[Federal Register Volume 85, Number 99 (Thursday, May 21, 2020)]
[Notices]
[Pages 30990-31005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10932]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88887; File No. SR-CboeBZX-2019-107]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of Amendment No. 5 and Order Granting Accelerated Approval of a 
Proposed Rule Change, as Modified by Amendment No. 5, To Adopt Rule 
14.11(m), Tracking Fund Shares, and To List and Trade Shares of the 
Fidelity Blue Chip Value ETF, Fidelity Blue Chip Growth ETF, and 
Fidelity New Millennium ETF

May 15, 2020.

I. Introduction

    On December 12, 2019, 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'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to adopt BZX Rule 14.11(m) and to 
list and trade shares (``Shares'') of the Fidelity Value ETF, Fidelity 
Growth ETF, and Fidelity Opportunistic ETF (each a ``Fund,'' and, 
collectively, ``Funds''), each a series of the Fidelity Covington Trust 
(``Trust''), under proposed BZX Rule 14.11(m). The proposed rule change 
was published for comment in the Federal Register on December 31, 
2019.\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. 87856 (December 23, 
2019), 84 FR 72414.
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    On February 12, 2020, the Exchange filed Amendment No. 1 to the 
proposed rule change, which replaced and superseded the proposed rule 
change as originally filed.\4\ On February 13, 2020, pursuant to 
Section 19(b)(2) of the Act,\5\ 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 
disapprove the proposed rule change.\6\ On March 26, 2020, the 
Commission published Amendment No. 1 for notice and comment and 
instituted proceedings under Section 19(b)(2)(B) of

[[Page 30991]]

the Act \7\ to determine whether to approve or disapprove the proposed 
rule change.\8\ On April 7, 2020, the Exchange filed Amendment No. 3, 
which replaced and superseded the proposed rule change, as amended by 
Amendment No. 1.\9\ On May 12, 2020, the Exchange filed Amendment No. 4 
to the proposed rule change, which replaced and superseded the proposed 
rule change as amended by Amendment No. 3.\10\ On May 14, 2020, the 
Exchange filed Amendment No. 5 to the proposed rule change, which 
replaced and superseded the proposed rule change as amended by 
Amendment No. 4.\11\ The Commission has received no comments on the 
proposed rule change. The Commission is publishing this notice to 
solicit comments on the proposed rule change, as modified by Amendment 
No. 5, from interested persons and is approving the proposed rule 
change, as modified by Amendment No. 5, on an accelerated basis.
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    \4\ Amendment No. 1 is available on the Commission's website at 
https://www.sec.gov/comments/sr-cboebzx-2019-107/srcboebzx2019107-6984660-214616.pdf.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 88195, 85 FR 9888 
(February 20, 2020). The Commission designated March 30, 2020, as 
the date by which the Commission shall approve or disapprove, or 
institute proceedings to determine whether to disapprove, the 
proposed rule change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 88481, 85 FR 18304 
(April 1, 2020).
    \9\ Amendment No. 3 is available on the Commission's website at 
https://www.sec.gov/comments/sr-cboebzx-2019-107/srcboebzx2019107-7055624-215408.pdf. The Exchange filed and withdrew Amendment No. 2 
on April 7, 2020.
    \10\ Amendment No. 4 is available on the Commission's website at 
https://www.sec.gov/comments/sr-cboebzx-2019-107/srcboebzx2019107-7180931-216798.pdf.
    \11\ Amendment No. 5 is available on the Commission's website at 
https://www.sec.gov/comments/sr-cboebzx-2019-107/srcboebzx2019107-7196701-216862.pdf.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change, as Modified by Amendment 
No. 5

    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
    This Amendment No. 5 to SR-CboeBZX-2019-107 amends and replaces in 
its entirety the proposal as amended by Amendment No. 4, which was 
submitted on May 12, 2020, which amended and replaced in its entirety 
Amendment No. 3, which was submitted on April 7, 2020, and amended and 
replaced in its entirety Amendment No. 1, which was submitted on 
February 12, 2020, and amended and replaced in its entirety the 
proposal as originally submitted on December 12, 2019.\12\ The Exchange 
submits this Amendment No. 5 in order to clarify certain points and add 
additional details to the proposal.
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    \12\ The Exchange notes that it submitted and subsequently 
withdrew Amendment No. 2 on April 7, 2020.
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    The Exchange proposes to add new Rule 14.11(m) for the purpose of 
permitting the listing and trading, or trading pursuant to unlisted 
trading privileges, of Tracking Fund Shares, which are securities 
issued by an actively managed open-end management investment 
company.\13\
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    \13\ The basis of this proposal are several applications for 
exemptive relief that were filed with the Commission and for which 
public notice was issued on November 14, 2019 and subsequent order 
granting certain exemptive relief to, among others, Fidelity 
Management & Research Company and FMR Co., Inc., Fidelity Beach 
Street Trust, and Fidelity Distributors Corporation (File No. 812-
14364), issued on December 10, 2019 (the ``Application,'' 
``Notice,'' and ``Order,'' respectively, and, collectively, the 
``Exemptive Order''). See Investment Company Act Release Nos. 33683 
(November 14, 2019), 84 FR 64140 (November 20, 2019) (the Notice) 
and 33712 (the Order). The Order specifically notes that ``granting 
the requested exemptions is appropriate in and consistent with the 
public interest and consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the 
Act. It is further found that the terms of the proposed 
transactions, including the consideration to be paid or received, 
are reasonable and fair and do not involve overreaching on the part 
of any person concerned, and that the proposed transactions are 
consistent with the policy of each registered investment company 
concerned and with the general purposes of the Act.'' The Exchange 
notes that it also referred to the application for exemptive relief 
orders (collectively, with the Application, the ``Proxy 
Applications'') and notices thereof (collectively, with the Notice, 
the ``Proxy Notices'') for T. Rowe Price Associates, Inc. and T. 
Rowe Price Equity Series, Inc. (File No. 812-14214 and Investment 
Company Act Release Nos. 33685 and 33713), Natixis ETF Trust II, et 
al. (File No. 812-14870 and Investment Company Act Release Nos. 
33684 and 33711), Blue Tractor ETF Trust and Blue Tractor Group, LLC 
(File No. 812-14625 and Investment Company Act Release Nos. 33682 
and 33710), and Gabelli ETFs Trust, et al. (File No. 812-15036 and 
Investment Company Act Release Nos. 33681 and 33708). While there 
are certain differences between the applications, the Exchange 
believes that each would qualify as Tracking Fund Shares under 
proposed Rule 14.11(m).
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Proposed Rule 14.11(m)
    Proposed Rule 14.11(m)(3)(A) provides that the term ``Tracking Fund 
Share'' means a security that: (i) Represents an interest in an 
investment company registered under the Investment Company Act of 1940 
(``Investment Company'') organized as an open-end management investment 
company, that invests in a portfolio of securities selected by the 
Investment Company's investment adviser consistent with the Investment 
Company's investment objectives and policies; (ii) is issued in a 
specified aggregate minimum number in return for a deposit of a 
specified Tracking Basket and/or a cash amount with a value equal to 
the next determined Net Asset Value (``NAV''); (iii) when aggregated in 
the same specified minimum number, may be redeemed at a holder's 
request, which holder will be paid a specified Tracking Basket and/or a 
cash amount with a value equal to the next determined NAV; and (iv) the 
portfolio holdings for which are disclosed within at least 60 days 
following the end of every fiscal quarter.
    Proposed Rule 14.11(m)(1) provides that the Exchange will consider 
for trading, whether by listing or pursuant to unlisted trading 
privileges, Tracking Fund Shares that meet the criteria of this Rule.
    Proposed Rule 14.11(m)(2) provides that this proposed Rule is 
applicable only to Tracking Fund Shares. Except to the extent 
inconsistent with this Rule, or unless the context otherwise requires, 
the rules and procedures of the Board of Directors shall be applicable 
to the trading on the Exchange of such securities. Tracking Fund Shares 
are included within the definition of ``security'' or ``securities'' as 
such terms are used in the Rules of the Exchange.
    Proposed Rule 14.11(m)(2)(A)-(C) provide that the Exchange will 
file separate proposals under Section 19(b) of the Act before the 
listing of Tracking Fund Shares; and that transactions in Tracking Fund 
Shares will occur throughout the Exchange's trading hours; the minimum 
price variation for quoting and entry of orders in Tracking Fund Shares 
is $0.01.
    Proposed Rule 14.11(m)(2)(D) provides that the Exchange will 
implement and maintain written surveillance procedures for Tracking 
Fund Shares and as part of these surveillance procedures, the 
Investment Company's investment adviser will upon request by the 
Exchange or FINRA, on behalf of the Exchange, make available to the 
Exchange or FINRA the daily Fund Portfolio of each series of Tracking 
Fund Shares.
    Proposed Rule 14.11(m)(2)(E) provides that if the investment 
adviser to the Investment Company issuing Tracking Fund Shares is 
registered as a broker-dealer or is affiliated with a broker-dealer, 
such investment adviser will erect and maintain a ``fire wall'' between 
the investment adviser and

[[Page 30992]]

personnel of the broker-dealer or broker-dealer affiliate, as 
applicable, with respect to access to information concerning the 
composition of and/or changes to the Fund Portfolio and/or the Tracking 
Basket. Any person related to the investment adviser or Investment 
Company who makes decisions pertaining to the Investment Company's Fund 
Portfolio and/or the Tracking Basket or has access to nonpublic 
information regarding the Fund Portfolio and/or the Tracking Basket or 
changes thereto must be subject to procedures designed to prevent the 
use and dissemination of material nonpublic information regarding the 
Fund Portfolio and/or the Tracking Basket or changes thereto.
    Proposed Rule 14.11(m)(2)(F) provides that any person or entity, 
including a custodian, Reporting Authority, distributor, or 
administrator, who has access to nonpublic information regarding the 
Fund Portfolio or the Tracking Basket or changes thereto, must be 
subject to procedures designed to prevent the use and dissemination of 
material nonpublic information regarding the applicable Fund Portfolio 
or the Tracking Basket or changes thereto. Moreover, if any such person 
or entity is registered as a broker-dealer or affiliated with a broker-
dealer, such person or entity will erect and maintain a ``fire wall'' 
between the person or entity and the broker-dealer with respect to 
access to information concerning the composition and/or changes to such 
Fund Portfolio or Tracking Basket.
    Proposed Rule 14.11(m)(3)(B) provides that the term ``Fund 
Portfolio'' means the identities and quantities of the securities and 
other assets held by the Investment Company that will form the basis 
for the Investment Company's calculation of NAV at the end of the 
business day.
    Proposed Rule 14.11(m)(3)(C) provides that the term ``Reporting 
Authority'' in respect of a particular series of Tracking Fund Shares 
means the Exchange, an institution, or a reporting service designated 
by the Exchange or by the exchange that lists a particular series of 
Tracking Fund Shares (if the Exchange is trading such series pursuant 
to unlisted trading privileges) as the official source for calculating 
and reporting information relating to such series, including, but not 
limited to, the Tracking Basket; the Fund Portfolio; the amount of any 
cash distribution to holders of Tracking Fund Shares, NAV, or other 
information relating to the issuance, redemption or trading of Tracking 
Fund Shares. A series of Tracking Fund Shares may have more than one 
Reporting Authority, each having different functions.
    Proposed Rule 14.11(m)(3)(D) provides that the term ``Normal Market 
Conditions'' includes, but is not limited to, the absence of trading 
halts in the applicable financial markets generally; operational issues 
(e.g., systems failure) causing dissemination of inaccurate market 
information; or force majeure type events such as natural or manmade 
disaster, act of God, armed conflict, act of terrorism, riot or labor 
disruption or any similar intervening circumstance.
    Proposed Rule 14.11(m)(3)(E) provides that the term ``Tracking 
Basket'' means the identities and quantities of the securities and 
other assets included in a basket that is designed to closely track the 
daily performance of the Fund Portfolio, as provided in the exemptive 
relief under the 1940 Act applicable to a series of Tracking Fund 
Shares. The website for each series of Tracking Fund Shares shall 
disclose the following information regarding the Tracking Basket as 
required under this Rule 14.11(m), to the extent applicable: (i) Ticker 
symbol; (ii) CUSIP or other identifier; (iii) Description of holding; 
(iv) Quantity of each security or other asset held; and (v) Percentage 
weight of the holding in the portfolio.
    Proposed Rule 14.11(m)(4)(A) provides the initial listing criteria 
for a series of Tracking Fund Shares, which include the following: (A) 
Each series of Tracking Fund Shares will be listed and traded on the 
Exchange subject to application of the following initial listing 
criteria: (i) For each series, the Exchange will establish a minimum 
number of Tracking Fund Shares required to be outstanding at the time 
of commencement of trading on the Exchange; (ii) the Exchange will 
obtain a representation from the issuer of each series of Tracking Fund 
Shares that the NAV per share for the series will be calculated daily 
and that each of the following will be made available to all market 
participants at the same time when disclosed: the NAV, the Tracking 
Basket, and the Fund Portfolio; and (iii) all Tracking Fund Shares 
shall have a stated investment objective, which shall be adhered to 
under Normal Market Conditions.
    Proposed Rule 14.11(m)(4)(B) provides that each series of Tracking 
Fund Shares will be listed and traded on the Exchange subject to 
application of the following continued listing criteria: (i) The 
Tracking Basket will be publicly disseminated at least once daily and 
will be made available to all market participants at the same time; and 
(ii) the Fund Portfolio will at a minimum be publicly disclosed within 
at least 60 days following the end of every fiscal quarter and will be 
made available to all market participants at the same time; (iii) upon 
termination of an Investment Company, the Exchange requires that 
Tracking Fund Shares issued in connection with such entity be removed 
from listing on the Exchange; and (iv) voting rights shall be as set 
forth in the applicable Investment Company prospectus or Statement of 
Additional Information.
    Additionally, proposed Rule 14.11(m)(4)(B)(iii) provides that the 
Exchange will consider the suspension of trading in and will commence 
delisting proceedings for a series of Tracking Fund Shares pursuant to 
Rule 14.12 under any of the following circumstances: (a) If, following 
the initial twelve-month period after commencement of trading on the 
Exchange of a series of Tracking Fund Shares, there are fewer than 50 
beneficial holders of the series of Tracking Fund Shares for 30 or more 
consecutive trading days; (b) if either the Tracking Basket or Fund 
Portfolio is not made available to all market participants at the same 
time; (c) if the Investment Company issuing the Tracking Fund Shares 
has failed to file any filings required by the Commission or if the 
Exchange is aware that the Investment Company is not in compliance with 
the conditions of any exemptive order or no-action relief granted by 
the Commission or the Commission Staff under the 1940 Act to the 
Investment Company with respect to the series of Tracking Fund Shares; 
(d) if any of the requirements set forth in this rule are not 
continuously maintained; (e) if any of the applicable Continued Listing 
Representations for the issue of Tracking Fund Shares are not 
continuously met; or (f) if such other event shall occur or condition 
exists which, in the opinion of the Exchange, makes further dealings on 
the Exchange inadvisable. Proposed Rule 14.11(m)(4)(B)(iv) provides 
that (a) the Exchange may consider all relevant factors in exercising 
its discretion to halt trading in a series of Tracking Fund Shares. 
Trading may be halted because of market conditions or for reasons that, 
in the view of the Exchange, make trading in the series of Tracking 
Fund Shares inadvisable. These may include: (i) The extent to which 
trading is not occurring in the securities and/or the financial 
instruments composing the Tracking Basket or Fund Portfolio; or (ii) 
whether other unusual conditions or

[[Page 30993]]

circumstances detrimental to the maintenance of a fair and orderly 
market are present; and (b) if the Exchange becomes aware that one of 
the following is not being made available to all market participants at 
the same time: the net asset value, the Tracking Basket, or the Fund 
Portfolio with respect to a series of Tracking Fund Shares, then the 
Exchange will halt trading in such series until such time as the net 
asset value, the Tracking Basket, or the Fund Portfolio is available to 
all market participants, as applicable.
    Proposed Rule 14.11(m)(5) provides that neither the Exchange, the 
Reporting Authority, when the Exchange is acting in the capacity of a 
Reporting Authority, nor any agent of the Exchange shall have any 
liability for damages, claims, losses or expenses caused by any errors, 
omissions, or delays in calculating or disseminating any current 
portfolio value; the current value of the portfolio of securities 
required to be deposited to the open-end management investment company 
in connection with issuance of Tracking Fund Shares; the amount of any 
dividend equivalent payment or cash distribution to holders of Tracking 
Fund Shares; NAV; or other information relating to the purchase, 
redemption, or trading of Tracking Fund Shares, resulting from any 
negligent act or omission by the Exchange, the Reporting Authority when 
the Exchange is acting in the capacity of a Reporting Authority, or any 
agent of the Exchange, or any act, condition, or cause beyond the 
reasonable control of the Exchange, its agent, or the Reporting 
Authority, when the Exchange is acting in the capacity of a Reporting 
Authority, including, but not limited to, an act of God; fire; flood; 
extraordinary weather conditions; war; insurrection; riot; strike; 
accident; action of government; communications or power failure; 
equipment or software malfunction; or any error, omission, or delay in 
the reports of transactions in one or more underlying securities.
Policy Discussion--Proposed Rule 14.11(m)
    The purpose of the structure of Tracking Fund Shares is to provide 
investors with the traditional benefits of ETFs \14\ while protecting 
funds from the potential for front running or free riding of portfolio 
transactions, which could adversely impact the performance of a fund. 
While each series of Tracking Fund Shares will be actively managed and, 
to that extent, similar to Managed Fund Shares (as defined in Rule 
14.11(i)), Tracking Fund Shares differ from Managed Fund Shares in one 
key way.\15\ A series of Tracking Fund Shares will disclose the 
Tracking Basket on a daily basis which, as described above, is designed 
to closely track the performance of the holdings of the Investment 
Company, instead of the actual holdings of the Investment Company, as 
provided by a series of Managed Fund Shares.\16\
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    \14\ For purposes of this filing, the term ETF will include only 
Portfolio Depositary Receipts as defined in Rule 14.11(b), Index 
Fund Shares as defined in Rule 14.11(c), Managed Fund Shares as 
defined in Rule 14.11(i), and ETF Shares as defined in Rule 
14.11(l), along with the equivalent products defined in the rules of 
other national securities exchanges.
    \15\ The Exchange notes that there is one additional substantive 
difference between proposed Rule 14.11(m) and Rule 14.11(i): 
Proposed Rule 14.11(m) would require a rule filing under Section 
19(b) prior to listing any product on the Exchange meaning that no 
series of Tracking Fund Shares could be listed on the Exchange 
pursuant to Rule 19b-4(e) and there are no proposed rules comparable 
to the quantitative portfolio holdings standards from Rule 14.11(i).
    \16\ Proposed Rule 14.11(m)(4)(B)(iii) will, however, require 
each series of Tracking Fund Shares to at a minimum disclose the 
entirety of its portfolio holdings within at least 60 days following 
the end of every fiscal quarter in accordance with normal disclosure 
requirements otherwise applicable to open-end investment companies 
registered under the 1940 Act.
    Form N-PORT requires reporting of a fund's complete portfolio 
holdings on a position-by-position basis on a quarterly basis within 
60 days after fiscal quarter end. Investors can obtain a fund's 
Statement of Additional Information, its Shareholder Reports, its 
Form N-CSR, filed twice a year, and its Form N-CEN, filed annually. 
A fund's SAI and Shareholder Reports are available free upon request 
from the Investment Company, and those documents and the Form N-
PORT, Form N-CSR, and Form N-CEN may be viewed on-screen or 
downloaded from the Commission's website at www.sec.gov.
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    For the arbitrage mechanism for any ETF to function effectively, 
authorized participants, arbitrageurs, and other market participants 
(collectively, ``Market Makers'') need sufficient information to 
accurately value shares of a fund to transact in both the primary and 
secondary market. The Tracking Basket is designed to closely track the 
daily performance of the Fund Portfolio.
    Given the correlation between the Tracking Basket and the Fund 
Portfolio,\17\ the Exchange believes that the Tracking Basket would 
serve as a pricing signal to identify arbitrage opportunities when its 
value and the secondary market price of the shares of a series of 
Tracking Fund Shares diverge. If shares began trading at a discount to 
the Tracking Basket, an authorized participant could purchase the 
shares in secondary market transactions and, after accumulating enough 
shares to comprise a creation unit,\18\ redeem them in exchange for a 
redemption basket reflecting the NAV per share of the Fund Portfolio. 
The purchases of shares would reduce the supply of shares in the 
market, and thus tend to drive up the shares' market price closer to 
the fund's NAV. Alternatively, if shares are trading at a premium, the 
transactions in the arbitrage process are reversed. Market Makers also 
can engage in arbitrage without using the creation or redemption 
processes. For example, if a fund is trading at a premium to the 
Tracking Basket, Market Makers may sell shares short and take a long 
position in the Tracking Basket securities, wait for the trading prices 
to move toward parity, and then close out the positions in both the 
shares and the securities, to realize a profit from the relative 
movement of their trading prices. Similarly, a Market Maker could buy 
shares and take a short position in the Tracking Basket securities in 
an attempt to profit when shares are trading at a discount to the 
Tracking Basket.
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    \17\ As provided in the Proxy Notices, funds and their 
respective advisers will take remedial actions as necessary if the 
funds do not function as anticipated. For the first three years 
after a launch, a fund will establish certain thresholds for its 
level of tracking error, premiums/discounts, and spreads, so that, 
upon the fund's crossing a threshold, the adviser will promptly call 
a meeting of the fund's board of directors and will present the 
board or committee with recommendations for appropriate remedial 
measures. The board would then consider the continuing viability of 
the fund, whether shareholders are being harmed, and what, if any, 
action would be appropriate. Specifically, the Proxy Applications 
and Proxy Notices provide that such a meeting would occur: (1) If 
the tracking error exceeds 1%; or (2) if, for 30 or more days in any 
quarter or 15 days in a row (a) the absolute difference between 
either the market closing price or bid/ask price, on one hand, and 
NAV, on the other, exceeds 2%, or (b) the bid/ask spread exceeds 2%.
    \18\ Tracking Fund Shares will be purchased or redeemed only in 
large aggregations, or ``creation units,'' and the Tracking Basket 
will constitute the names and quantities of instruments for both 
purchases and redemptions of Creation Units.
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    Overall, the Exchange believes that the arbitrage process would 
operate similarly to the arbitrage process in place today for existing 
ETFs that use in-kind baskets for creations and redemptions that do not 
reflect the ETF's complete holdings but nonetheless produce performance 
that is highly correlated to the performance of the ETF's actual 
portfolio. The Exchange has observed highly efficient trading of ETFs 
that invest in markets where security values are not fully known at the 
time of ETF trading, and where a perfect hedge is not possible, such as 
international equity and fixed-income ETFs. While the ability to value 
and hedge many of these existing ETFs in the market may be limited, 
such ETFs have generally maintained an effective arbitrage mechanism 
and traded efficiently.

[[Page 30994]]

    As provided in the Notice, the Commission believes that an 
arbitrage mechanism based largely on the combination of a daily 
disclosed Tracking Basket and at a minimum quarterly disclosure of the 
Fund Portfolio can work in an efficient manner to maintain a fund's 
secondary market prices close to its NAV.\19\ Consistent with the 
Commission's view, the Exchange believes that the arbitrage mechanism 
for Tracking Fund Shares will be sufficient to keep secondary market 
prices in line with NAV.
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    \19\ See Notice at 64144. The Commission also notes that as long 
as arbitrage continues to keep the Fund's secondary market price and 
NAV close, and does so efficiently so that spreads remain narrow, 
that investors would benefit from the opportunity to invest in 
active strategies through a vehicle that offers the traditional 
benefits of ETFs. See Id., at 64145.
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    The Exchange notes that a significant amount of information about 
each fund and its Fund Portfolio will be publicly available at all 
times. Each series will disclose the Tracking Basket, which is designed 
to closely track the daily performance of the Fund Portfolio, on a 
daily basis. Each series of Tracking Fund Shares will at a minimum 
publicly disclose the entirety of its portfolio holdings, including the 
name, identifier, market value and weight of each security and 
instrument in the portfolio within at least 60 days following the end 
of every fiscal quarter in a manner consistent with normal disclosure 
requirements otherwise applicable to open-end investment companies 
registered under the 1940 Act. The website will include additional 
quantitative information updated on a daily basis, including, on a per 
share basis for each fund, the prior business day's NAV and the closing 
price or bid/ask price at the time of calculation of such NAV, and a 
calculation of the premium or discount of the closing price or bid/ask 
price against such NAV. The website will also disclose the percentage 
weight overlap between the holdings of the Tracking Basket compared to 
the Fund Holdings for the prior business day and any information 
regarding the bid/ask spread for each fund as may be required for other 
ETFs under Rule 6c-11 under the 1940 Act, as amended. The website and 
information will be publicly available at no charge.
    While not providing daily disclosure of the Fund Portfolio could 
open the door to potential information leakage and misuse of material 
non-public information, the Exchange believes that proposed Rules 
14.11(m)(2)(E) and (F) provide sufficient safeguards to prevent such 
leakage and misuse of information. The Exchange believes that these 
proposed rules are designed to prevent fraudulent and manipulative acts 
and practices related to the listing and trading of Tracking Fund 
Shares because they provide meaningful requirements about both the data 
that will be made publicly available about the Shares as well as the 
information that will only be available to certain parties and the 
controls on such information. Specifically, the Exchange believes that 
the requirements related to information protection enumerated under 
proposed Rule 14.11(m)(2)(F) will act as a strong safeguard against any 
misuse and improper dissemination of information related to a Fund 
Portfolio, the Tracking Basket, or changes thereto. The requirement 
that any person or entity, including a custodian, Reporting Authority, 
distributor, or administrator, who has access to nonpublic information 
regarding the Fund Portfolio or the Tracking Basket or changes thereto, 
must be subject to procedures designed to prevent the use and 
dissemination of material nonpublic information regarding the 
applicable Fund Portfolio or the Tracking Basket or changes thereto 
will act to prevent any individual or entity from sharing such 
information externally. Additionally, the requirement that any such 
person or entity that is registered as a broker-dealer or affiliated 
with a broker-dealer will erect and maintain a ``fire wall'' between 
the person or entity and the broker-dealer with respect to access to 
information concerning the composition and/or changes to such Fund 
Portfolio or Tracking Basket will act to make sure that no entity will 
be able to misuse the data for their own purposes. As such, the 
Exchange believes that this proposal is designed to prevent fraudulent 
and manipulative acts and practices.
Surveillance
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of Tracking Fund 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 
Tracking Fund Shares through the Exchange will be subject to the 
Exchange's surveillance procedures for derivative products. The 
Exchange will require the issuer of each series of Tracking Fund Shares 
listed on the Exchange to represent to the Exchange that it will advise 
the Exchange of any failure by a Fund to comply with the continued 
listing requirements, and, pursuant to its obligations under Section 
19(g)(1) of the Exchange Act, the Exchange will surveil for compliance 
with the continued listing requirements. If a Fund is not in compliance 
with the applicable listing requirements, the Exchange will commence 
delisting procedures under Exchange Rule 14.12. In addition, the 
Exchange also has a general policy prohibiting the distribution of 
material, non-public information by its employees.
    As noted in proposed Rule 14.11(m)(2)(D), the Investment Company's 
investment adviser will upon request make available to the Exchange 
and/or FINRA, on behalf of the Exchange, the daily Fund Portfolio of 
each series of Tracking Fund Shares. The Exchange believes that this is 
appropriate because it will provide the Exchange or FINRA, on behalf of 
the Exchange, with access to the daily Fund Portfolio of any series of 
Tracking Fund Shares upon request on an as needed basis. The Exchange 
believes that the ability to access the information on an as needed 
basis will provide it with sufficient information to perform the 
necessary regulatory functions associated with listing and trading 
series of Tracking Fund Shares on the Exchange, including the ability 
to monitor compliance with the initial and continued listing 
requirements as well as the ability to surveil for manipulation of the 
shares.
Trading Halts
    As described above, proposed Rule 14.11(m)(4)(B)(iv) provides that 
(a) the Exchange may consider all relevant factors in exercising its 
discretion to halt trading in a series of Tracking Fund Shares. Trading 
may be halted because of market conditions or for reasons that, in the 
view of the Exchange, make trading in the series of Tracking Fund 
Shares inadvisable. These may include: (i) The extent to which trading 
is not occurring in the securities and/or the financial instruments 
composing the Tracking Basket or Fund Portfolio; or (ii) whether other 
unusual conditions or circumstances detrimental to the maintenance of a 
fair and orderly market are present; and (b) if the Exchange becomes 
aware that one of the following is not being made available to all 
market participants at the same time: The net asset value, the Tracking 
Basket, or the Fund Portfolio with respect to a series of Tracking Fund 
Shares, then the Exchange will halt trading in such series until such 
time as the net asset value, the Tracking Basket, or the Fund Portfolio 
is available to all market participants, as applicable.

[[Page 30995]]

Availability of Information
    As noted above, Form N-PORT requires reporting of a fund's complete 
portfolio holdings on a position-by-position basis on a quarterly basis 
within 60 days after fiscal quarter end. Investors can obtain a fund's 
Statement of Additional Information, its Shareholder Reports, its Form 
N-CSR, filed twice a year, and its Form N-CEN, filed annually. A fund's 
SAI and Shareholder Reports are available free upon request from the 
Investment Company, and those documents and the Form N-PORT, Form N-
CSR, and Form N-CEN may be viewed on-screen or downloaded from the 
Commission's website at www.sec.gov. The Exchange also notes that the 
Proxy Applications provide that an issuer will comply with Regulation 
Fair Disclosure, which prohibits selective disclosure of any material 
non-public information, which otherwise do not apply to issuers of 
Tracking Fund Shares.
    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. 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. Quotation and last sale information for the 
shares will be available via the Consolidated Tape Association 
(``CTA'') high-speed line.
Trading Rules
    The Exchange deems Tracking Fund Shares to be equity securities, 
thus rendering trading in the shares subject to the Exchange's existing 
rules governing the trading of equity securities.\20\ As provided in 
proposed Rule 14.11(m)(2)(C), the minimum price variation for quoting 
and entry of orders in securities traded on the Exchange is $0.01. The 
Exchange has appropriate rules to facilitate trading in Tracking Fund 
Shares during all trading sessions.
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    \20\ With respect to trading in Tracking Fund Shares, all of the 
BZX Member obligations relating to product description and 
prospectus delivery requirements will continue to apply in 
accordance with Exchange rules and federal securities laws, and the 
Exchange will continue to monitor its Members for compliance with 
such requirements.
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Fidelity Blue Chip Value ETF, Fidelity Blue Chip Growth ETF, and 
Fidelity New Millennium ETF
    The Shares are offered by the Trust, which is organized as a 
business trust under the laws of The Commonwealth of Massachusetts. The 
Trust is registered with the Commission as an open-end investment 
company and will file a registration statement on behalf of the Funds 
on Form N-1A (``Registration Statement'') with the Commission.\21\ 
Fidelity Management & Research Company or FMR Co., Inc. (the 
``Adviser'') will be the investment adviser to the Funds. The Adviser 
is not registered as a broker-dealer, but is affiliated with numerous 
broker-dealers. The Adviser represents that a fire wall exists and will 
be maintained between the respective personnel at the Adviser and 
affiliated broker-dealers with respect to access to information 
concerning the composition and/or changes to each Fund's portfolio and 
Tracking Basket. Personnel who make decisions on a Fund's portfolio 
composition and/or Tracking Basket or who have access to nonpublic 
information regarding the Fund Portfolio and/or the Tracking Basket or 
changes thereto are subject to procedures designed to prevent the use 
and dissemination of material non-public information regarding such 
portfolio and/or Tracking Basket. The Funds' sub-advisers, FMR 
Investment Management (UK) Limited, Fidelity Management & Research 
(Hong Kong) Limited, and Fidelity Management & Research (Japan) Limited 
(each a ``Sub-Adviser'' and, collectively, the ``Sub-Advisers''), are 
not registered as a broker-dealer but are affiliated with numerous 
broker-dealers. Sub-Adviser personnel who make decisions regarding a 
Fund's Fund Portfolio and/or Tracking Basket or who have access to 
information regarding the Fund Portfolio and/or the Tracking Basket or 
changes thereto are subject to procedures designed to prevent the use 
and dissemination of material nonpublic information regarding the 
Fund's portfolio and/or Tracking Basket. In the event that (a) the 
Adviser or a Sub-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 newly 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 Fund Portfolio and/or Tracking Basket, and will 
be subject to procedures designed to prevent the use and dissemination 
of material non-public information regarding such portfolio and/or 
Tracking Basket. Any person or entity, including any service provider 
for the Funds, who has access to nonpublic information regarding a Fund 
Portfolio or Tracking Basket or changes thereto for a Fund or Funds 
will be subject to procedures designed to prevent the use and 
dissemination of material nonpublic information regarding the 
applicable Fund Portfolio or Tracking Basket or changes thereto. 
Further, any such person or entity that is registered as a broker-
dealer or affiliated with a broker-dealer, has erected and will 
maintain a ``fire wall'' between the person or entity and the broker-
dealer with respect to access to information concerning the composition 
and/or changes to such Fund Portfolio or Tracking Basket. Each Fund 
intends to qualify each year as a regulated investment company under 
Subchapter M of the Internal Revenue Code of 1986, as amended.
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    \21\ The Trust intends to file a post-effective amendment to the 
Registration Statement in the near future. The descriptions of the 
Funds and the Shares contained herein are based, in part, on 
information that will be included in the Registration Statement. The 
Commission has issued an order granting certain exemptive relief to 
the Trust under the Investment Company Act of 1940 (15 U.S.C. 80a-
1).
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    The Shares will conform to the initial and continued listing 
criteria under Rule 14.11(m) as well as all terms in the Exemptive 
Order. The Exchange represents that, for initial and/or continued 
listing, each Fund will be in compliance with Rule 10A-3 under the 
Act.\22\ A minimum of 100,000 Shares of each Fund will be outstanding 
at the commencement of trading on the Exchange. The Exchange will 
obtain a representation from the issuer of the Shares of each Fund that 
the NAV per share of each Fund will be calculated daily and will be 
made available to all market participants at the same time. Each Fund's 
investments will be consistent with its investment objective and will 
not be used to enhance leverage.
---------------------------------------------------------------------------

    \22\ See 17 CFR 240.10A-3.
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Fidelity Blue Chip Value ETF
    The Fund's holdings will conform to the permissible investments as 
set forth in the Application and Order and the holdings will be 
consistent with all requirements in the Application and Order.\23\ Any 
foreign common stocks

[[Page 30996]]

held by the Fund will be traded on an exchange that is a member of the 
Intermarket Surveillance Group (``ISG'') or with which the Exchange has 
in place a comprehensive surveillance sharing agreement.
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    \23\ Pursuant to the Order, the Fund's permissible investments 
include only the following instruments: ETFs, exchange-traded notes, 
exchange-traded common stocks, common stocks listed on a foreign 
exchange that trade on such exchange contemporaneously with the 
Shares (``foreign common stocks''), exchange-traded preferred 
stocks, exchange-traded American Depositary Receipts (``ADRs''), 
exchange-traded real estate investment trusts, exchange-traded 
commodity pools, exchange-traded metals trusts, exchange-traded 
currency trusts, and exchange-traded futures that trade 
contemporaneously with the Shares, as well as cash and cash 
equivalents. With the exception of foreign common stocks and cash 
and cash equivalents, all holdings of the Fund will be listed on a 
U.S. national securities exchange.
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    The Fund seeks long-term growth of capital as its investment 
objective. In order to achieve its investment objective, the Fund 
typically invests primarily in: (i) In blue chip companies (companies 
that, in the Adviser's view, are well-known, well-established and well-
capitalized), which generally have large or medium market 
capitalizations; and (ii) companies that the Adviser believes are 
undervalued in the marketplace in relation to factors such as assets, 
sales, earnings, growth potential, or cash flow, or in relation to 
securities of other companies in the same industry (stocks of these 
companies are often called ``value'' stocks).
Fidelity Blue Chip Growth ETF
    The Fund's holdings will conform to the permissible investments as 
set forth in the Application and Order and the holdings will be 
consistent with all requirements in the Application and Order.\24\ Any 
foreign common stocks held by the Fund will be traded on an exchange 
that is a member of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
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    \24\ Pursuant to the Order, the Fund's permissible investments 
include only the following instruments: ETFs, exchange-traded notes, 
exchange-traded common stocks, foreign common stocks, exchange-
traded preferred stocks, ADRs, exchange-traded real estate 
investment trusts, exchange-traded commodity pools, exchange-traded 
metals trusts, exchange-traded currency trusts, and exchange-traded 
futures that trade contemporaneously with the Shares, as well as 
cash and cash equivalents. With the exception of foreign common 
stocks and cash and cash equivalents, all holdings of the Fund will 
be listed on a U.S. national securities exchange.
---------------------------------------------------------------------------

    The Fund seeks long-term growth of capital as its investment 
objective. In order to achieve its investment objective, the Fund 
typically invests primarily in: (i) In blue chip companies (companies 
that, in the Adviser's view, are well-known, well-established and well-
capitalized), which generally have large or medium market 
capitalizations; and (ii) companies that the Adviser believes have 
above-average growth potential (stocks of these companies are often 
called ``growth'' stocks).
Fidelity New Millennium ETF
    The Fund's holdings will conform to the permissible investments as 
set forth in the Application and Order and the holdings will be 
consistent with all requirements in the Application and Order.\25\ Any 
foreign common stocks held by the Fund will be traded on an exchange 
that is a member of ISG or with which the Exchange has in place a 
comprehensive surveillance sharing agreement.
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    \25\ Pursuant to the Order, the Fund's permissible investments 
include only the following instruments: ETFs, exchange-traded notes, 
exchange-traded common stocks, foreign common stocks, exchange-
traded preferred stocks, ADRs, exchange-traded real estate 
investment trusts, exchange-traded commodity pools, exchange-traded 
metals trusts, exchange-traded currency trusts, and exchange-traded 
futures that trade contemporaneously with the Shares, as well as 
cash and cash equivalents. With the exception of foreign common 
stocks and cash and cash equivalents, all holdings of the Fund will 
be listed on a U.S. national securities exchange.
---------------------------------------------------------------------------

    The Fund seeks long-term growth of capital as its investment 
objective. In order to achieve its investment objective, the Fund 
typically invests primarily in: (i) Companies that may benefit from 
opportunities created by long-term changes in the marketplace by 
examining technological advances, product innovation, economic plans, 
demographics, social attitudes, and other factors, which can lead to 
investments in small and medium-sized companies; and (ii) both 
``growth'' and ``value'' stocks based on fundamental analysis of 
factors such as each issuer's financial condition and industry 
position, as well as market and economic conditions.
Tracking Basket for the Proposed Funds
    For the Funds, the Tracking Basket will consist of a combination of 
the Fund's recently disclosed portfolio holdings and representative 
ETFs. ETFs selected for inclusion in the Tracking Basket will be 
consistent with the Fund's objective and selected based on certain 
criteria, including, but not limited to, liquidity, assets under 
management, holding limits and compliance considerations. 
Representative ETFs can provide a useful mechanism to reflect a Fund's 
holdings' exposures within the Tracking Basket without revealing a 
Fund's exact positions.\26\ Intraday pricing information for all 
constituents of the Tracking Basket that are exchange-traded, which 
includes all eligible instruments except cash and cash equivalents, 
will be available on the exchanges on which they are traded and through 
subscription services. Intraday pricing information for cash 
equivalents will be available through subscription services and/or 
pricing services. The Exchange notes that each Fund's NAV will form the 
basis for creations and redemptions for the Funds and creations and 
redemptions will work in a manner substantively identical to that of 
series of Managed Fund Shares. The Adviser expects that the Shares of 
the Funds will generally be created and redeemed in-kind, with limited 
exceptions. The names and quantities of the instruments that constitute 
the basket of securities for creations and redemptions will be the same 
as a Fund's Tracking Basket, except to the extent purchases and 
redemptions are made entirely or in part on a cash basis. In the event 
that the value of the Tracking Basket is not the same as a Fund's NAV, 
the creation and redemption baskets will consist of the securities 
included in the Tracking Basket plus or minus an amount of cash equal 
to the difference between the NAV and the value of the Tracking Basket, 
as further described below.
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    \26\ The set of ETFs that are ``representative'' to be used in 
the Tracking Basket will depend on certain factors, including the 
Fund's investment objective, past holdings, and benchmark, and may 
change from time to time. For example, a U.S. diversified fund 
benchmarked to a diversified U.S. index would use liquid U.S. 
exchange-traded ETFs to capture size (large, mid or small 
capitalization), style (growth or value) and/or sector exposures in 
the Fund's portfolio. Leveraged and inverse ETFs will not be 
included in the Tracking Basket. ETFs may constitute no more than 
50% of the Tracking Basket's assets.
---------------------------------------------------------------------------

    The Tracking Basket will be constructed utilizing a covariance 
matrix based on an optimization process to minimize deviations in the 
return of the Tracking Basket relative to the Fund. The proprietary 
optimization process mathematically seeks to minimize three key 
parameters that the Adviser believes are important to the effectiveness 
of the Tracking Basket as a hedge: Tracking error (standard deviation 
of return differentials between the Tracking Basket and the Fund), 
turnover cost, and basket creation cost.\27\ Typically, the Tracking 
Basket is expected to be rebalanced on schedule with the public 
disclosure of the Fund's holdings; however, a new optimized Tracking 
Basket may be generated as frequently as daily, and therefore, 
rebalancing may occur more frequently at the Adviser's discretion. In 
determining whether to rebalance a new optimized Tracking Basket, the 
Adviser will consider various factors, including liquidity of the 
securities in the Tracking Basket, tracking error, and the cost to 
create and trade the Tracking Basket.\28\ For

[[Page 30997]]

example, if the Adviser determines that a new Tracking Basket would 
reduce the variability of return differentials between the Tracking 
Basket and the Fund when balanced against the cost to trade the new 
Tracking Basket, rebalancing may be appropriate. The Adviser will 
periodically review the Tracking Basket parameters and Tracking Basket 
performance and process.
---------------------------------------------------------------------------

    \27\ Tracking error measures the deviations between the Tracking 
Basket and Fund. Turnover cost and basket creation cost are measures 
of the cost to create and maintain the Tracking Basket as a hedge.
    \28\ The Adviser uses a trading cost model to develop estimates 
of costs to trade a new Tracking Basket. There are essentially two 
elements to this cost: (1) The cost to purchase securities 
constituting the Tracking Basket, i.e., the cost to put on the hedge 
for the Authorized Participant, and (2) the cost of any adjustments 
that need to be made to the composition of the Tracking Basket, 
i.e., the cost to the Authorized Participant to change or maintain 
the hedge position. The inclusion of the trading cost model in the 
optimization process is intended to result in a Tracking Basket that 
is cost effective and liquid without compromising its tracking 
ability.
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    As noted above, each Fund will also disclose the entirety of its 
portfolio holdings, including the name, identifier, market value and 
weight of each security and instrument in the portfolio, at a minimum 
within at least 60 days following the end of every fiscal quarter. As 
described above, the Exchange notes that the concept of the Tracking 
Basket employed under this structure is designed to provide investors 
with the traditional benefits of ETFs while protecting the Funds from 
the potential for front running or free riding of portfolio 
transactions, which could adversely impact the performance of a Fund.
Policy Discussion--Proposed Funds
    Separately and in addition to the rationale supporting the 
arbitrage mechanism for Tracking Fund Shares more broadly above, the 
Exchange also believes that the particular instruments that may be 
included in each Fund Portfolio and Tracking Basket do not raise any 
concerns related to the Tracking Baskets being able to closely track 
the NAV of the Funds because such instruments include only instruments 
that trade on an exchange contemporaneously with the Shares.\29\ The 
Funds will also comply with the initial and continued listing 
requirements under Proposed Rule 14.11(m) applicable to Tracking Fund 
Shares. In addition, a Fund's Tracking Basket will be optimized so that 
it reliably and consistently correlates to the performance of the Fund. 
The Exchange and the Adviser agree with language in the Notice that 
specifically states that ``in order to facilitate arbitrage, each 
Fund's portfolio and Tracking Basket will only include certain 
securities that trade on an exchange contemporaneously with the Fund's 
Shares. Because the securities would be exchange traded, market 
participants would be able to accurately price and readily trade the 
securities in the Tracking Basket for purposes of assessing the 
intraday value of the Fund's portfolio holdings and to hedge their 
positions in the Fund's Shares.'' \30\
---------------------------------------------------------------------------

    \29\ The Exchange notes that to the extent that the Fund 
Portfolio or Tracking Basket include any foreign common stocks, such 
securities will be traded on an exchange that is a member of ISG or 
with which the Exchange has in place a comprehensive surveillance 
sharing agreement.
    \30\ The Exchange notes that the instruments enumerated herein 
are consistent with the investable universe contemplated in the 
Notice. Specifically, the Notice provides that ``Each Fund may 
invest only in ETFs, Exchange-traded notes, Exchange-traded common 
stocks, common stocks listed on a foreign exchange that trade on 
such exchange contemporaneously with the Shares, Exchange-traded 
preferred stocks, Exchange-traded American depositary receipts, 
Exchange-traded real estate investment trusts, Exchange-traded 
commodity pools, Exchange-traded metals trusts, Exchange-traded 
currency trusts, and exchange-traded futures that trade 
contemporaneously with the Shares, as well as cash and cash 
equivalents. All futures contracts that a Fund may invest in will be 
traded on a U.S. futures exchange. For these purposes, an 
``Exchange'' is a national securities exchange as defined in section 
2(a)(26) of the [1940] Act.'' See Notice at 64143.
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    The Adviser anticipates that the returns between a Fund and its 
respective Tracking Basket will have a consistent relationship and that 
the deviation in the returns between a Fund and its Tracking Basket 
will be sufficiently small such that the Tracking Basket will provide 
Market Makers with a reliable hedging vehicle that they can use to 
effectuate low-risk arbitrage trades in Fund Shares. The Exchange 
believes that the disclosures provided by the Funds will allow Market 
Makers to understand the relationship between the performance of a Fund 
and its Tracking Basket. Market Makers will be able to estimate the 
value of and hedge positions in a Fund's Shares, which the Exchange 
believes will facilitate the arbitrage process and help ensure that the 
Fund's Shares normally will trade at market prices close to their NAV. 
The Exchange also believes that competitive market making, where 
traders are looking to take advantage of differences in bid-ask spread, 
will aid in keeping spreads tight.
    The Exchange notes that a significant amount of information about 
each Fund and its Fund Portfolio is publicly available at all times. 
Each series will disclose the Tracking Basket, which is designed to 
closely track the daily performance of the Fund Portfolio, on a daily 
basis. Each series of Tracking Fund Shares will at a minimum publicly 
disclose the entirety of its portfolio holdings, including the name, 
identifier, market value and weight of each security and instrument in 
the portfolio within at least 60 days following the end of every fiscal 
quarter in a manner consistent with normal disclosure requirements 
otherwise applicable to open-end investment companies registered under 
the 1940 Act. The website will include additional quantitative 
information updated on a daily basis, including, on a per Share basis 
for each Fund, the prior business day's NAV and the closing price or 
bid/ask price at the time of calculation of such NAV, and a calculation 
of the premium or discount of the closing price or bid/ask price 
against such NAV. The website will also disclose the percentage weight 
overlap between the holdings of the Tracking Basket compared to the 
Fund Holdings for the prior business day and any information regarding 
the bid/ask spread for each Fund as may be required for other ETFs 
under Rule 6c-11 under the 1940 Act, as amended.
Additional Information
    The Exchange represents that the Shares of the Funds will continue 
to comply with all other proposed requirements applicable to Tracking 
Fund Shares, including the dissemination of key information such as the 
Tracking Basket, the Fund Portfolio, and NAV, suspension of trading or 
removal, trading halts, surveillance, minimum price variation for 
quoting and order entry, an information circular informing members of 
the special characteristics and risks associated with trading in the 
series of Tracking Fund Shares, and firewalls as set forth in the 
proposed Exchange rules applicable to Tracking Fund Shares and the 
orders approving such rules.
    Price information for the exchange-listed instruments held by the 
Funds, including both U.S. and non-U.S. listed equity securities and 
U.S. exchange-listed futures will be available through major market 
data vendors or securities exchanges listing and trading such 
securities. Moreover, U.S.-listed equity securities held by the Funds 
will trade on markets that are a member of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.\31\ Any foreign common stocks held by the Fund will be 
traded on an exchange that is a member of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement. 
All futures contracts that the Funds may invest in will be traded on a 
U.S. futures exchange. The Exchange

[[Page 30998]]

or the Financial Industry Regulatory Authority (``FINRA''), on behalf 
of the Exchange, or both, will communicate as needed regarding trading 
in the Shares, underlying U.S. exchange-listed equity securities, and 
U.S. exchange-listed futures with other markets and other entities that 
are members of ISG, and the Exchange or FINRA, on behalf of the 
Exchange, or both, may obtain trading information regarding trading 
such instruments from such markets and other entities. In addition, the 
Exchange may obtain information regarding trading in the Shares, 
underlying equity securities, and U.S. exchange-listed futures from 
markets and other entities that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing agreement.
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    \31\ For a list of the current members of ISG, see 
www.isgportal.com. The Exchange notes that not all components of the 
Funds may trade on markets that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.
---------------------------------------------------------------------------

    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 asset (as applicable), or the applicability of Exchange 
listing rules specified in this filing shall constitute continued 
listing requirements for the Shares. The issuer has represented to the 
Exchange that it will advise the Exchange of any failure by the Funds 
or 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. FINRA conducts certain cross-market surveillances on 
behalf of the Exchange pursuant to a regulatory services agreement. The 
Exchange is responsible for FINRA's performance under this regulatory 
services agreement. If a Fund is not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
with respect to such Fund under Exchange Rule 14.12.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) of the Act \32\ in general and Section 6(b)(5) of the Act \33\ in 
particular in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, 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.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78f.
    \33\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that proposed Rule 14.11(m) is designed to 
prevent fraudulent and manipulative acts and practices in that the 
proposed rules relating to listing and trading of Tracking Fund Shares 
provide specific initial and continued listing criteria required to be 
met by such securities. Proposed Rule 14.11(m)(4)(A) provides the 
initial listing criteria for a series of Tracking Fund Shares, which 
include the following: (A) Each series of Tracking Fund Shares will be 
listed and traded on the Exchange subject to application of the 
following initial listing criteria: (i) For each series, the Exchange 
will establish a minimum number of Tracking Fund Shares required to be 
outstanding at the time of commencement of trading on the Exchange; 
(ii) the Exchange will obtain a representation from the issuer of each 
series of Tracking Fund Shares that the NAV per share for the series 
will be calculated daily and that each of the following will be made 
available to all market participants at the same time when disclosed: 
the NAV, the Tracking Basket, and the Fund Portfolio.
    Proposed Rule 14.11(m)(4)(B) provides that each series of Tracking 
Fund Shares will be listed and traded on the Exchange subject to 
application of the following continued listing criteria: (i) The 
Tracking Basket will be disseminated at least once daily and will be 
made available to all market participants at the same time; (ii) the 
Fund Portfolio will at a minimum be publicly disclosed within at least 
60 days following the end of every fiscal quarter and will be made 
available to all market participants at the same time; (iii) upon 
termination of an Investment Company, the Exchange requires that 
Tracking Fund Shares issued in connection with such entity be removed 
from listing on the Exchange; and (iv) voting rights shall be as set 
forth in the applicable Investment Company prospectus or Statement of 
Additional Information.
    Additionally, proposed Rule 14.11(m)(4)(B)(iii) provides that the 
Exchange will consider the suspension of trading in and will commence 
delisting proceedings for a series of Tracking Fund Shares pursuant to 
Rule 14.12 under any of the following circumstances: (a) If, following 
the initial twelve-month period after commencement of trading on the 
Exchange of a series of Tracking Fund Shares, there are fewer than 50 
beneficial holders of the series of Tracking Fund Shares for 30 or more 
consecutive trading days; (b) if either the Tracking Basket or Fund 
Portfolio is not made available to all market participants at the same 
time; (c) if the Investment Company issuing the Tracking Fund Shares 
has failed to file any filings required by the Commission or if the 
Exchange is aware that the Investment Company is not in compliance with 
the conditions of any exemptive order or no-action relief granted by 
the Commission to the Investment Company with respect to the series of 
Tracking Fund Shares; (d) if any of the requirements set forth in this 
rule are not continuously maintained; (e) if any of the applicable 
Continued Listing Representations for the issue of Tracking Fund Shares 
are not continuously met; or (f) if such other event shall occur or 
condition exists which, in the opinion of the Exchange, makes further 
dealings on the Exchange inadvisable.
    Proposed Rule 14.11(m)(4)(B)(iv) provides that (a) the Exchange may 
consider all relevant factors in exercising its discretion to halt 
trading in a series of Tracking Fund Shares. Trading may be halted 
because of market conditions or for reasons that, in the view of the 
Exchange, make trading in the series of Tracking Fund Shares 
inadvisable. These may include: (i) The extent to which trading is not 
occurring in the securities and/or the financial instruments composing 
the Tracking Basket or Fund Portfolio; or (ii) whether other unusual 
conditions or circumstances detrimental to the maintenance of a fair 
and orderly market are present; and (b) if the Exchange becomes aware 
that one of the following is not being made available to all market 
participants at the same time: the net asset value, the Tracking 
Basket, or the Fund Portfolio with respect to a series of Tracking Fund 
Shares, then the Exchange will halt trading in such series until such 
time as the net asset value, the Tracking Basket, or the Fund Portfolio 
is available to all market participants, as applicable.
    While not providing daily disclosure of the Fund Portfolio could 
open the door to potential information leakage and misuse of material 
non-public information, the Exchange believes that proposed Rules 
14.11(m)(2)(E) and (F) provide sufficient safeguards to prevent such 
leakage and misuse of information. The Exchange believes that these 
proposed rules are designed to prevent fraudulent and manipulative acts 
and practices related to the listing and trading of Tracking Fund 
Shares because they provide meaningful requirements about both the data 
that will be made publicly available about the Shares as well as the 
information

[[Page 30999]]

that will only be available to certain parties and the controls on such 
information. Specifically, the Exchange believes that the requirements 
related to information protection enumerated under proposed Rule 
14.11(m)(2)(F) will act as a strong safeguard against any misuse and 
improper dissemination of information related to a Fund Portfolio, the 
Tracking Basket, or changes thereto. The requirement that any person or 
entity, including a custodian, Reporting Authority, distributor, or 
administrator, who has access to nonpublic information regarding the 
Fund Portfolio or the Tracking Basket or changes thereto, must be 
subject to procedures designed to prevent the use and dissemination of 
material nonpublic information regarding the applicable Fund Portfolio 
or the Tracking Basket or changes thereto will act to prevent any 
individual or entity from sharing such information externally. 
Additionally, the requirement that any such person or entity that is 
registered as a broker-dealer or affiliated with a broker-dealer will 
erect and maintain a ``fire wall'' between the person or entity and the 
broker-dealer with respect to access to information concerning the 
composition and/or changes to such Fund Portfolio or Tracking Basket 
will act to make sure that no entity will be able to misuse the data 
for their own purposes. As such, the Exchange believes that this 
proposal is designed to prevent fraudulent and manipulative acts and 
practices.
    The Exchange believes that these proposed rules are designed to 
prevent fraudulent and manipulative acts and practices related to the 
listing and trading of Tracking Fund Shares because they provide 
meaningful requirements about both the data that will be made publicly 
available about the Shares (the Tracking Basket) as well as the 
information that will only be available to certain parties and the 
controls on such information. Specifically, the Exchange believes that 
the requirements related to firewalls and information protection will 
act as a strong safeguard against any misuse and improper dissemination 
of information related to the securities included in or changes made to 
the Fund Portfolio and/or the Tracking Basket. As such, the Exchange 
believes that this proposal is designed to prevent fraudulent and 
manipulative acts and practices.
    As noted above, the purpose of the structure of Tracking Fund 
Shares is to provide investors with the traditional benefits of ETFs 
while protecting funds from the potential for front running or free 
riding of portfolio transactions, which could adversely impact the 
performance of a fund. While each series of Tracking Fund Shares will 
be actively managed and, to that extent, similar to Managed Fund Shares 
(as defined in Rule 14.11(i)), Tracking Fund Shares differ from Managed 
Fund Shares in one key way.\34\ A series of Tracking Fund Shares will 
disclose the Tracking Basket on a daily basis which, as described 
above, is designed to closely track the performance of the holdings of 
the Investment Company, instead of the actual holdings of the 
Investment Company, as provided by a series of Managed Fund Shares.\35\
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    \34\ The Exchange notes that there is one additional substantive 
difference between proposed Rule 14.11(m) and Rule 14.11(i): 
Proposed Rule 14.11(m) would require a rule filing under Section 
19(b) prior to listing any product on the Exchange meaning that no 
series of Tracking Fund Shares could be listed on the Exchange 
pursuant to Rule 19b-4(e) and there are no proposed rules comparable 
to the quantitative portfolio holdings standards from Rule 14.11(i).
    \35\ Proposed Rule 14.11(m)(4)(B)(ii) will, however, require 
each series of Tracking Fund Shares to at a minimum disclose the 
entirety of its portfolio holdings within at least 60 days following 
the end of every fiscal quarter in accordance with normal disclosure 
requirements otherwise applicable to open-end investment companies 
registered under the 1940 Act.
    Form N-PORT requires reporting of a fund's complete portfolio 
holdings on a position-by-position basis on a quarterly basis within 
60 days after fiscal quarter end. Investors can obtain a fund's 
Statement of Additional Information, its Shareholder Reports, its 
Form N-CSR, filed twice a year, and its Form N-CEN, filed annually. 
A fund's SAI and Shareholder Reports are available free upon request 
from the Investment Company, and those documents and the Form N-
PORT, Form N-CSR, and Form N-CEN may be viewed on-screen or 
downloaded from the Commission's website at www.sec.gov.
---------------------------------------------------------------------------

    For the arbitrage mechanism for any ETF to function effectively, 
Market Makers need sufficient information to accurately value shares of 
a fund to transact in both the primary and secondary market. The 
Tracking Basket is designed to closely track the daily performance of 
the holdings of a series of Tracking Fund Shares.
    Given the correlation between the Tracking Basket and the Fund 
Portfolio,\36\ the Exchange believes that the Tracking Basket would 
serve as a pricing signal to identify arbitrage opportunities when its 
value and the secondary market price of the shares of a series of 
Tracking Fund Shares diverge. If shares began trading at a discount to 
the Tracking Basket, an authorized participant could purchase the 
shares in secondary market transactions and, after accumulating enough 
shares to comprise a creation unit,\37\ redeem them in exchange for a 
redemption basket reflecting the NAV per share of the fund's portfolio 
holdings. The purchases of shares would reduce the supply of shares in 
the market, and thus tend to drive up the shares' market price closer 
to the fund's NAV. Alternatively, if shares are trading at a premium, 
the transactions in the arbitrage process are reversed. Market Makers 
also can engage in arbitrage without using the creation or redemption 
processes. For example, if a fund is trading at a premium to the 
Tracking Basket, Market Makers may sell shares short and take a long 
position in the Tracking Basket securities, wait for the trading prices 
to move toward parity, and then close out the positions in both the 
shares and the securities, to realize a profit from the relative 
movement of their trading prices. Similarly, a Market Maker could buy 
shares and take a short position in the Tracking Basket securities in 
an attempt to profit when shares are trading at a discount to the 
Tracking Basket.
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    \36\ As provided in the Proxy Notices, funds and their 
respective advisers will take remedial actions as necessary if the 
funds do not function as anticipated. For the first three years 
after a launch, a fund will establish certain thresholds for its 
level of tracking error, premiums/discounts, and spreads, so that, 
upon the fund's crossing a threshold, the adviser will promptly call 
a meeting of the fund's board of directors and will present the 
board or committee with recommendations for appropriate remedial 
measures. The board would then consider the continuing viability of 
the fund, whether shareholders are being harmed, and what, if any, 
action would be appropriate. Specifically, the Proxy Applications 
and Proxy Notices provide that such a meeting would occur: (1) If 
the tracking error exceeds 1%; or (2) if, for 30 or more days in any 
quarter or 15 days in a row (a) the absolute difference between 
either the market closing price or bid/ask price, on one hand, and 
NAV, on the other, exceeds 2%, or (b) the bid/ask spread exceeds 2%.
    \37\ Tracking Fund Shares will be purchased or redeemed only in 
large aggregations, or ``creation units,'' and the Tracking Basket 
will constitute the names and quantities of instruments for both 
purchases and redemptions of Creation Units.
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    Overall, the Exchange believes that the arbitrage process would 
operate similarly to the arbitrage process in place today for existing 
ETFs that use in-kind baskets for creations and redemptions that do not 
reflect the ETF's complete holdings but nonetheless produce performance 
that is highly correlated to the performance of the ETF's actual 
portfolio. The Exchange has observed highly efficient trading of ETFs 
that invest in markets where security values are not fully known at the 
time of ETF trading, and where a perfect hedge is not possible, such as 
international equity and fixed-income ETFs. While the ability to value 
and hedge many of these existing ETFs in the market may be limited, 
such ETFs have generally maintained an effective arbitrage mechanism 
and traded efficiently.

[[Page 31000]]

    As provided in the Notice, the Commission believes that an 
arbitrage mechanism based largely on the combination of a daily 
disclosed Tracking Basket and at a minimum quarterly disclosure of the 
Fund Portfolio can work in an efficient manner to maintain a fund's 
secondary market prices close to its NAV.\38\ Consistent with the 
Commission's view, the Exchange believes that the arbitrage mechanism 
for Tracking Fund Shares will be sufficient to keep secondary market 
prices in line with NAV.
---------------------------------------------------------------------------

    \38\ See Notice at 64144. The Commission also notes that as long 
as arbitrage continues to keep the Fund's secondary market price and 
NAV close, and does so efficiently so that spreads remain narrow, 
that investors would benefit from the opportunity to invest in 
active strategies through a vehicle that offers the traditional 
benefits of ETFs. See Id., at 64145.
---------------------------------------------------------------------------

    The Exchange notes that a significant amount of information about 
each fund and its Fund Portfolio is publicly available at all times. 
Each series will disclose the Tracking Basket, which is designed to 
closely track the daily performance of the Fund Portfolio, on a daily 
basis. Each series of Tracking Fund Shares will at a minimum publicly 
disclose the entirety of its portfolio holdings, including the name, 
identifier, market value and weight of each security and instrument in 
the portfolio within at least 60 days following the end of every fiscal 
quarter in a manner consistent with normal disclosure requirements 
otherwise applicable to open-end investment companies registered under 
the 1940 Act. The website will include additional quantitative 
information updated on a daily basis, including, on a per Share basis 
for each Fund, the prior business day's NAV and the closing price or 
bid/ask price at the time of calculation of such NAV, and a calculation 
of the premium or discount of the closing price or bid/ask price 
against such NAV. The website will also disclose the percentage weight 
overlap between the holdings of the Tracking Basket compared to the 
Fund Holdings for the prior business day and any information regarding 
the bid/ask spread for each Fund as may be required for other ETFs 
under Rule 6c-11 under the 1940 Act, as amended.
    The Exchange believes that its surveillance procedures are adequate 
to properly monitor the trading of Tracking Fund 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 
Tracking Fund Shares through the Exchange will be subject to the 
Exchange's surveillance procedures for derivative products. The 
Exchange will require the issuer of each series of Tracking Fund Shares 
listed on the Exchange to represent to the Exchange that it will advise 
the Exchange of any failure by a Fund to comply with the continued 
listing requirements, and, pursuant to its obligations under Section 
19(g)(1) of the Exchange Act, the Exchange will surveil for compliance 
with the continued listing requirements. If a Fund is not in compliance 
with the applicable listing requirements, the Exchange will commence 
delisting procedures under Exchange Rule 14.12. In addition, the 
Exchange also has a general policy prohibiting the distribution of 
material, non-public information by its employees.
    As noted in proposed Rule 14.11(m)(2)(D), the Investment Company's 
investment adviser will upon request make available to the Exchange 
and/or FINRA, on behalf of the Exchange, the daily portfolio holdings 
of each series of Tracking Fund Shares. The Exchange believes that this 
is appropriate because it will provide the Exchange or FINRA, on behalf 
of the Exchange, with access to the daily Fund Portfolio of any series 
of Tracking Fund Shares upon request on an as needed basis. The 
Exchange believes that the ability to access the information on an as 
needed basis will provide it with sufficient information to perform the 
necessary regulatory functions associated with listing and trading 
series of Tracking Fund Shares on the Exchange, including the ability 
to monitor compliance with the initial and continued listing 
requirements as well as the ability to surveil for manipulation of the 
shares.
    As noted above, Form N-PORT requires reporting of a fund's complete 
portfolio holdings on a position-by-position basis on a quarterly basis 
within 60 days after fiscal quarter end. Investors can obtain a fund's 
Statement of Additional Information, its Shareholder Reports, its Form 
N-CSR, filed twice a year, and its Form N-CEN, filed annually. A fund's 
SAI and Shareholder Reports are available free upon request from the 
Investment Company, and those documents and the Form N-PORT, Form N-
CSR, and Form N-CEN may be viewed on-screen or downloaded from the 
Commission's website at www.sec.gov. The Exchange also notes that the 
Proxy Applications provide that an issuer will comply with Regulation 
Fair Disclosure, which prohibits selective disclosure of any material 
non-public information, which otherwise do not apply to issuers of 
Tracking Fund Shares.
    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. 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. Quotation and last sale information for the 
Shares will be available via the CTA high-speed line. The Exchange 
deems Tracking Fund Shares to be equity securities, thus rendering 
trading in the Shares subject to the Exchange's existing rules 
governing the trading of equity securities. As provided in proposed 
Rule 14.11(m)(2)(C), the minimum price variation for quoting and entry 
of orders in securities traded on the Exchange is $0.01.
The Funds
    Separately and in addition to the rationale supporting the 
arbitrage mechanism for Tracking Fund Shares more broadly above, the 
Exchange also believes that the particular instruments that may be 
included in each Fund's portfolio and Tracking Basket do not raise any 
concerns related to the Tracking Baskets being able to closely track 
the NAV of the Funds because such instruments include only instruments 
that trade on an exchange contemporaneously with the Shares. In 
addition, a Fund's Tracking Basket will be optimized so that it 
reliably and consistently correlates to the performance of the Fund. 
The Exchange and the Adviser agree with language in the Notice that 
specifically states that ``in order to facilitate arbitrage, each 
Fund's portfolio and Tracking Basket will only include certain 
securities that trade on an exchange contemporaneously with the Fund's 
Shares. Because the securities would be exchange traded, market 
participants would be able to accurately price and readily trade the 
securities in the Tracking Basket for purposes of assessing the 
intraday value of the Fund's portfolio holdings and to hedge their 
positions in the Fund's Shares.'' \39\
---------------------------------------------------------------------------

    \39\ The Exchange notes that the instruments enumerated herein 
are consistent with the investable universe contemplated in the 
Notice. Specifically, the Notice provides that ``Each Fund may 
invest only in ETFs, Exchange-traded notes, Exchange-traded common 
stocks, common stocks listed on a foreign exchange that trade on 
such exchange contemporaneously with the Shares, Exchange-traded 
preferred stocks, Exchange-traded American depositary receipts, 
Exchange-traded real estate investment trusts, Exchange-traded 
commodity pools, Exchange-traded metals trusts, Exchange-traded 
currency trusts, and exchange-traded futures that trade 
contemporaneously with the Shares, as well as cash and cash 
equivalents . . . All futures contracts that a Fund may invest in 
will be traded on a U.S. futures exchange. For these purposes, an 
``Exchange'' is a national securities exchange as defined in section 
2(a)(26) of the [1940] Act.'' See Notice at 64143.

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[[Page 31001]]

    The Adviser anticipates that the returns between a Fund and its 
respective Tracking Basket will have a consistent relationship and that 
the deviation in the returns between a Fund and its Tracking Basket 
will be sufficiently small such that the Tracking Basket will provide 
Market Makers with a reliable hedging vehicle that they can use to 
effectuate low-risk arbitrage trades in Fund Shares. The Exchange 
believes that the disclosures provided by the Funds will allow Market 
Makers to understand the relationship between the performance of a Fund 
and its Tracking Basket. Market Makers will be able to estimate the 
value of and hedge positions in a Fund's Shares, which the Exchange 
believes will facilitate the arbitrage process and help ensure that the 
Fund's Shares normally will trade at market prices close to their NAV. 
The Exchange also believes that competitive market making, where 
traders are looking to take advantage of differences in bid-ask spread, 
will aid in keeping spreads tight.
    The Exchange notes that a significant amount of information about 
each Fund and its Fund Portfolio is publicly available at all times. 
Each series will disclose the Tracking Basket, which is designed to 
closely track the daily performance of the Fund Portfolio, on a daily 
basis. Intraday pricing information for all constituents of the 
Tracking Basket that are exchange-traded, which includes all eligible 
instruments except cash and cash equivalents, will be available on the 
exchanges on which they are traded and through subscription services. 
Intraday pricing information for cash equivalents will be available 
through subscription services and/or pricing services. Each series of 
Tracking Fund Shares will at a minimum publicly disclose the entirety 
of its portfolio holdings, including the name, identifier, market value 
and weight of each security and instrument in the portfolio within at 
least 60 days following the end of every fiscal quarter in a manner 
consistent with normal disclosure requirements otherwise applicable to 
open-end investment companies registered under the 1940 Act. The 
website will include additional quantitative information updated on a 
daily basis, including, on a per Share basis for each Fund, the prior 
business day's NAV and the closing price or bid/ask price at the time 
of calculation of such NAV, and a calculation of the premium or 
discount of the closing price or bid/ask price against such NAV. The 
website will also disclose the percentage weight overlap between the 
holdings of the Tracking Basket compared to the Fund Holdings for the 
prior business day and any information regarding the bid/ask spread for 
each Fund as may be required for other ETFs under Rule 6c-11 under the 
1940 Act, as amended.
    The Exchange represents that the Shares of the Funds will continue 
to comply with all other proposed requirements applicable to Tracking 
Fund Shares, which also generally correspond to the requirements for 
Managed Fund Shares, including the dissemination of key information 
such as the Tracking Basket, the Fund Portfolio, and NAV, suspension of 
trading or removal, trading halts, surveillance, minimum price 
variation for quoting and order entry, an information circular 
informing members of the special characteristics and risks associated 
with trading in the series of Tracking Fund Shares, and firewalls as 
set forth in the proposed Exchange rules applicable to Tracking Fund 
Shares and the orders approving such rules. Moreover, U.S.-listed 
equity securities held by the Funds will trade on markets that are a 
member of ISG or with which the Exchange has in place a comprehensive 
surveillance sharing agreement.\40\ 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 asset (as 
applicable), or the applicability of Exchange listing rules specified 
in this filing shall constitute continued listing requirements for the 
Shares. The issuer has represented to the Exchange that it will advise 
the Exchange of any failure by a Fund or 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. FINRA conducts certain cross-
market surveillances on behalf of the Exchange pursuant to a regulatory 
services agreement. The Exchange is responsible for FINRA's performance 
under this regulatory services agreement. If a Fund is not in 
compliance with the applicable listing requirements, the Exchange will 
commence delisting procedures with respect to such Fund under Exchange 
Rule 14.12.
---------------------------------------------------------------------------

    \40\ For a list of the current members of ISG, see 
www.isgportal.com. The Exchange notes that not all components of the 
Funds may trade on markets that are members of ISG or with which the 
Exchange has in place a comprehensive surveillance sharing 
agreement.
---------------------------------------------------------------------------

    For the above reasons, the Exchange believes that the proposed rule 
change is consistent with the requirements of Section 6(b)(5) of the 
Act.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Act. Rather, the Exchange notes 
that the proposed rule change will facilitate the listing of a new type 
of actively-managed exchange-traded product, thus enhancing competition 
among both market participants and listing venues, to the benefit of 
investors and the marketplace.

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

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

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change, as modified by Amendment No. 5, is consistent with the Act and 
rules and regulations thereunder applicable to a national securities 
exchange.\41\ In particular, the Commission finds that the proposed 
rule change, as modified by Amendment No. 5, is consistent with Section 
6(b)(5) of the Act,\42\ 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.
---------------------------------------------------------------------------

    \41\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \42\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

A. Proposed BZX Rule 14.11(m)

    Pursuant to the Exemptive Order,\43\ Tracking Fund Shares would not 
be required to disclose the actual holdings of the Investment Company 
on a daily basis. Instead, Tracking Fund Shares would be required to 
publicly disclose the Tracking Basket, which is designed to closely 
track the performance of the

[[Page 31002]]

holdings of the Investment Company, on a daily basis. Like other 
registered management investment companies, Tracking Fund Shares would 
be required to disclose the actual holdings of the Investment Company 
within at least 60 days following the end of every fiscal quarter. For 
reasons described below, the Commission believes that BZX Rule 14.11(m) 
is sufficiently designed to be consistent with the Act and to help 
prevent fraudulent and manipulative acts and practices and to maintain 
a fair and orderly market for Tracking Fund Shares.
---------------------------------------------------------------------------

    \43\ See supra note 13.
---------------------------------------------------------------------------

    The Commission finds that the Exchange's proposal contains adequate 
rules and procedures to govern the listing and trading of Tracking Fund 
Shares on the Exchange. The Commission notes that the proposed listing 
and trading rules for Tracking Fund Shares, where appropriate, are 
similar to existing Exchange rules relating to exchange-traded funds, 
in particular, Managed Portfolio Shares.\44\ Prior to listing and/or 
trading on the Exchange, the Exchange must file a separate proposed 
rule change pursuant to Section 19(b) of the Act for each series of 
Tracking Fund Shares.\45\ All such shares listed and/or traded under 
proposed BZX Rule 14.11(m) will be subject to the full panoply of BZX 
rules and procedures that currently govern the trading of equity 
securities on the Exchange.
---------------------------------------------------------------------------

    \44\ The proposed rules relating to limitation of liability 
(proposed BZX Rule 14.11(m)(5)), termination (proposed BZX Rule 
14.11(m)(4)(B)(iv)), and voting (proposed BZX Rule 
14.11(m)(4)(B)(v)) are substantively similar or identical to 
existing provisions for Managed Fund Shares and Managed Portfolio 
Shares. See BZX Rule 14.11(i)(5) and BZX Rule 14.11(k)(5), BZX Rule 
14.11(i)(4)(B)(v) and BZX Rule 14.11(k)(4)(B)(v), and BZX Rule 
14.11(i)(4)(B)(vi) and BZX Rule 14.11(k)(4)(B)(vi), respectively.
    \45\ See proposed BZX Rule 14.11(m)(2)(A).
---------------------------------------------------------------------------

    For the initial listing of each series of Tracking Fund Shares 
under proposed BZX Rule 14.11(m), the Exchange must establish a minimum 
number of Tracking Fund Shares required to be outstanding at the 
commencement of trading. In addition, the Exchange must obtain a 
representation from the issuer of Tracking Fund Shares that the NAV per 
share will be calculated daily and that the NAV, Tracking Basket, and 
Fund Portfolio will be made available to all market participants at the 
same time. Moreover, all Tracking Fund Shares must have a stated 
investment objective, which must be adhered to under Normal Market 
Conditions.
    Although the actual portfolio holdings of the Tracking Fund Shares 
are not publicly disclosed on a daily basis, the Commission believes 
that the proposed listing standards under proposed BZX Rule 14.11(m), 
along with the Tracking Basket, are adequate to ensure transparency of 
key information regarding the Tracking Fund Shares and that such 
information is made available to market participants at the same time. 
Namely, the Tracking Basket would be disseminated at least once daily 
and would be made available to all market participants at the same 
time.\46\ In addition, like all other registered management investment 
companies, each series of Tracking Fund Shares would be required to 
publicly disclose its portfolio holdings information on a quarterly 
basis, within at least 60 days following the end of every fiscal 
quarter.\47\ If the Exchange becomes aware that the NAV, the Tracking 
Basket, or the Fund Portfolio is not being made available to all market 
participants at the same time, then the Exchange will halt trading in 
such series until such times as the NAV, Tracking Basket, or Fund 
Portfolio is available to all market participants, as applicable.\48\ 
Further, if either the Tracking Basket or Fund Portfolio is not made 
available to all market participants at the same time, the Exchange 
will consider the suspension of trading in and will commence delisting 
proceedings for a series of Tracking Fund Shares. Moreover, the 
Exchange represents that a series of Tracking Fund Shares' Statement of 
Additional Information and shareholder reports will be available for 
free upon request from the Investment Company, and that those documents 
and the Form N-PORT, Form N-CSR, and Form N-CEN may be viewed on-screen 
or downloaded from the Commission's website at www.sec.gov.
---------------------------------------------------------------------------

    \46\ See proposed BZX Rule 14.11(m)(4)(B)(i).
    \47\ See proposed BZX Rule 14.11(m)(3)(A). See also Rules 30e-1, 
30d-1, and 30b1-5 under the 1940 Act.
    \48\ See proposed BZX Rule 14.11(m)(4)(B)(iv)(b).
---------------------------------------------------------------------------

    The Commission also finds that the Exchange's rules with respect to 
trading halts and suspensions under proposed BZX Rule 14.11(m) are 
designed to help maintain a fair and orderly market. According to the 
proposal, the Exchange may consider all relevant factors in exercising 
its discretion to halt trading in a series of Tracking Fund Shares. 
Further, trading may be halted because of market conditions or for 
reasons that, in the view of the Exchange, make trading in the series 
of Tracking Fund Shares inadvisable. These may include the extent to 
which trading is not occurring in the securities and/or the financial 
instruments comprising the Tracking Basket or the Fund Portfolio, or 
whether other unusual conditions or circumstances detrimental to the 
maintenance of a fair and orderly market are present.\49\
---------------------------------------------------------------------------

    \49\ See proposed BZX Rule 14.11(m)(4)(B)(iv)(a).
---------------------------------------------------------------------------

    Other provisions of the Exchange's rule pertaining to suspension 
are substantially consistent with provisions that currently exist for 
Managed Fund Shares and Managed Portfolio Shares. Those provisions 
state that the Exchange will consider the suspension of trading in, and 
will commence delisting proceedings under BZX Rule 14.12 for, a series 
of Tracking Fund Shares if: (1) Following the initial twelve-month 
period after commencement of trading on the Exchange of a series of 
Tracking Fund Shares, there are fewer than 50 beneficial holders of the 
series of the Tracking Fund Shares for 30 or more consecutive trading 
days; \50\ (2) the Investment Company issuing the Tracking Fund Shares 
has failed to file any required filings with the Commission, or if the 
Exchange becomes aware that the Investment Company is not in compliance 
with the conditions of any exemptive order or no-action relief granted 
by the Commission or Commission staff to the Investment Company with 
respect to the series of Tracking Fund Shares; \51\ (3) any of the 
listing requirements set forth in BZX Rule 14.11(m) are not 
continuously maintained; \52\ (4) any of the applicable Continued 
Listing Representations \53\ for the issue of Tracking Fund Shares are 
not continuously met; \54\ or (5) such other event shall occur or 
condition exists which, in the opinion of the Exchange, makes further 
dealings of the Tracking Fund Shares on the Exchange inadvisable.\55\
---------------------------------------------------------------------------

    \50\ See proposed BZX Rule 14.11(m)(4)(B)(iii)(a).
    \51\ See proposed BZX Rule 14.11(m)(4)(B)(iii)(c).
    \52\ See proposed BZX Rule 14.11(m)(4)(B)(iii)(d).
    \53\ BZX Rule 14.11(a) defines ``Continued Listing 
Representations'' as any of the statements or representations 
regarding the index composition, the description of the portfolio or 
reference assets, limitations on portfolio holdings or reference 
assets, dissemination and availability of index, reference asset, 
intraday indicative values, and VIIV (as applicable), or the 
applicability of Exchange listing rules specified in any filing to 
list a series of Other Securities (as defined in BZX Rule 14.11(a)).
    \54\ See proposed BZX Rule 14.11(m)(3)(B)(iii)(e).
    \55\ See proposed BZX Rule 14.11(m)(3)(B)(iii)(f).
---------------------------------------------------------------------------

    Finally, the Commission believes that the requirements of proposed 
BZX Rule 14.11(m) are consistent with the Act and, more specifically, 
are reasonably designed to help prevent fraudulent and manipulative 
acts and practices. The Commission notes that, because Tracking Fund 
Shares would not publicly disclose on a daily basis

[[Page 31003]]

information about the actual holdings of the Fund Portfolio, it is 
vital that such information be kept confidential and not be subject to 
misuse. Accordingly, to help ensure that the portfolio information be 
kept confidential and the shares not be susceptible to fraud or 
manipulation, proposed BZX Rule 14.11(m)(2)(E) requires that, if the 
investment adviser to the Investment Company issuing Tracking Fund 
Shares is registered as a broker-dealer or is affiliated with a broker-
dealer, such investment adviser must erect and maintain a ``fire wall'' 
between such investment adviser and personnel of the broker-dealer or 
broker-dealer affiliate, as applicable, with respect to access to 
information concerning the composition of and/or changes to the Fund 
Portfolio and/or the Tracking Basket. Further, the Rule also requires 
that any person related to the investment adviser or Investment Company 
who makes decisions pertaining to the Investment Company's Fund 
Portfolio and/or the Tracking Basket or has access to nonpublic 
information regarding the Fund Portfolio and/or the Tracking Basket or 
changes thereto must be subject to procedures designed to prevent the 
use and dissemination of material nonpublic information regarding the 
Fund Portfolio and/or the Tracking Basket or changes thereto. In 
addition, proposed BZX Rule 14.11(m)(2)(F) provides that any person or 
entity, including a custodian, Reporting Authority, distributor, or 
administrator, who has access to nonpublic information regarding the 
Fund Portfolio or the Tracking Basket or changes thereto must be 
subject to procedures designed to prevent the use and dissemination of 
material nonpublic information regarding the applicable Fund Portfolio 
or the Tracking Basket or changes thereto. Moreover, if any such person 
or entity is registered as a broker-dealer or affiliated with a broker-
dealer, such person or entity must erect and maintain a ``fire wall'' 
between the person or entity and the broker-dealer with respect to 
access to information concerning the composition and/or changes to such 
Fund Portfolio or Tracking Basket. The proposed rules also require that 
the Exchange implement and maintain surveillance procedures. Finally, 
to ensure that the Exchange has the appropriate information to monitor 
and surveil its market, BZX Rule 14.11(m) requires that the Investment 
Company's investment adviser will upon request by the Exchange or 
FINRA, on behalf of the Exchange, make available to the Exchange or 
FINRA the daily Fund Portfolio of each series of Tracking Fund 
Shares.\56\
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    \56\ See proposed BZX Rule 14.11(m)(2)(D).
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    For the reasons discussed above, the Commission finds that proposed 
BZX Rule 14.11(m) for Tracking Fund Shares is consistent with Section 
6(b)(5) of the Act.
    B. Listing and Trading of Fidelity Blue Chip Value ETF, Fidelity 
Blue Chip Growth ETF, and Fidelity New Millennium ETF
    The Commission believes that the proposal is reasonably designed to 
promote fair disclosure of information that may be necessary to price 
the Shares appropriately and to prevent trading in the Shares when a 
reasonable degree of certain pricing transparency cannot be assured. As 
such, the Commission believes the proposal is reasonably designed to 
maintain a fair and orderly market for trading the Shares. The 
Commission also finds that the proposal is consistent with Section 
11A(a)(1)(C)(iii) of the Act, which sets forth Congress's finding that 
it is in the public interest and appropriate for the protection of 
investors and the maintenance of fair and orderly markets to assure the 
availability to brokers, dealers, and investors of information with 
respect to quotations for, and transactions in, securities.
    Specifically, the Commission notes that the Exchange has obtained a 
representation from the issuer that the NAV per Share of each Fund will 
be calculated daily and that the NAV, Tracking Basket, and Fund 
Portfolio will be made available to all market participants at the same 
time.\57\ 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 Consolidated Tape Association high-speed line. Moreover, the 
Funds' website will include additional information updated on a daily 
basis, including, on a per Share basis for each Fund, the prior 
business day's NAV, the closing price or bid/ask price at the time of 
calculation of such NAV, and a calculation of the premium or discount 
of the closing price or bid/ask price against such NAV. The website 
will also disclose the percentage weight overlap between the holdings 
of the Tracking Basket compared to the Fund holdings for the prior 
business day, and any information regarding the bid/ask spread for each 
Fund as may be required. The website and information will be publicly 
available at no charge.
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    \57\ See BZX Rule 14.11(m)(4)(A)(ii).
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    In addition, the Exchange states that intraday pricing information 
for all constituents of the Tracking Basket that are exchange-traded, 
which includes all eligible instruments except cash and cash 
equivalents, will be available on the exchanges on which they are 
traded and through subscription services, and that intraday pricing 
information for cash equivalents will be available through subscription 
services and/or pricing services.
    The Commission also believes that the proposal is reasonably 
designed to help prevent fraudulent and manipulative acts and 
practices. Specifically, the Exchange provides that:
     The Adviser is not registered as a broker-dealer but is 
affiliated with numerous broker-dealers and has implemented and will 
maintain a ``fire wall'' between the respective personnel at the 
Adviser and affiliated broker-dealers with respect to access to 
information concerning the composition and/or changes to each Fund's 
portfolio and Tracking Basket;
     Personnel who make decisions on a Fund's portfolio 
composition and/or Tracking Basket or who have access to nonpublic 
information regarding the Fund Portfolio and/or the Tracking Basket or 
changes thereto are subject to procedures designed to prevent the use 
and dissemination of material non-public information regarding such 
portfolio and/or Tracking Basket;
     The Funds' Sub-Advisers are not registered as a broker-
dealer but are affiliated with numerous broker-dealers, and Sub-Adviser 
personnel who make decisions regarding a Fund's Fund Portfolio and/or 
Tracking Basket or who have access to information regarding the Fund 
Portfolio and/or the Tracking Basket or changes thereto are subject to 
procedures designed to prevent the use and dissemination of material 
nonpublic information regarding the Fund's portfolio and/or Tracking 
Basket;
     In the event that (a) the Adviser or a Sub-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 newly 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 Fund Portfolio and/or 
Tracking Basket, and will be subject to procedures designed to prevent 
the use and dissemination of material non-public information

[[Page 31004]]

regarding such portfolio and/or Tracking Basket; and
     Any person or entity, including any service provider for 
the Funds, who has access to nonpublic information regarding a Fund 
Portfolio or Tracking Basket or changes thereto for a Fund or Funds 
will be subject to procedures designed to prevent the use and 
dissemination of material nonpublic information regarding the 
applicable Fund Portfolio or Tracking Basket or changes thereto, and 
any such person or entity that is registered as a broker-dealer or 
affiliated with a broker-dealer has erected and will maintain a ``fire 
wall'' between the person or entity and the broker-dealer with respect 
to access to information concerning the composition and/or changes to 
such Fund Portfolio or Tracking Basket.
    Finally, the Exchange represents that trading of the Shares on the 
Exchange will be subject to the Exchange's surveillance procedures for 
derivative products,\58\ and 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.
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    \58\ See BZX Rule 14.11(m)(2)(D), which requires, as part of the 
surveillance procedures for Tracking Fund Shares, the Funds' 
investment adviser to, upon request by the Exchange or FINRA, on 
behalf of the Exchange, make available to the Exchange or FINRA the 
daily portfolio holdings of each series of Tracking Fund Shares.
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    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. Moreover, the 
Exchange will inform its members in an information circular of the 
special characteristics and risks associated with trading the Shares.
    In support of this proposal, the Exchange represents that:
    (1) The Shares will conform to the initial and continued listing 
criteria under BZX Rule 14.11(m).
    (2) A minimum of 100,000 Shares of each Fund will be outstanding at 
the commencement of trading on the Exchange.
    (3) The Exchange or FINRA, on behalf of the Exchange, or both, will 
communicate as needed with and may obtain trading information regarding 
trading in the Shares and the underlying exchange-traded instruments 
from other markets and other entities that are members of ISG or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement. Any foreign common stocks held by the Fund will be traded on 
an exchange that is a member of ISG or with which the Exchange has in 
place a comprehensive surveillance sharing agreement.
    (4) The Exchange has appropriate rules to facilitate transactions 
in the Shares during all trading sessions in which the Shares trade.
    (5) For initial and continued listing, each Fund will be in 
compliance with Rule 10A-3 under the Act.\59\
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    \59\ See 17 CFR 240.10A-3.
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    (6) Each Fund's holdings will conform to the permissible 
investments as set forth in the Application and Order, and the holdings 
will be consistent with all requirements set forth in the Application 
and Order. Each Fund's investments will be consistent with its 
investment objective and will not be used to enhance leverage.
    The Exchange represents that all statements and representations 
made in the filing regarding: (1) The description of the portfolio or 
reference assets; (2) limitations on portfolio holdings or reference 
assets; (3) dissemination and availability of reference asset; and (4) 
the applicability of Exchange rules constitute continued listing 
requirements for listing the Shares on the Exchange. In addition, the 
Exchange represents that the issuer will advise the Exchange of any 
failure by a Fund to comply with the continued listing requirements 
and, pursuant to its obligations under Section 19(g)(1) of the Act, the 
Exchange will surveil for compliance with the continued listing 
requirements. If a Fund is not in compliance with the applicable 
listing requirements, the Exchange will commence delisting procedures 
under BZX Rule 14.12.

IV. Solicitation of Comments on Amendment No. 5 to the Proposed Rule 
Change

    Interested persons are invited to submit written data, views, and 
arguments concerning whether the proposed rule change, as modified by 
Amendment No. 5, is consistent with the Exchange 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-2019-107 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-2019-107. 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-2019-107, and should be 
submitted on or before June 11, 2020.

V. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 5

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 5, prior to the thirtieth day 
after the date of publication of notice of the filing of Amendment No. 
5 in the Federal Register. In Amendment No. 5, the Exchange (a) revised 
the description of circumstances under which the Exchange will consider 
halting trading in a series of Tracking Fund Shares; (b) revised the 
description of information that shall be disclosed on the website for 
each series of Tracking Fund Shares; (c) removed the description of 
required prospectus delivery requirements under Section 24(d) of the 
Investment Company Act of 1940; (d) removed the description of the 
information circular provided by the Exchange; (e) represented that any 
foreign common

[[Page 31005]]

stock will be traded on an exchange that is a member of ISG or with 
which the Exchange has in place a comprehensive surveillance sharing 
agreement; (f) described the sources of pricing information for 
components of the Tracking Basket; (g) represented that the website of 
each series of Tracking Fund Share would disclose the percentage weight 
overlap between the holdings of the Tracking Basket compared to a 
Fund's holdings for the prior business day; (h) noted that an issuer 
will comply with Regulation Fair Disclosure; and (i) represented that 
any person or entity, including any service provider for the Funds, who 
has access to nonpublic information regarding a Fund Portfolio or 
Tracking Basket or changes thereto for a Fund or Funds would be subject 
to procedures designed to prevent the use and dissemination of material 
nonpublic information, and that any such person or entity that is 
registered as a broker-dealer or affiliated with a broker dealer has 
erected and will maintain a ``fire wall'' between the person or entity 
and the broker-dealer with respect to access to information concerning 
the composition and/or changes to such Fund Portfolio or Tracking 
Basket. Amendment No. 5 also provides other clarifications and 
additional information to the proposed rule change.\60\ The changes and 
additional information in Amendment No. 5 assist the Commission in 
finding that the proposal is consistent with the Exchange Act. 
Accordingly, the Commission finds good cause, pursuant to Section 
19(b)(2) of the Exchange Act,\61\ to approve the proposed rule change, 
as modified by Amendment No. 5, on an accelerated basis.
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    \60\ See Amendment No. 4, supra note 11.
    \61\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\62\ that the proposed rule change (SR-CboeBZX-2019-107), as modified 
by Amendment No. 5, be, and it hereby is, approved on an accelerated 
basis.
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    \62\ Id.
    \63\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\63\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-10932 Filed 5-20-20; 8:45 am]
 BILLING CODE 8011-01-P


