Notice2025-19912
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To List and Trade Shares of the BondBloxx Private Credit Trust Under BZX Rule 14.11(f), Trust Issued Receipts
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
November 17, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 219 (Monday, November 17, 2025)</title>
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[Federal Register Volume 90, Number 219 (Monday, November 17, 2025)]
[Notices]
[Pages 51420-51423]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19912]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104175; File No. SR-CboeBZX-2025-096]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change To List and Trade Shares of the BondBloxx Private
Credit Trust Under BZX Rule 14.11(f), Trust Issued Receipts
November 6, 2025.
I. Introduction
On July 25, 2025, Cboe BZX Exchange, Inc. (``BZX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
list and trade shares (``Shares'') of the BondBloxx Private Credit
Trust (``Trust'') under BZX Rule 14.11(f). The proposed rule change was
published for comment in the Federal Register on August 12, 2025.\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. 103654 (Aug. 7,
2025), 90 FR 38849 (``Notice''). While the Commission is currently
``accepting'' comments, in that we will not prevent the submission
of letters via the usual methods (webform, email, or mail), the
Commission will not be posting them until after the resumption of
duties. Please note that there may be a delay in the public
availability of comments after the resumption of duties; comments
will be treated as if received on the original submission date.
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On September 22, 2025, pursuant to Section 19(b)(2) of the Act,\4\
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.\5\ This order institutes proceedings under Section 19(b)(2)(B)
of the Act \6\ to determine whether to disapprove the proposed rule
change.
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\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 104017, 90 FR 46276
(Sept. 25, 2025) (designating November 10, 2025, as the date by
which the Commission shall either approve, disapprove, or institute
proceedings to determine whether to disapprove the proposed rule
change).
\6\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change <SUP>7</SUP>
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\7\ Additional information regarding the Trust and the Shares
can be found in the Notice, supra note 3.
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As described in the Notice, the Exchange proposes to list and trade
[[Page 51421]]
Shares of the Trust \8\ under BZX Rule 14.11(f)(4), which governs the
listing and trading of Trust Issued Receipts \9\ on the Exchange.
According to the Exchange, the Trust seeks to provide risk-adjusted
returns primarily through distributions of current income from the
Trust's portfolio.\10\
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\8\ The Trust has filed an amended registration statement on
Form S-1 under the Securities Act of 1933, dated May 21, 2025 (File
No. 333-283852) (``Registration Statement''). The description of the
Trust and the Shares contained herein is based on the Registration
Statement. The Exchange states the Registration Statement for the
Trust is not yet effective, and the Trust will not trade on the
Exchange until such time that the Registration Statement is
effective. See Notice, supra note 3, 90 FR at 38850, n. 5.
\9\ Rule 14.11(f)(4) applies to Trust Issued Receipts that
invest in ``Investment Shares'' or ``Financial Instruments.'' The
term ``Investment Shares,'' as defined in Rule 14.11(f)(4)(A)(i),
means a security (a) that is issued by a trust, partnership,
commodity pool or other similar entity that invests in any
combination of futures contracts, options on futures contracts,
forward contracts, commodities, swaps or high credit quality short-
term fixed income securities or other securities; and (b) issued and
redeemed daily at net asset value in amounts correlating to the
number of receipts created and redeemed in a specified aggregate
minimum number. The term ``Financial Instruments,'' as defined in
Rule 14.11(f)(4)(A)(iv), means any combination of investments,
including cash; securities; options on securities and indices;
futures contracts; options on futures contracts; forward contracts;
equity caps, collars and floors; and swap agreements.
\10\ The Exchange states the Trust intends to operate its
business so that it is falls outside of the definition of an
investment company under the Investment Company Act of 1940 (the
``1940 Act''). See Notice, supra note 3, 90 FR at 38850, n. 6.
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Description of the Trust
BondBloxx Investment Management Corporation (``Advisor'') is the
advisor to the Trust and is responsible for the overall management of
the Trust's business activities. HCG Fund Management LP (``Sub-
Advisor'') is responsible for the day-to-day management of the Trust's
private credit assets. Brown Brothers Harriman & Co. serves as the
administrator, custodian, and the transfer agent. CSC Delaware Trust
Company, a Delaware trust company, is the sole trustee of the Trust.
According to the Exchange, the Trust intends to achieve its
investment objective by constructing a diversified portfolio of
consumer and small business private credit assets.\11\ The Exchange
states the Trust intends to target primarily whole loans that the
Advisor believes will offer stable and predictable cash flows.\12\ The
Trust generally intends to focus on loans that have short and medium
terms (e.g., less than 60 months) which, through principal
amortization, tend to have low duration (e.g., less than 30
months).\13\
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\11\ See Notice, supra note 3, 90 FR at 38850.
\12\ See id.
\13\ See id.
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Investable Instruments and Trust Liquidity
The Exchange states the Trust intends to hold the following
instruments: personal installment loans, small business loans, student
loans, point of sale loans, and asset backed securities that are backed
by such loans (collectively ``Private Credit Assets''), investment
grade bonds, U.S. Treasuries, shares of certain exchange traded funds
that invest in U.S. Treasuries or other short-term, interest bearing
assets and cash and cash equivalents,\14\ including funds of an
affiliated Trust for which the Advisor acts as the investment
adviser.\15\
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\14\ Cash equivalents are short-term instruments with maturities
of less than 3 months, specifically including U.S. Government
securities, certificates of deposit, bankers' acceptances,
repurchase and reverse repurchase agreements, bank time deposits,
commercial paper, and money market funds. This definition is
consistent with the definition of cash and cash equivalents in
Exchange Rule 14.11(i)(4)(C)(iii).
\15\ See Notice, supra note 3, 90 FR at 38850.
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According to the Exchange, there is limited sell-side liquidity
available in the market for Private Credit Assets.\16\ As such, the
Advisor is proposing to utilize the following strategy to facilitate
redemptions in the Trust:
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\16\ See id.
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1. The Trust will maintain a portion of the portfolio in cash and
cash equivalents (``Liquidity Sleeve''). Under normal circumstances,
the Trust expects to hold approximately 20% of the portfolio in these
liquid assets. According to the Exchange, the Advisor expects that it
will generally be able to fulfill redemption orders using this
position.\17\ The Advisor may also strategically increase the size of
the Liquidity Sleeve in order to better facilitate anticipated
redemptions by retaining, rather than distributing the paydowns from
Private Credit Assets as further described below.
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\17\ See Notice, supra note 3, 90 FR at 38851.
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2. The remaining 80% of the Trust's holdings will consist of
Private Credit Assets. The Exchange states these are short duration,
high yielding products that are underwritten to pay a weighted average
of 8% of the total Trust assets under management (``AUM'') per month or
10% of the private credit AUM per month.\18\ The underwritten yields
are currently 10% and at origination typically have an underwritten
average duration limit of 3 years, with a target for the initial
portfolio of less than 1 year.\19\ The monthly cash flows, which are
received throughout the month, may be reinvested to the extent
necessary to maintain the approximate 20/80 allocation between the
Liquidity Sleeve and Private Credit Assets described above.\20\ The
Trust will consider the current level of the Liquidity Sleeve, among
other factors, in determining its distribution policy, and may
determine to use accumulated cash received from payments of interest
and principal on its Private Credit Assets as well as cash proceeds
from loan repayments to replenish or increase the Liquidity Sleeve
before distributing such amounts to shareholders.\21\
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\18\ See id.
\19\ See id.
\20\ See id.
\21\ See id.
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3. Further, according to the Exchange, in the event that the cash
and cash equivalents required to accommodate a series of redemptions or
a single large redemption approaches the size of the Trust's Liquidity
Sleeve, the Trust may:
a. Sell Private Credit Assets in the secondary market to raise
cash;
b. Arrange a line of credit or other financing facility with a bank
or broker dealer, using the portfolio of Private Credit Assets as
collateral.\22\
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\22\ See id.
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The Exchange states these options will likely come at a cost to the
Trust or may not be available to the Trust depending on market
conditions.\23\
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\23\ See id.
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4. In the event that items 1-3 above do not provide sufficient cash
and cash equivalents to the Liquidity Sleeve to accommodate redemptions
in the Trust, the Exchange states redemptions may be suspended until
the Trust accumulates enough cash to facilitate additional redemptions,
which the Advisor does not expect to last for longer than approximately
2.5 months.\24\ In the event that the Advisor implements a restriction
on redemptions, the Shares on the secondary market may trade at deep
discount.\25\ According to the Exchange, the discount could potentially
serve to prompt investors to buy shares and potentially trigger primary
market activity.\26\
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\24\ See id.
\25\ See id.
\26\ See id.
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According to the Exchange, the Advisor believes that the liquidity
strategy laid out above will be sufficient to address concerns that may
arise from the relative illiquidity of the secondary market for selling
Private Credit Assets.\27\ Specifically, the Advisor believes that the
20% Liquidity Sleeve (with the flexibility to increase the
[[Page 51422]]
sleeve during times of potentially high redemptions) will provide the
Trust with sufficient liquidity to manage redemptions under the vast
majority of market conditions.\28\ Additionally, because the Trust will
target shorter duration loans that are underwritten to generate cash
payments of interest and principal amortization of approximately 8% of
the Trust's AUM per month, even in the event that the Trust's Liquidity
Sleeve is exhausted, it is expected to be replenished by the cash
payments generated by the Private Credit Assets.\29\ In the event that
the cash generated by the Private Credit Assets is insufficient to
satisfy incoming redemptions the Trust would then have the ability to
facilitate additional redemptions by selling certain of the Private
Credit Assets and/or using the Private Credit Assets as collateral for
a cash loan from a bank or broker dealer.\30\ According to the
Exchange, in a worst case scenario, the Trust would temporarily suspend
redemptions.\31\ However, the Exchange states the Advisor does not
expect such a suspension to last for longer than approximately 2.5
months because of the cash expected to be generated by the Private
Credit Assets.\32\
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\27\ See id.
\28\ See id.
\29\ See id.
\30\ See id.
\31\ See id.
\32\ See id.
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In addition to the specific liquidity strategy described above, the
Exchange states that the small size of loans sourced through Fintech
lending platforms will enable the Trust to hold a portfolio that is
diversified by sector, source, vintage, count and geography, which will
help to manage idiosyncratic risk and ensure a diverse universe of
lenders.\33\ The Exchange states the small loan size means that the
Trust will need to hold a significant number of Private Credit Assets,
further ensuring diversity and minimizing the risk that any single
Private Credit Assets would have on the portfolio.\34\ Finally, the
Exchange states the Advisor believes that the cash yields and short
duration through regular principal amortization will, in addition to
enhancing the liquidity of the Trust, help manage volatility of
returns.\35\
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\33\ See id.
\34\ See id.
\35\ See id.
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Availability of Information
According to the Exchange, the net asset value (``NAV'') for the
Trust will be calculated by an independent third party once each
business day and will be disseminated daily to all market participants
at the same time.\36\ Pricing information will be available on the
Advisor's website including: (1) the prior business day's reported NAV,
the closing market price or the bid/ask price, daily trading volume,
and a calculation of the premium and discount of the closing market
price or bid/ask price against the NAV; and (2) data in chart format
displaying the frequency distribution of discounts and premiums of the
daily closing price against the NAV, within appropriate ranges, for
each of the four previous calendar quarters. The Trust will also
disclose its portfolio holdings on a daily basis on its website. The
aforementioned information will be published as of the close of
business and available on the Advisor's website at
<a href="http://www.bondbloxxetf.com">www.bondbloxxetf.com</a>.\37\
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\36\ See id. NAV means the total assets of the Trust including,
but not limited to, all cash and cash equivalents and private credit
assets, less any liabilities, divided by the total number of Shares
outstanding. The Trust's NAV is generally calculated at 4 p.m. ET.
See Notice, supra note 3, 90 FR at 38851, n. 9.
\37\ See Notice, supra note 3, 90 FR at 38852.
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According to the Exchange, the Trust generally values its assets
using market quotations when they are readily available.\38\ However,
according to the Exchange, whole loans, asset backed securities and
certain other types of private credit assets that the Trust may hold
may not have readily available market quotations.\39\ In accordance
with the Advisor's valuation policies and procedures, the Sub-Advisor
will fair value the Trust's private credit assets based on a discounted
cash flow (``DCF'') analysis of the loan portfolio's expected future
net cash flows over the lifetime of the loan, discounted by the
expected return.\40\ Further, in accordance with the valuation policy
and procedures, an independent third-party pricing service will provide
the inputs for the DCF model, including daily loan tapes (e.g., loan
balances, payment history, interest rates, and FICO scores) along with
forward outlook on the portfolio (e.g., loss expectation).\41\
Additionally, the model may incorporate any publicly available
information such as pricing from recent deals or information specific
to the Fintech lending platform.\42\ The model will be updated for
daily changes to reflect any new information regarding the borrower or
loan.\43\ Further, daily cash balances will reflect ending account
balances per the Trust's bank account; interest receivable will reflect
accrued interest balances for the loan portfolio per the loan
servicer's statement; and prepaid and other assets will reflect ending
accrued balances per the general ledger.\44\ According to the Exchange,
the Sub-Advisor will review for reasonableness the fair values of the
private credit assets provided by the independent third-party pricing
services.\45\
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\38\ See id.
\39\ See id.
\40\ See id. According to the Exchange, the difference between
the calculated net present value and carrying value of the loan
portfolio reflects the valuation adjustment that will be updated
daily. See id.
\41\ See id.
\42\ See id.
\43\ See id.
\44\ See id.
\45\ See id. According to the Exchange, ``fair value
calculations will involve significant professional judgment in the
application of both observable and unobservable attributes, and as a
result, the calculated NAV of the Trust's assets may differ from
their actual realizable value or future fair value.'' Id.
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Quotation and last-sale information regarding the Shares will be
disseminated through the facilities of the Consolidated Tape
Association. Pricing information regarding cash equivalents in which
the Trust will invest is generally available through nationally
recognized data services providers, such as Reuters and Bloomberg,
through subscription agreements.\46\
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\46\ See id.
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The Exchange states the Intraday Indicative Value (``IIV'') will be
updated during Regular Trading Hours to reflect changes in the value of
the Trust's holdings during the trading day.\47\ The IIV disseminated
during Regular Trading Hours should not be viewed as an actual real-
time update of the NAV, which will be calculated only once at the end
of each trading day.\48\ The IIV will be updated every 15 seconds, as
calculated by the Exchange or a third-party financial data provider
during the Exchange's Regular Trading Hours (9:30 a.m. to 4 p.m.
Eastern time).
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\47\ See id.
\48\ See id.
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III. Proceedings To Determine Whether To Approve or Disapprove SR-
CboeBZX-2025-096 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Act \49\ to determine whether the proposed rule
change should be approved or disapproved. Institution of such
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to any of the
[[Page 51423]]
issues involved. Rather, as described below, the Commission seeks and
encourages interested persons to provide comments on the proposed rule
change.
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\49\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Act,\50\ the Commission is
providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis of the proposal's consistency with Section 6(b)(5) of the Act,
which requires, among other things, that the rules of a national
securities exchange be ``designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade,'' and ``to protect investors and the public
interest.'' \51\
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\50\ Id.
\51\ 15 U.S.C. 78f(b)(5).
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The Commission asks that commenters address the sufficiency of the
Exchange's statements in support of the proposal, which are set forth
in the Notice, in addition to any other comments they may wish to
submit about the proposed rule change. In particular, the Commission
seeks comment on the following questions and asks commenters to submit
data where appropriate to support their views:
1. What are commenters' views generally with respect to the
liquidity and transparency of the markets for Private Credit Assets?
What sources of reliable pricing information (both intraday and end-of-
day) are available for the Private Credit Assets? Are such sources of
reliable pricing information generally available to investors? Do the
answers to these questions depend upon the type of Private Credit
Asset?
2. What are commenters' views on whether the proposal would
maintain alignment between intraday trading prices of the Shares and
the contemporaneous value of the underlying portfolio? Will the
proposed allocation of the Trust's holdings, including the liquidity
strategy described by the Exchange,\52\ facilitate alignment of the
secondary market prices of the Shares with the value of the Trust's
underlying portfolio? Why or why not? Will authorized participants and
market makers have sufficient information to value the Trust's
underlying portfolio and facilitate creation/redemption or trading in
the Shares, respectively? Why or why not?
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\52\ See supra notes 16-26 and accompanying text.
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3. Given the nature of the underlying assets held by the Trust,
what are commenters' views on whether the proposed Trust and Shares
would be susceptible to manipulation? What are commenters' views
generally on whether the Exchange's proposal is designed to prevent
fraudulent and manipulative acts and practices?
IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
views of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Act, and
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of views, data, and arguments, the
Commission will consider, pursuant to Rule 19b-4, any request for an
opportunity to make an oral presentation.\53\
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\53\ Section 19(b)(2) of the Act, as amended by the Securities
Acts Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Acts Amendments of 1975, Senate Comm.
on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by December 8, 2025. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
December 22, 2025.
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#b5c7c0d9d098d6dad8d8d0dbc1c6f5c6d0d69bd2dac3"><span class="__cf_email__" data-cfemail="493b3c252c642a2624242c273d3a093a2c2a672e263f">[email protected]</span></a>. Please include
file number SR-CboeBZX-2025-096 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-2025-096. 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 filing 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-2025-096 and should be submitted
on or before December 8, 2025. Rebuttal comments should be submitted by
December 22, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\54\
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\54\ 17 CFR 200.30-3(a)(57).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-19912 Filed 11-14-25; 8:45 am]
BILLING CODE 8011-01-P
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