Notice2023-27786
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend BZX Rule 14.11(e)(4)(C)(i) (Commodity-Based Trust Shares)
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
December 19, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 242 (Tuesday, December 19, 2023)</title>
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[Federal Register Volume 88, Number 242 (Tuesday, December 19, 2023)]
[Notices]
[Pages 87830-87832]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-27786]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99162; File No. SR-CboeBZX-2023-105]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Amend
BZX Rule 14.11(e)(4)(C)(i) (Commodity-Based Trust Shares)
December 13, 2023.
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 December
[[Page 87831]]
12, 2023, Cboe BZX Exchange, Inc. (``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 Exchange filed the proposal as a ``non-
controversial'' proposed rule change pursuant to section
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(6) thereunder.\4\ 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a proposed rule change to (1) to amend Exchange Rule 14.11(e)(4)(C)(i)
(``Commodity-Based Trust Shares''); and (2) amend 14.11(e)(4)(C)(ii) to
state that the term ``commodity'' is defined in section 1a(9) of the
Commodity Exchange Act.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes (1) to amend Exchange Rule 14.11(e)(4)(C)(i)
(``Commodity-Based Trust Shares''); and (2) to amend 14.11(e)(4)(C)(ii)
to state that the term ``commodity'' is defined in section 1a(9) of the
Commodity Exchange Act. The proposed rules are identical to NYSE Arca,
Inc. (``Arca'') Rules 8.201-E(c)(1) and (2), respectively.\5\
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\5\ See Securities and Exchange Act Nos. 89310 (July 14, 2020)
85 FR 43932 (July 20, 2020) (SR-NYSEArca-2020-59) (Notice of Filing
of Proposed Rule Change To Amend NYSE Arca Rule 8.201-E (Commodity-
Based Trust Shares) and To Permit the Listing and Trading of Shares
of the United States Gold and Treasury Investment Trust Under NYSE
Arca Rule 8.201-E); 90216 (October 16, 2020) 85 FR 67401 (October
22, 2020) (Order Granting Accelerated Approval of a Proposed Rule
Change, as Modified by Amendment No. 3, To Amend NYSE Arca Rule
8.201-E (Commodity-Based Trust Shares) and To Permit the Listing and
Trading of Shares of the Wilshire [w]Shares Enhanced Gold Trust
Under Amended NYSE Arca Rule 8.201-E).
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Under Exchange Rule 14.11(e)(4), the Exchange may propose to list
and/or trade pursuant to UTP ``Commodity-Based Trust Shares.'' \6\ Rule
14.11(e)(4)(C)(1) currently states that such securities are issued by a
trust in a specified aggregate minimum number in return for a deposit
of a quantity of the underlying commodity, and that, when aggregated in
the same specified minimum number, may be redeemed at a holder's
request by such trust which will deliver to the redeeming holder the
quantity of the underlying commodity.
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\6\ Commodity-Based Trust Shares are securities issued by a
trust that represents investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust. Rule 14.11(e)(4)(C)(i) defines the term ``Commodity-Based
Trust Shares'' as follows: the term ``Commodity-Based Trust Shares''
means a security (a) that is issued by a trust (``Trust'') that
holds a specified commodity deposited with the Trust; (b) that is
issued by such Trust in a specified aggregate minimum number in
return for a deposit of a quantity of the underlying commodity; and
(c) that, when aggregated in the same specified minimum number, may
be redeemed at a holder's request by such Trust which will deliver
to the redeeming holder the quantity of the underlying commodity.
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The Exchange proposes to amend Rule 14.11(e)(4)(C)(1) to provide:
the term ``Commodity-Based Trust Shares'' means a security (a) that is
issued by a trust (``Trust'') that holds (1) a specified commodity
deposited with the Trust, or (2) a specified commodity and, in addition
to such specified commodity, cash; (b) that is issued by such Trust in
a specified aggregate minimum number in return for a deposit of a
quantity of the underlying commodity and/or cash; and (c) that, when
aggregated in the same specified minimum number, may be redeemed at a
holder's request by such Trust which will deliver to the redeeming
holder the quantity of the underlying commodity and/or cash. Given the
competitive marketplace for exchange listings, the Exchange is
conforming its listing rules to that of another exchange.\7\
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\7\ See Arca Rule 8.201-E(c)(1).
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The Exchange further proposes to amend Rule 14.11(e)(4)(C)(ii) to
state that the term ``commodity'' is defined in section 1a(9) of the
Commodity Exchange Act (rather than section 1(a)(4) as currently
referenced in Rule 14.11(e)(4)(C)(ii)) to reflect an amendment to the
Commodity Exchange Act included in the Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010.\8\
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\8\ Public Law 111-203, 124 Stat. 1900 (2010).
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Last, the Exchange proposes to correct ministerial errors in Rule
14.11(e)(4)(C)(ii) to remove several errant parentheses.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Act and the rules and regulations thereunder applicable to the
Exchange and, in particular, the requirements of section 6(b) of the
Act.\9\ Specifically, the Exchange believes the proposed rule change is
consistent with the section 6(b)(5) \10\ 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.
Additionally, the Exchange believes the proposed rule change is
consistent with the section 6(b)(5) \11\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
\11\ Id.
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As noted above, the marketplace for exchange listings is highly
competitive, and the Exchange's proposal is merely conforming its
listing rules to that of another exchange. The Exchange believes the
proposed change will facilitate the listing and trading of additional
types of exchange-traded derivative securities products that will
enhance competition among market participants, to the benefit of
investors and the marketplace.
The Exchange's proposal to amend Rule 14.11(e)(4)(C)(ii) to state
that the term ``commodity'' is defined in section 1a(9) of the
Commodity Exchange Act (rather than section 1(a)(4) as currently
referenced in 14.11(e)(4)(C)(ii)) reflects an amendment to the
Commodity Exchange Act included in the Dodd-Frank Wall Street Reform
and Consumer
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Protection Act of 2010.\12\ Furthermore, the proposed amendment is
identical to Arca Rule 8.201-E(c)(2). The Exchange also believes its
proposal to correct ministerial errors in Rule 14.11(e)(4)(C)(ii) will
provide clarity in the Exchange's rulebook to the benefit of all
investors.
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\12\ Supra note 6.
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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 purposes of the Act. The proposed rule change to
Rule 14.11(e)(4)(C)(ii) does not address competitive issues, but
rather, as discussed above, is merely intended to correct a reference
to a modified Commodity Exchange Act rule. The Exchange believes the
proposed rule change to Rule 14.11(e)(4)(C)(i) will enhance competition
by accommodating Exchange trading of additional exchange-traded
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
Pursuant to section 19(b)(3)(A) of the Act \13\ and Rule 19b-
4(f)(6) \14\ thereunder, the Exchange has designated this proposal as
one that effects a change that: (i) does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) by its terms, does not
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate if consistent with the
protection of investors and the public interest.\15\
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ 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) \16\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange requested
that the Commission waive the 30-day operative delay so that the
proposal may become operative immediately upon filing. The proposed
rule change, which modifies the Exchange's rules by conforming the
definition of Commodity-Based Trust Shares with the same definition
used by another national securities exchange \17\ and corrects the
citation for the term ``commodity,'' as defined in the Commodity
Exchange Act, raises no unique or novel legal or regulatory issues and
will lessen any potential confusion among market participants.
Therefore, 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.\18\
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\16\ 17 CFR 240.19b-4(f)(6)(iii).
\17\ See supra note 7.
\18\ 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
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#9ae8eff6ffb7f9f5f7f7fff4eee9dae9fff9b4fdf5ec"><span class="__cf_email__" data-cfemail="592b2c353c743a3634343c372d2a192a3c3a773e362f">[email protected]</span></a>. Please include
file number SR-CboeBZX-2023-105 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-2023-105. 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="https://www.sec.gov/rules/sro.shtml">https://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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-CboeBZX-2023-105 and should
be submitted on or before January 9, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-27786 Filed 12-18-23; 8:45 am]
BILLING CODE 8011-01-P
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