Cboe BZX Exchange Proposed Rule Change to Amend Exchange Rule 14

Summary

SIFMA AMG provided comments to the U.S. Securities and Exchange Commission (SEC) in response to the proposed rule change from the Cboe BZX Exchange, Inc. to amend Exchange Rule 14.

Excerpt

The Asset Management Group of the Securities Industry and Financial Markets
Association ("SIFMA AMG") ¹ respectfully submits this comment letter to the U.S. Securities and Exchange Commission (the "Commission") in response to the proposed rule change from the Cboe BZX Exchange, Inc. to amend Exchange Rule 14.2 (Failure to Meet Listing Standards).

The proposed amendment would authorize the Listing Qualifications Department to grant companies - in this case, sponsors of exchange traded funds ("ETFs") - an additional 180-day compliance period for deficiencies related to beneficial holders continued listing standard.

SIFMA AMG supports the proposed rule change.

As a general matter, the market should ultimately determine which products succeed, but it can be challenging for new funds to develop a broad shareholder base amidst the prevalence of ETF and ETP products.

The amendment would permit the Exchange to take signs of tangible progress into
account rather than serve as an automatic or indefinite extension for non-viable listings.

As the Rule 19b-4 filing notes, some laddered strategies utilize a tranche of ETFs which each have their own unique date parameters. The dynamics and timing of such strategies have implications for beneficial shareholder activity as the strategy goes through its expected life cycle. Later-dated ETFs are a part of the overall strategy but would not be expected to attract assets in the same way as if they were stand-alone products.

While the proposed rule amendment relates solely to the compliance time frame, SIFMA AMG encourages the Exchange to periodically revisit the beneficial owner threshold and the de-listing standards. ²

For the reasons discussed above, SIFMA AMG encourages approval of the Exchange's proposed rule amendment. If you have any questions or need any additional information, please contact Kevin Ehrlich at 202.962.7336.