30 day notice

Federal Register / Vol. 85, No. 132 / Thursday, July 9, 2020 / Notices
Representative,20 custodian, Reporting
Authority, distributor, or administrator,
who has access to information regarding
the Fund’s portfolio composition or
changes thereto or its Creation Basket,
must be subject to procedures designed
to prevent the use and dissemination of
material nonpublic information
regarding the applicable Fund portfolio
or changes thereto or the Creation
Basket.21 Moreover, if any such person
or entity is registered as a broker-dealer
or affiliated with a broker-dealer, such
person or entity must erect and
maintain a ‘‘fire wall’’ between the
person or entity and the broker-dealer
with respect to access to information
concerning the composition of and/or
changes to such Fund’s portfolio or
Creation Basket.22 Finally, the Exchange
represents that trading of the Shares
through the Exchange will be subject to
the Exchange’s surveillance procedures
for derivative products, including
Managed Portfolio Shares,23 and that its
surveillance procedures are adequate to
properly monitor the trading of the
Shares on the Exchange during all
trading sessions and to deter and detect
violations of Exchange rules and the
applicable federal securities laws.
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Shares subject to the Exchange’s
existing rules governing the trading of
equity securities. Moreover, prior to the
commencement of trading, the Exchange
will inform its members in an
Information Circular (‘‘Circular’’) of the
special characteristics and risks
associated with trading the Shares.24
In support of this proposal, the
Exchange represents that:
20 See

BZX Rule 14.11(k)(3)(C).
BZX Rule 14.11(k)(2)(E).
22 See id. The Exchange represents that any
person or entity who has access to information
regarding the Fund’s portfolio composition or
changes thereto or the Creation Basket will be
subject to procedures designed to prevent the use
and dissemination of material nonpublic
information regarding the portfolio composition or
changes thereto or the Creation Basket.
23 See BZX Rule 14.11(k)(2)(C), which requires, as
part of the surveillance procedures for Managed
Portfolio Shares, the Fund’s investment adviser to,
upon request by the Exchange or the Financial
Industry Regulatory Authority (‘‘FINRA’’), on behalf
of the Exchange, make available to the Exchange or
FINRA the daily portfolio holdings of each series
of Managed Portfolio Shares.
24 The Exchange represents that the Circular will
discuss the following: (1) Procedures for purchases
and redemptions of Shares; (2) BZX Rule 3.7, which
imposes suitability obligations on Exchange
members with respect to recommending
transactions in the Shares to customers; (3) how
information regarding the VIIV is disseminated; (4)
the requirement that members deliver a prospectus
to investors purchasing newly issued Shares prior
to or concurrently with the confirmation of a
transaction; (5) trading information; and (6) that the
portfolio holdings will be disclosed within at least
60 days following the end of every fiscal quarter.

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21 See

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(1) The Shares will conform to the
initial and continued listing criteria
under BZX Rule 14.11(k).
(2) A minimum of 100,000 Shares of
the Fund will be outstanding at the
commencement of trading on the
Exchange.
(3) The Exchange or FINRA, on behalf
of the Exchange, or both, will
communicate as needed, and may
obtain trading information, regarding
trading in the Shares, and the
underlying exchange-traded instruments
with other markets and other entities
that are members of the ISG. In addition,
the Exchange may obtain information
regarding trading in the Shares and the
underlying exchange-traded instruments
from markets and other entities with
which the Exchange has in place a
comprehensive surveillance sharing
agreement.
(4) The Exchange has appropriate
rules to facilitate transactions in the
Shares during all trading sessions in
which the Shares trade.
(5) For initial and continued listing,
the Fund will be in compliance with
Rule 10A–3 under the Act.25
(6) The Fund’s holdings will conform
to the permissible investments as set
forth in the Exemptive Application and
Exemptive Order, and investments
made by the Fund will be consistent
with all requirements set forth in the
Exemptive Application and Exemptive
Order. The Fund’s investments will be
consistent with its investment objective
and will not be used to enhance
leverage.
The Exchange represents that all
statements and representations made in
the filing regarding: (1) The description
of the portfolio or reference assets; (2)
limitations on portfolio holdings or
reference assets; (3) dissemination and
availability of the VIIV, reference assets,
and intraday indicative values; and (4)
the applicability of Exchange rules
constitute continued listing
requirements for listing the Shares on
the Exchange. In addition, the Exchange
represents that the issuer will advise the
Exchange of any failure by the Fund to
comply with the continued listing
requirements and, pursuant to its
obligations under Section 19(g)(1) of the
Act, the Exchange will surveil for
compliance with the continued listing
requirements. If the Fund is not in
compliance with the applicable listing
requirements, the Exchange will
commence delisting procedures under
BZX Rule 14.12.
For the foregoing reasons, the
Commission finds that the proposed
rule change is consistent with Section

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25 See

17 CFR 240.10A–3.

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41265

6(b)(5) of the Act 26 and Section
11A(a)(1)(C)(iii) of the Act 27 and the
rules and regulations thereunder
applicable to a national securities
exchange.
IV. Conclusion
It is therefore ordered,pursuant to
Section 19(b)(2) of the Act,28 that the
proposed rule change (SR-CboeBZX–
2020–029), as modified by Amendment
No. 1, be, and it hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–14742 Filed 7–8–20; 8:45 am]
BILLING CODE 8011–01–P

SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–259, OMB Control No.
3235–0269]

Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
Rule 17f–5

Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 350l–3520), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) requests for extension of the
previously approved collections of
information discussed below.
Rule 17f–5 (17 CFR 270.17f–5) under
the Investment Company Act of 1940
[15 U.S.C. 80a] (the ‘‘Act’’) governs the
custody of the assets of registered
management investment companies
(‘‘funds’’) with custodians outside the
United States. Under rule 17f–5, a fund
or its foreign custody manager (as
delegated by the fund’s board) may
maintain the fund’s foreign assets in the
care of an eligible fund custodian under
certain conditions. If the fund’s board
delegates to a foreign custody manager
authority to place foreign assets, the
fund’s board must find that it is
reasonable to rely on each delegate the
board selects to act as the fund’s foreign
custody manager. The delegate must
26 15

U.S.C. 78f(b)(5).
U.S.C. 78k–1(a)(1)(C)(iii).
28 15 U.S.C. 78s(b)(1).
29 17 CFR 200.30–3(a)(12).
27 15

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Federal Register / Vol. 85, No. 132 / Thursday, July 9, 2020 / Notices

agree to provide written reports that
notify the board when the fund’s assets
are placed with a foreign custodian and
when any material change occurs in the
fund’s custody arrangements. The
delegate must agree to exercise
reasonable care, prudence, and
diligence, or to adhere to a higher
standard of care. When the foreign
custody manager selects an eligible
foreign custodian, it must determine
that the fund’s assets will be subject to
reasonable care if maintained with that
custodian, and that the written contract
that governs each custody arrangement
will provide reasonable care for fund
assets. The contract must contain
certain specified provisions or others
that provide at least equivalent care.
The foreign custody manager must
establish a system to monitor the
performance of the contract and the
appropriateness of continuing to
maintain assets with the eligible foreign
custodian.
The collection of information
requirements in rule 17f–5 are intended
to provide protection for fund assets
maintained with a foreign bank
custodian whose use is not authorized
by statutory provisions that govern fund
custody arrangements,1 and that is not
subject to regulation and examination
by U.S. regulators. The requirement that
the fund board determine that it is
reasonable to rely on each delegate is
intended to ensure that the board
carefully considers each delegate’s
qualifications to perform its
responsibilities. The requirement that
the delegate provide written reports to
the board is intended to ensure that the
delegate notifies the board of important
developments concerning custody
arrangements so that the board may
exercise effective oversight. The
requirement that the delegate agree to
exercise reasonable care is intended to
provide assurances to the fund that the
delegate will properly perform its
duties.
The requirements that the foreign
custody manager determine that fund
assets will be subject to reasonable care
with the eligible foreign custodian and
under the custody contract, and that
each contract contain specified
provisions or equivalent provisions, are
intended to ensure that the delegate has
evaluated the level of care provided by
the custodian, that it weighs the
adequacy of contractual provisions, and
that fund assets are protected by
minimal contractual safeguards. The
requirement that the foreign custody
manager establish a monitoring system
is intended to ensure that the manager
1 See

section 17(f) of the Act. 15 U.S.C. 80a–17(f).

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periodically reviews each custody
arrangement and takes appropriate
action if developing custody risks may
threaten fund assets.2
Commission staff estimates that each
year, approximately 90 registrants 3
could be required to make an average of
one response per registrant under rule
17f–5, requiring approximately 2.5
hours of board of director time per
response, to make the necessary
findings concerning foreign custody
managers. The total annual burden
associated with these requirements of
the rule is up to approximately 225
hours (90 registrants × 2.5 hours per
registrant). The staff further estimates
that during each year, approximately 15
global custodians 4 are required to make
an average of 4 responses per custodian
concerning the use of foreign custodians
other than depositories. The staff
estimates that each response will take
approximately 270 hours, requiring
approximately 1,080 total hours
annually per custodian (270 hours × 4
responses per custodian). The total
annual burden associated with these
requirements of the rule is
approximately 16,200 hours (15 global
custodians × 1,080 hours per custodian).
Therefore, the total annual burden of all
collection of information requirements
of rule 17f–5 is estimated to be up to
16,425 hours (225 + 16,200). The total
annual cost of burden hours is estimated
to be $4,779,225 ((225 hours × $4,465/
hour for board of director’s time +
(16,200 hours × $233/hour for a trust
administrator’s time)).5 Compliance
with the collection of information
requirements of the rule is necessary to
obtain the benefit of relying on the
rule’s permission for funds to maintain
their assets in foreign custodians.
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act. The estimate
2 The staff believes that subcustodian monitoring
does not involve ‘‘collection of information’’ within
the meaning of the Paperwork Reduction Act of
1995 (44 U.S.C. 3501–3520) (‘‘Paperwork Reduction
Act’’).
3 This figure is an estimate of the number of new
funds each year, based on data reported by funds
for 2017, 2018, and 2019. In practice, not all funds
will use foreign custody managers. The actual figure
therefore may be smaller.
4 This estimate is based on staff research.
5 Based on fund industry representations, the staff
estimated in 2014 that the average cost of board of
director time, for the board as a whole, was $4,000
per hour. Adjusting for inflation, the staff estimates
that the current average cost of board of director
time is approximately $4,465 per hour. The $233/
hour figure for a trust administrator is from
SIFMA’s Management & Professional Earnings in
the Securities Industry 2013, modified by
Commission staff to account for an 1800-hour workyear and inflation, and multiplied by 5.35 to
account for bonuses, firm size, employee benefits,
and overhead.

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is not derived from a comprehensive or
even a representative survey or study of
the costs of Commission rules and
forms.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Find this particular
information collection by selecting
‘‘Currently under 30-day Review—Open
for Public Comments’’ or by using the
search function. Written comments and
recommendations for the proposed
information collection should be sent
within 30 days of publication of this
notice to (i) www.reginfo.gov/public/do/
PRAMain and (ii) David Bottom,
Director/Chief Information Officer,
Securities and Exchange Commission,
c/o Cynthia Roscoe, 100 F Street NE,
Washington, DC 20549, or by sending an
email to: [email protected].
Dated: July 2, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–14749 Filed 7–8–20; 8:45 am]
BILLING CODE 8011–01–P

SURFACE TRANSPORTATION BOARD
[Docket No. AB 290 (Sub-No. 408X)]

Norfolk Southern Railway Company—
Abandonment Exemption—in Hudson
and Essex Counties, NJ
On June 19, 2020, Norfolk Southern
Railway Company (NSR) filed with the
Surface Transportation Board (Board) a
petition under 49 U.S.C. 10502 for
exemption from the prior approval
requirements of 49 U.S.C. 10903 to
abandon an approximately 8.6-mile rail
line, extending from milepost WD 2.9 in
the City of Jersey City, to milepost WD
11.5 in the Township of Montclair, in
Hudson and Essex Counties, NJ (the
Line). The Line traverses U.S. Postal
Service Zip Codes 07306, 07094, 07032,
07104, 07109, 07003, 07028, and 07042.
NSR states that it is seeking to
abandon the Line because the Line has
been dormant for more than a decade.1
1 NSR states that it has served no customers on
the Line since it acquired the property from the
Consolidated Rail Corporation in 1999. (Pet. 4, 11.)
According to NSR, in 2005, it discontinued service
over a 6.2-mile segment between milepost WD 2.2
in Jersey City and milepost WD 8.4 in Newark. (Id.)
See Norfolk S. Ry.—Discontinuance of Serv.
Exemption—Between Newark & Kearney, NJ, in
Essex & Hudson Ctys., NJ, AB 290 (Sub-No. 242X)
(STB served Jan. 18, 2005). NSR states that New
Jersey Transit operated commuter rail passenger
service over the Line until 2002, (pet. 10–11), and
the 6.2-mile segment served as an overhead route
to serve one customer located on the Newark
Industrial Track, (id. at 4–5). NSR states that no
freight traffic has moved over the remaining
segment of the Line from milepost WD 8.4 to

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