[Federal Register Volume 85, Number 70 (Friday, April 10, 2020)]
[Notices]
[Pages 20326-20328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-07546]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88570; File No. SR-CboeBYX-2020-011]
Self-Regulatory Organizations; Cboe BYX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Expand
the Trading Hours Applicable to Managed Portfolio Shares To Include All
Trading Sessions
April 6, 2020.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 31, 2020, Cboe BYX Exchange, Inc. (``Exchange'' or ``BYX'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BYX Exchange, Inc. (the ``Exchange'' or ``BYX'') proposes to
expand the trading hours applicable to Managed Portfolio Shares to
include all trading sessions instead of just Regular Trading Hours.\3\
The text of the proposed rule change is provided in Exhibit 5.
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\3\ As defined in Rule 1.5(w), the term ``Regular Trading
Hours'' means the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
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The text of the proposed rule change is also available on the
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/byx/), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
[[Page 20327]]
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange adopted new Rule 14.11 for the purpose of permitting
trading, pursuant to unlisted trading privileges,\4\ of Managed
Portfolio Shares, which are securities issued by an actively managed
open-end management investment company,\5\ on January 21, 2020.\6\ Rule
14.11(b)(2) currently provides that transactions in Managed Portfolio
Shares will occur only during Regular Trading Hours. On March 23, 2020,
Cboe BZX Exchange, Inc. (``BZX''), the listing market for Managed
Portfolio Shares, amended its rules to allow Managed Portfolio Shares
to trade during all sessions.\7\ Accordingly, the Exchange is now
proposing to change rule 14.11(b)(2) in order to allow for trading in
Managed Portfolio Shares during all trading sessions on the Exchange.
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\4\ As noted in Exchange Rule 14.1(a), the Exchange does not
list any Equity Securities, as defined in Rule 14.1(a). Therefore,
the provisions of Rules 14.2 through 14.11 only allow the trading of
such Equity Securities pursuant to unlisted trading privileges.
\5\ As defined in Rule 14.11(c)(1), the term ``Managed Portfolio
Share'' means a security that (a) 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;
(b) is issued in a Creation Unit (as defined in Rule 14.11(c)(6)),
or multiples thereof, in return for a designated portfolio of
instruments (and/or an amount of cash) with a value equal to the
next determined net asset value and delivered to the Authorized
Participant (as defined in the Investment Company's Form N-1A filed
with the Commission) through a Confidential Account; (c) when
aggregated into a Redemption Unit (as defined in Rule 14.11(c)(7)),
or multiples thereof, may be redeemed for a designated portfolio of
instruments (and/or an amount of cash) with a value equal to the
next determined net asset value delivered to the Confidential
Account (as defined in Rule 14.11(c)(4))for the benefit of the
Authorized Participant; and (d) the portfolio holdings for which are
disclosed within at least 60 days following the end of every fiscal
quarter.
\6\ See Securities Exchange Act Release No. 88112 (February 3,
2020), 85 FR 7352 (February 7, 2020) (SR-CboeBYX-2020-003).
\7\ See Securities Exchange Act Release No. 88468 (March 25,
2020) 85 FR 17908 (March 31, 2020) (SR-CboeBZX-2020-028).
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The proposed amendment would allow trading in Managed Portfolio
Shares during all sessions including the Early Trading Session,\8\ the
Pre-Opening Session,\9\ Regular Trading Hours, and the After Hours
Trading Session.\10\ The Exchange notes that Managed Portfolio Shares
are currently the only product-type that is not available for trading
during all trading sessions on the Exchange. As such, this proposal
would allow Managed Portfolio Shares to be traded, pursuant to unlisted
trading privileges, on the Exchange in a manner identical to all other
products traded on the Exchange.
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\8\ As defined in Rule 1.5(ee), the term ``Early Trading
Session'' shall mean the time between 7:00 a.m. and 8:00 a.m.
Eastern Time.
\9\ As defined in Rule 1.5(r), the term ``Pre-Opening Session''
shall mean the time between 8:00 a.m. and 9:30 a.m. Eastern Time.
\10\ As defined in Rule 1.5(c), the term ``After Hours Trading
Session'' shall mean the time between 4:00 p.m. and 8:00 p.m.
Eastern Time.
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2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\11\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \12\ requirements that the rules of an exchange be
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 regulating, clearing,
settling, processing information with respect to, and 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.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(5).
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In particular, the Exchange believes that allowing Managed
Portfolio Shares to trade during all trading sessions on the Exchange
will remove impediments to and perfect a national market system by
reducing the complexity and potential investor confusion that could be
associated with limiting the trading hours for one product type.
Furthermore, the proposal is consistent with a recent changed made by
the listing market for Managed Portfolio Shares, BZX, and thus would
eliminate complexity and potential investor confusion related to which
platforms are offering trading in Managed Portfolio Shares at different
times of the day.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The Exchange notes that the
proposed rule change, rather, will facilitate the trading of Managed
Portfolio Shares in a manner that is consistent with other product
types traded on the Exchange as well as on other trading platforms,
enhancing competition among market participants, product types, and
platforms, 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 neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) thereunder.\14\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6) \15\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\16\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to
[[Page 20328]]
waive the 30-day operative delay so that the proposal may become
operative immediately upon filing. The Exchange states that waiver of
the operative delay would allow trading of Managed Portfolio Shares on
the Exchange during all trading sessions as soon as possible, making
the treatment of Managed Portfolio Shares consistent with all other
product types as well as the listing market, and reducing confusion and
complexity associated with Managed Portfolio Shares. In addition, the
Exchange states that the proposal raises no novel or unique issues in
that it would allow Managed Portfolio Shares to trade in a manner
identical to all other products traded on the Exchange and consistent
with the exemptive relief granted by the Commission. For these reasons,
the Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission waives the 30-day operative delay and
designates the proposed rule change operative upon filing.\17\
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\15\ 17 CFR 240.19b-4(f)(6).
\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-CboeBYX-2020-011 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-CboeBYX-2020-011. 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-CboeBYX-2020-011 and should be submitted
on or before May 1, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-07546 Filed 4-9-20; 8:45 am]
BILLING CODE 8011-01-P