www.isgportal.com. The Exchange notes that not all 
components of the Disclosed Portfolio for a Fund may trade on 
markets that are members of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
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    The Exchange represents that it 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. 
In support of this proposal, the Exchange has made the following 
representations:
    (1) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions.
    (2) Trading of the Shares through the Exchange will be subject to 
the Exchange's surveillance procedures for derivative products, 
including Managed Fund Shares, and these 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.
    (3) Each of the Funds will hold only: (i) Shares of an Unhedged ADR 
listed on a U.S. national securities exchange; (ii) OTC currency swaps 
that hedge against fluctuations in the exchange rate between the U.S. 
dollar and the Local Currency; and (iii) cash and cash equivalents.
    (4) The U.S. national securities exchanges on which the Unhedged 
ADRs will be listed are members of ISG or are exchanges with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
The Exchange may obtain information regarding trading in the Funds and 
Unhedged ADRs held by each Fund via the ISG, from other exchanges that 
are members or affiliates of the ISG, or with which the Exchange has 
entered into a comprehensive surveillance sharing agreement. 
Additionally, the Exchange or FINRA, on behalf of the Exchange, are 
able to access, as needed, trade information for certain fixed income 
instruments reported to TRACE.
    (5) The Funds will attempt to limit counterparty risk in OTC 
currency swaps by: (i) Entering into such contracts only with 
counterparties the Advisor believes are creditworthy; (ii) limiting a 
Fund's exposure to each counterparty; and (iii) monitoring the 
creditworthiness of each counterparty and the Fund's exposure to each 
counterparty on an ongoing basis.
    (6) Other than Exchange Rules 14.11(i)(4)(C)(i)(a)(3)-(4) and 
14.11(i)(4)(C)(v), the Shares of each Fund will meet and be subject to 
all requirements of the Generic Listing Standards and other applicable 
continued listing requirements for Managed Fund Shares under Exchange 
Rule 14.11(i), such as the listing requirements regarding the Disclosed 
Portfolio (including the requirement that the Disclosed Portfolio and 
NAV will be made available to all market participants at the same 
time); and the requirements regarding intraday indicative value, 
suspension of trading or removal, trading halts, disclosure, firewalls, 
and surveillance.
    (7) Prior to the commencement of trading, the Exchange will inform 
its members in an Information Circular of the special characteristics 
and risks associated with trading the Shares. Specifically, the 
Information Circular will discuss the following: (i) The procedures for 
purchases and redemptions of Shares in Creation Units (and that Shares 
are not individually redeemable); (ii) Exchange Rule 3.7, which imposes 
suitability obligations on Exchange members with respect to 
recommending transactions in the Shares to customers; (iii) how 
information regarding the intraday indicative value and Disclosed 
Portfolio is disseminated; (iv) the risks involved in trading the 
Shares during the Pre-Opening and After Hours Trading Sessions when an 
updated intraday indicative value will not be calculated or publicly 
disseminated; (v) the requirement that members deliver a prospectus to 
investors purchasing newly issued Shares prior to or concurrently with 
the confirmation of a transaction; and (vi) trading information.
    (8) The Exchange will suspend trading and commence delisting 
proceedings pursuant to Exchange Rule 14.12 for a Fund if the Unhedged 
ADR held by a Fund has been suspended from trading or delisted by the 
Unhedged ADR's listing exchange.
    (9) The Trust is required to comply with Rule 10A-3 under the Act 
\31\ for the initial and continued listing of the Shares of each Fund.
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    \31\ 17 CFR 240.10A-3.
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    (10) A minimum of 100,000 Shares for each Fund will be outstanding 
at the commencement of trading on the Exchange.
    In addition, the Exchange represents that all statements and 
representations made in this filing regarding the description of the 
portfolio or reference assets, limitations on portfolio holdings or 
reference assets, dissemination and availability of reference assets 
and intraday indicative values, and the applicability of Exchange 
listing rules specified in this filing shall constitute continued 
listing requirements for the Funds. In addition, the Trust, on behalf 
of the Funds, has represented to the Exchange that it will advise the 
Exchange of any failure by a Fund or the Shares to comply with the 
continued listing requirements, and, pursuant to its obligations under 
Section 19(g)(1) of the Act, the Exchange will surveil for compliance 
with the continued listing requirements. If a Fund or the Shares are 
not in compliance with the applicable listing requirements, the 
Exchange will commence delisting procedures under Exchange Rule 14.12.
    This approval order is based on all of the Exchange's 
representations, including those set forth above and in Amendment No. 
3. For the foregoing reasons, the Commission finds that the proposed 
rule change, as modified by Amendment No. 3, is consistent with Section 
6(b)(5) of the Act \32\ and Section 11A(a)(1)(C)(iii) of the Act \33\ 
and the rules and regulations thereunder applicable to a national 
securities exchange.\34\
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    \32\ 15 U.S.C. 78f(b)(5).
    \33\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
    \34\ As noted above, on June 19, 2018, the Commission instituted 
proceedings to determine whether to approve or disapprove the 
proposed rule change. No comments were received in connection with 
that order instituting proceedings. See supra note 7.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\35\ that the proposed rule change (SR-CboeBZX-2018-019), as 
modified by Amendment No. 3, be, and it hereby is, approved.
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    \35\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\36\
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    \36\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-20432 Filed 9-19-18; 8:45 am]
 BILLING CODE 8011-01-P


