Notice2021-20079
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Reflect an Amendment to the Application and Exemptive Order Governing the Following Funds, Shares of Which Are Listed and Traded on the Exchange Under BZX Rule 14.11(m): Fidelity Growth Opportunities ETF, Fidelity Magellan ETF, Fidelity Real Estate Investment ETF, Fidelity Small-Mid Cap Opportunities ETF, Fidelity Blue Chip Value ETF, Fidelity Blue Chip Growth ETF, and Fidelity New Millennium ETF
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 17, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 178 (Friday, September 17, 2021)</title>
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[Federal Register Volume 86, Number 178 (Friday, September 17, 2021)]
[Notices]
[Pages 51941-51943]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-20079]
[[Page 51941]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-92946; File No. SR-CboeBZX-2021-060]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Reflect
an Amendment to the Application and Exemptive Order Governing the
Following Funds, Shares of Which Are Listed and Traded on the Exchange
Under BZX Rule 14.11(m): Fidelity Growth Opportunities ETF, Fidelity
Magellan ETF, Fidelity Real Estate Investment ETF, Fidelity Small-Mid
Cap Opportunities ETF, Fidelity Blue Chip Value ETF, Fidelity Blue Chip
Growth ETF, and Fidelity New Millennium ETF
September 13, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on August 31, 2021, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the Exchange. The
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\ 15 U.S.C. 78a.
\3\ 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 BZX Exchange, Inc. (the ``Exchange'' or ``BZX'') proposes to
reflect an amendment to the Application and Exemptive Order governing
the following funds, shares of which are listed and traded on the
Exchange under BZX Rule 14.11(m): Fidelity Growth Opportunities ETF,
Fidelity Magellan ETF, Fidelity Real Estate Investment ETF, Fidelity
Small-Mid Cap Opportunities ETF, Fidelity Blue Chip Value ETF, Fidelity
Blue Chip Growth ETF, and Fidelity New Millennium ETF.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/">http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/</a>), at the Exchange's Office of the Secretary, and at
the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange adopted BZX Rule 14.11(m) for the purpose of
permitting the listing and trading, or pursuant to unlisted trading
privileges (``UTP''), of Tracking Fund Shares, which are securities
issued by an actively managed open-end management investment
company.\4\ Exchange Rule 14.11(m)(2)(A) requires the Exchange to file
separate proposals under Section 19(b) of the Act before listing and
trading any series of Tracking Fund Shares on the Exchange. Pursuant to
this provision, the Exchange submitted proposals to list and trade
shares (``Shares'') of Tracking Funds Shares of the following funds
listed and traded on the Exchange under BZX Rule 14.11(m): Fidelity
Growth Opportunities ETF, Fidelity Magellan ETF, Fidelity Real Estate
Investment ETF, Fidelity Small-Mid Cap Opportunities ETF, Fidelity Blue
Chip Value ETF, Fidelity Blue Chip Growth ETF, and Fidelity New
Millennium ETF (each, a ``Fund'' and, together the ``Funds'').\5\ The
Exchange proposes to reflect an amendment to the Prior Exemptive Order
(as defined below) related to the listing and trading of these Funds
filed by, among others, Fidelity Beach Street Trust (the ``Issuer'') as
follows.
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\4\ See Securities Exchange Act Release No. 88887 (May 15,
2020), 85 FR 30990 (May 21, 2020) (SR-CboeBZX-2019-107) (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 (``Approval Order'')). Rule
14.11(m)(3)(A) provides that ``[t]he 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; (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 net asset value; and (iv) the portfolio holdings for
which are disclosed within at least 60 days following the end of
every fiscal quarter. Rule 14.11(m)(3)(E) provides that ``[t]he 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 Investment Company Act of
1940 applicable to a series of Tracking Fund Shares.''
\5\ On May 15, 2020, in conjunction with its approval of Rule
14.11(m), the Commission approved the proposed rule change relating
to the listing and trading of shares of Fidelity Blue Chip Value
ETF, Fidelity Blue Chip Growth ETF, and Fidelity New Millennium ETF.
Id. The Commission published the notice of filing and immediate
effectiveness relating to the rule change to list and trade shares
of the Fidelity Growth Opportunities ETF, Fidelity Magellan ETF,
Fidelity Real Estate Investment ETF, and Fidelity Small-Mid Cap
Opportunities ETF on November 30, 2020. See Securities Exchange
Release No. 90530 (November 30, 2020), 85 FR 78366 (December 4,
2020) (SR-CboeBZX-2020-085) (``Notice'').
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The Issuer filed a ninth amended application for an order under
Section 6(c) of the 1940 Act for exemptions from various provisions of
the 1940 Act and rules thereunder (the ``Prior Application'').\6\ On
December 10, 2019, the Commission issued an order (the ``Prior
Exemptive Order'') under the 1940 Act granting the exemptions requested
in the Application.\7\
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\6\ See File No. 812-14364, dated November 8, 2019.
\7\ See Investment Company Act Release No. 33712, December 10,
2019.
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Under the Prior Exemptive Order, the Funds are required to publish
a basket of securities and cash that, while different from the Fund's
portfolio, is designed to closely track its daily performance (i.e.,
the Tracking Basket). The Prior Application stated that the Tracking
Basket will solely consist of a combination of (i) select recently
disclosed portfolio holdings (``Strategy Components''); (ii) liquid
U.S. exchange-traded funds (``ETFs'') that convey information about the
types of instruments (that are not otherwise fully represented by the
Strategy Components) in which a Fund invests (``Representative ETFs'');
and (iii) cash and cash equivalents. As set forth in the Approval Order
and in the Notice, investments made by the Funds will comply with the
conditions set forth in the Prior Application and the Prior Exemptive
Order.
On October 30, 2020, as amended June 30, 2021, the Issuer sought to
[[Page 51942]]
amend the Prior Exemptive Order to permit the Issuer to also select
securities from the universe from which a Fund's investments are
selected such as a broad-based market index (``Investment Universe'')
in the Fund's Tracking Basket.\8\ On August 5, 2021, the Commission
issued an amended order that, among other things, permits the Issuer to
include select securities from the Fund's Investment Universe in the
Fund's Tracking Basket (the ``Updated Exemptive Order'').\9\
Accordingly, the Funds will comply with this condition of the Updated
Application and the Updated Exemptive Order. Except for the change
noted above, all other representations made in the respective rule
filings remain unchanged and will continue to constitute continuing
listing requirements for the Funds. The Funds will also continue to
comply with the requirements of Rule 14.11(m).
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\8\ See File No. 812-15175, dated June 30, 2021. The amendment
also sought to provide for the use of creation baskets that include
instruments that are not included, or that are included with
different weightings, in the Fund's Tracking Basket. Accordingly,
the Exchange has filed a separate proposed rule change to amend Rule
14.11 to provide for the use of creation baskets that include
instruments that are not included, or that are included with
different weightings, in the Fund's Tracking Basket. See Securities
Exchange Act No. 92626 (August 10, 2021) 86 FR 45792 (August 16,
2021) (SR-CboeBZX-2021-053) (Notice of Filing of a Proposed Rule
Change To Amend Rule 14.11(m) (Tracking Fund Shares) To Provide for
the Use of Custom Baskets Consistent With the Exemptive Relief
Issued Pursuant to the Investment Company Act of 1940 Applicable to
a Series of Tracking Fund Shares).
\9\ See Investment Company Act Release No. 34350, August 5,
2021.
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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.\10\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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The proposed rule change is designed to perfect the mechanism of a
free and open market and, in general, to protect investors and the
public interest. The proposed revision is intended to reflect the
change in the Updated Application and the Updated Exemptive Order that
permits the Issuer to include select securities from the Fund's
Investment Universe in the Fund's Tracking Basket. The proposed rule
change would permit the Funds to operate consistent with this updated
condition in the Updated Application and the Updated Exemptive Order.
Furthermore, Exchange 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 if, among other things, 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 of the
Commission Staff under the 1940 Act to the Investment Company with
respect to the series of Tracking Funds Shares. Therefore, the proposed
rule change would allow the Exchange to enforce compliance by its
members and persons associated with its members, as provided in Section
6(b)(1) of the Act.\12\ Except for the changes noted above, all other
representations made in the respective rule filings remain unchanged
and, as noted, will continue to constitute continuing listing
requirements for the Funds.
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\12\ 15 U.S.C. 78f(b)(1).
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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. As noted, the purpose of the
filing is to reflect an amendment to the Prior Exemptive Order
governing the listing and trading of these Funds. To the extent that
the proposed rule change would continue to permit listing and trading
of another type of actively-managed ETF that has characteristics
different from existing actively-managed and index ETFs, the Exchange
believes that the proposal would benefit investors by continuing to
promote competition among various ETF products.
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)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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 pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \15\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
states that the Funds will continue to comply with the requirements of
BZX Rule 14.11(m) and that waiver of the operative delay would allow
the Funds to operate in a manner consistent with the Updated
Application and Updated Exemptive Order. 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 hereby waives the 30-day operative delay
and designates the proposed rule change operative upon filing.\16\
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\15\ 17 CFR 240.19b-4(f)(6)(iii).
\16\ 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
[[Page 51943]]
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
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#6a181f060f47090507070f041e192a190f09440d051c"><span class="__cf_email__" data-cfemail="a4d6d1c8c189c7cbc9c9c1cad0d7e4d7c1c78ac3cbd2">[email protected]</span></a>. Please include
File Number SR-CboeBZX-2021-060 on the subject line.
Paper Comments
<bullet> 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-2021-060. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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-2021-060 and should be submitted
on or before October 8, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-20079 Filed 9-16-21; 8:45 am]
BILLING CODE 8011-01-P
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