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Federal Register / Vol. 86, No. 189 / Monday, October 4, 2021 / Notices the definition of Tracking Fund Share in BZX Rule 14.11m3A to permit creations and redemptions of shares in return for a Custom Basket in addition to the Tracking Basket, to the extent permitted by a funds exemptive relief.7
Further, the Exchange proposes to define the term Custom Basket as a portfolio of securities that is different from the Tracking Basket and is otherwise consistent with the exemptive relief issued pursuant to the 1940 Act applicable to a series of Tracking Fund Shares.8 The Exchange also proposes to amend the definition of Reporting Authority in BZX Rule 14.11m3C
to include Custom Baskets among the types of information for which the Reporting Authority designated for a particular series of Tracking Fund Shares will be the official source for calculating and reporting such information.9
The Exchange proposes to amend BZX Rule 14.11m4 to incorporate specific initial and continued listing criteria relating to Custom Baskets.
Specifically, the Exchange proposes to add a new initial listing requirement to stipulate that the Exchange will obtain a representation from the issuer of each series of Tracking Fund Shares that the issuer and any person acting on behalf of the series of Tracking Fund Shares will comply with Regulation Fair Disclosure under the Exchange Act Regulation FD,10 including with 7 See proposed BZX Rule 14.11m3A defining Tracking Fund Share as a security that: i Represents an interest in an Investment Company organized as an open-end management investment company, that invests in a portfolio of securities selected by the Investment Companys investment adviser consistent with the Investment Companys investment objectives and policies; ii is issued in a specified aggregate minimum number in return for a deposit of a specified Tracking Basket or Custom Basket, as applicable, and/or a cash amount with a value equal to the next determined NAV; iii when aggregated in the same specified minimum number, may be redeemed at a holders request, which holder will be paid a specified Tracking Basket or Custom Basket, as applicable, 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.
8 See proposed BZX Rule 14.11m3F.
9 See proposed BZX Rule 14.11m3C defining Reporting Authority in respect of a particular series of Tracking Fund Shares as 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 Custom Basket; 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.
10 17 CFR 243.100.

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respect to any Custom Basket.11 The Exchange also proposes to add a new continued listing requirement that, with respect to each Custom Basket utilized by a series of Tracking Fund Shares, each business day, before the opening of trading in Regular Trading Hours,12 the Investment Company shall make publicly available on its website the composition of any Custom Basket transacted on the previous business day, except a Custom Basket that differs from the applicable Tracking Basket only with respect to cash.13
Finally, the Exchange proposes to amend BZX Rules 14.11m2E and F, which contain requirements that specified parties must erect and maintain fire walls with respect to access to information concerning the Fund Portfolio and Tracking Basket and enact procedures designed to prevent the use and dissemination of material nonpublic information regarding the Fund Portfolio and Tracking Basket, so that these requirements would also cover information concerning Custom Baskets. As proposed to be amended, BZX Rule 14.11m2E would require that, if the investment adviser to the Investment Company issuing Tracking Fund Shares is registered as a brokerdealer or is affiliated with a brokerdealer, such investment adviser will erect and maintain a fire wall between the investment adviser and personnel of the broker-dealer or brokerdealer affiliate, as applicable, with respect to access to information concerning the composition of and/or changes to the Fund Portfolio, the Tracking Basket, and/or the Custom Basket, as applicable. In addition, any person related to the investment adviser or Investment Company who makes decisions pertaining to the Investment Companys Fund Portfolio, the Tracking Basket, and/or the Custom Basket or has access to nonpublic information regarding the Fund Portfolio, the Tracking Basket, and/or the Custom Basket, as applicable, or changes thereto, must be subject to procedures designed to prevent the use and 11 See proposed BZX Rule 14.11m4Aiic.
BZX Rule 14.11m4Aii currently provides that 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 the NAV, the Tracking Basket, and the Fund Portfolio will be made available to all market participants at the same time when disclosed. The current requirements would be designated as BZX Rule 14.11m4Aiia and b.
12 The term Regular Trading Hours means the time between 9:30 a.m. and 4:00 p.m. Eastern Time.
See BZX Rule 1.5w.
13 See proposed BZX Rule 14.11m4Bii. The Exchange also proposes to renumber the remainder of BZX Rule 14.11m4B.

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dissemination of material nonpublic information regarding the Fund Portfolio, the Tracking Basket, and/or the Custom Basket, as applicable, or changes thereto. Proposed BZX Rule 14.11m2F would require that any person or entity, including a custodian, Reporting Authority, distributor, or administrator, who has access to nonpublic information regarding the Fund Portfolio, the Tracking Basket, or the Custom Basket, as applicable, or changes thereto, must be subject to procedures designed to prevent the use and dissemination of material nonpublic information regarding the applicable Fund Portfolio, the Tracking Basket, or the Custom Basket, as applicable, 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, Tracking Basket, or Custom Basket, as applicable.
III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the Exchange Act and rules and regulations thereunder applicable to a national securities exchange.14 In particular, the Commission finds that the proposed rule change is consistent with Section 6b5 of the Exchange Act,15 which requires, among other things, that the Exchanges 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.
The Commission previously approved BZX Rule 14.11m to permit the listing and trading of Tracking Fund Shares.16
14 In approving this proposed rule change, the Commission notes that it has considered the proposed rules impact on efficiency, competition, and capital formation. See 15 U.S.C. 78cf.
15 15 U.S.C. 78fb5.
16 See Securities Exchange Act Release No. 88887
May 15, 2020, 85 FR 30990 May 21, 2020 SR
CboeBZX2019107 approving proposal to adopt Rule 14.11m to permit the listing and trading of 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 2020 Order. The Exchange must file a separate proposed rule change pursuant to Section
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