SEC Division of Trading and Markets no-action letter: iShares Preferred Equity Index-Linked ETFs

4g,~~~ ~"~c~, UNITED STATES
' ~ SECURITIES AND EXCHANGE COMMISSION
J~'J ~o WASHINGTON, DC 20549
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DIVISION OF
TRADING AND MARKETS
December 3, 2018
P. Georgia Bullitt
Wilkie Farr &Gallagher LLP
787 Seventh Avenue
New York, NY 10019-6099
Re: iShares Preferred Equity Index-Linked Exchange Traded Funds File No. TP 19-01 Dear Ms. Bullitt:
In your letter dated December 3, 2018 (the "Letter"),1 as supplemented by conversations with the staff of the Division of Trading and Markets (the "Staff'), iShares Trust (the "Trust") on behalf of itself, and any national securities exchange on or through which shares ("Shares") of a series fund of the Trust (each, a "Fund") are listed (each, a "Listing Exchange") and/or any other trading market on which Shares may trade (with each such market referred to herein as a "Market"), B1ackRock Investments, LLC ("Distributor") and persons or entities engaging in transactions in Shares, including Authorized Participants (as defined in the Letter) and affiliated purchasers of the Funds and Authorized Participants, requests from the Staff, or from the Securities and Exchange Commission (the "Commission"), exemptions from, or interpretive or no-action advice regarding Rule lOb-17(b)(1)(v)(a) and (b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rules 101 and 102 of Regulation M, in connection with secondary market transactions in Shares and the creation or redemption of aggregations of Shares ("Creation Units"). The Trust is registered with the Commission under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end investment company. The Trust seeks the requested relief with respect to three Funds that are exchange traded funds ("ETFs") and that are managed to track an index (a "Referenced Index") containing (i) preferred securities or (ii) a combination of preferred securities, hybrid securities and/or fixed income securities (together, the "Preferred Funds"). The Preferred Funds include (i) the iShares U.S. Preferred Stock ETF ("PFF"), which was launched on March 26, 2007 and has been operating in compliance with class relief granted by the Staff and the Commission;2(ii) the iShares International Preferred Stock ETF ("IPFF"), which was launched on November 15, 2011 and has been operating in Each defined term in this letter has the same meaning as defined in the Letter, a copy of which we have attached, unless otherwise noted herein. Letter from James A. Brigagliano, Acting Assoc. Dir., Div. of Mkt. Regulation, to Stuart M. Strauss, Esq., Clifford Chance US LLP (Oct. 24, 2006) ("Equity Class Relief Letter").

Ms.Bullitt
December 3,2018 compliance with individual reliefgranted by the Staffand the Commission for such Fund;3 and (iii)the iShares Inv Grade Preferred and Income Securities ETF("IGPF"),which is a newly￾created series ofthe Trust and will be managed to track a Referenced Index that is comprised of both preferred securities and fixed income securities. You represent that PFF and IPFF will,as ofthe date ofthe Letter,comply with all ofthe Active ETF Reg.M Conditions. You also represent that IGPF will comply with all ofthe Active ETF Reg.MConditions immediately upon issuance. We are treating your request for reliefunder Rules 101,to bid for and purchase Shares, and 102ofRegulation M,to allow affiliated purchasers ofthe Funds and Authorized Participants to purchase Shares for investment purposes and redeem Shares,as arequest that the Staff confirm that it will not recommend enforcement action to the Commission ifthe Trust,Preferred Funds,the applicable Listing Exchanges,other Markets,the Distributor, Authorized Participants, and persons or entities engaging in transactions in the Shares,including affiliated purchasers of the Funds and Authorized Participants,rely on the interpretive guidance for actively managed funds in the Active ETF Relief,4 provided that the Funds meetthe Active ETF Reg.M Conditions,as described in the Letter. In addition, we are treating your request for reliefunder Rule lOb-17 ofthe Exchange Act as arequest that the Staffconfirm that it will not recommend enforcement action to the Commission ifthe Trust does not satisfy the notice requirements of Rule lOb-17 ofthe Exchange Actso long as the Trust meets all ofthe representations and conditions ofthe Rule lOb-17 Relieffor Active ETFs.s Based on the facts and representations set forth in the Letter,and without necessarily agreeing with your analysis,the Staffwill not recommend enforcement action to the Commission under Rules 101 and 102 ofRegulation Mifthe Trust,on behalfofitself,the Preferred Funds, the applicable Listing Exchanges,other Markets,the Distributor, Authorized Participants,and persons or entities engaging in transactions in the Shares,including affiliated purchasers ofthe Funds and Authorized Participants,6 rely on the interpretive guidance for actively managed funds in the Active ETF Relief, provided that the Fund meets the Active ETF Reg. M Conditions, notwithstanding the fact that the Funds seek to track investment results ofspecified Referenced Indexes. In addition,notwithstanding the fact that the Funds seek to track the investment results 3 Letter from Josephine J. Tao, Assistant Dir., Div. of Mkt. Regulation, to Matthew B. Comstock, Esq., Willkie Farr &Gallagher LLP(Nov.3,2011)("Custom IPFF Letter"). 4 Frequently Asked Questions About Regulation M,Div. of Mkt. Regulation: Staff Legal Bulletin No. 9 (revised Sept. 10,2010)("Active ETF Relief'). 5 Order Granting a Limited Exemption from Exchange Act Rule lOb-17 to Certain Actively Managed Exchange-Traded Funds Pursuant
to Exchange Act Rule lOb-17(b)(2), Exchange Act Release No.67215 (June 19,2012)("Rule lOb-17 Relieffor Active ETFs"). 6 For purposes ofthis no-action position under Rule 102 ofRegulation M,such transactions include redemptions and the purchase ofShares for investment purposes by affiliated purchasers ofthe Preferred Funds.

Ms. Bullitt
December 3, 2018 of specified Referenced Indexes with respect to the Preferred Funds that meet the Active ETF Reg. M Conditions, the Staff would not recommend enforcement action against the Trust under Rule l Ob-17 of the Exchange Act, provided that the Trust meets the representations and conditions of the Rule l Ob-17 Relief for Active ETFs other than those relating to a Fund's actively managed status. The foregoing no-action positions taken under Rule l Ob-17 of the Exchange Act and Rules 101 and 102 of Regulation M are based solely on your representations and the facts presented, and are strictly limited to the application of those rules to transactions involving shares under the circumstances described above and in the Letter. Any different facts or representations may require a different response. Such transactions should be discontinued, pending presentation of the facts for our consideration, in the event that any material change occurs with respect to any of those facts or representations. Moreover, the foregoing no-action positions taken under Rule l Ob-17 and Rules 101 and 102 of Regulation M are subject to the condition that such transactions in shares or any related securities are not made for the purpose of creating actual, or apparent, active trading in or raising or otherwise affecting the price of such securities. These positions are subject to modification or revocation if, at any time, the Commission or the Staff determines that such action is necessary or appropriate in furtherance of the purposes of the Exchange Act. In addition, your attention is directed to the continuing application of the antifraud and anti-manipulation provisions of the Exchange Act, particularly sections 9(a) and 10(b), and Rule l Ob-5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws must rest with each person relying on these positions. The Staff expresses no view with respect to other questions that the proposed transactions may raise, including, but not limited to, the adequacy of disclosure concerning, and the applicability of other federal and state laws to, the proposed transactions. Sincerely J sephine J. Tao Assistant Director Attachment We also note that compliance with Rule lOb-17 would be impractical in light of the nature of ETFs because it is not possible for ETFs accurately to project, ten days in advance, what dividend, if any, would be paid on a particular record date.