October 30, 2019
VIA E-MAIL
W. John McGuire, Esq.
Morgan, Lewis & Bockius LLP
1111 Pennsylvania Avenue, NW
Washington, DC 20004-2541
Re: BNY Mellon ETF Trust
Initial Registration Statements on Form N-1A
Filed October 1, 2019
File No. 333-234030
Dear Mr. McGuire:
On October 1, 2019, you filed the above-referenced initial
registration statement on Form
N-1A on behalf of BNY Mellon ETF Trust (the "Trust") to register shares
of the BNY Mellon
U.S. Large Cap Core Equity ETF, BNY Mellon U.S. Mid Cap Core Equity ETF,
BNY Mellon
U.S. Small Cap Core Equity ETF, BNY Mellon International Equity ETF, BNY
Mellon
Emerging Markets Equity ETF, BNY Mellon Core Bond ETF, BNY Mellon Short
Duration
Corporate Bond ETF, and BNY Mellon High Yield Beta ETF (each a "Fund,"
and together, the
"Funds"). Comments under General, Cover Page, and Fund Summaries apply
to all Funds
unless otherwise indicated. Based on our review, we have the following
comments. All
capitalized terms not otherwise defined herein have the meaning given to
them in the registration
statement.
General
1. Where a comment is made with regard to disclosure in one location, it
is applicable to all
similar disclosure appearing elsewhere in the registration statement.
2. The staff notes that the registration statement has omitted or
bracketed material information
throughout the prospectus and SAI. In particular, omission of the key
information, including
disclosure of the Indexes that the Funds will track and their
complete Index methodology,
prevented us from doing a complete review of the filing. We are
reserving our review of
those sections of the registration statement until a pre-effective
amendment with all this
information is filed.
W. John McGuire, Esq.
October 30, 2019
Page 2 of 5
3. Please inform the staff if a party other than the Funds' sponsor or
an affiliate is providing the
Funds with initial seed capital. If so, supplementally identify the
party providing the seed
capital and describe its relationship with the Funds.
4. Please include an audited balance sheet for the seed capital required
by Section 14(a)(1) of
the 1940 Act.
Cover Page
5. Please ensure that the ticker symbols are included in EDGAR and the
cover page of the
prospectus and SAI once available. See Regulation S-T, Rule
313(b)(1).
Fund Summaries, pages 2-28
As noted earlier, because so much information about the Funds'
principal strategy is
missing, we will be reserving our substantive comments until all that
information is provided in
the next pre-effective amendment. The following are some initial
comments applicable to the
Funds' principal strategy and risk disclosure:
6. Please provide more fulsome disclosure as to each Index's
methodology.
7. With respect to the BNY Mellon Emerging Markets Equity ETF, BNY
Mellon Core Bond
ETF, BNY Mellon Short Duration Corporate Bond ETF, and BNY Mellon
High Yield Beta
ETF, we note that each Fund's policy to invest 80% of the Fund's net
assets (plus borrowings
for investment purposes) ("80% names policy") in the type of
investments suggested by the
name is stated in the SAI under non-fundamental policies. We also
note that the SAI states
that the BNY Mellon International Equity ETF has adopted an 80% names
policy to invest in
equity securities of issuers in developed countries other than the
United States. Please
disclose each of these Fund's 80% names policy in the summary and in
the disclosure in
response to Item 9(b) of Form N-1A.
9. You state that the Funds may also invest in futures and other
derivatives. Since it does not
appear that futures and other derivatives will be components of any
of the Indexes, under the
terms of your exemptive order, the Funds may only invest a maximum of
20% of its assets in
such derivatives. Please clarify the disclosure accordingly.
Similarly, please clarify whether
the BNY Mellon Emerging Markets Equity ETF's investments in other
ETFs will be limited
to 20% of Fund's assets. Further, please also disclose that
investments in derivatives that are
counted towards a Fund's 80% names policy will be valued at market
value.
10. You state as to each Fund that "[i]n seeking to track the index, the
Fund's assets will
generally be concentrated in an industry or group of industries to
the extent that the index
concentrates in a particular industry or group of industries." Please
delete the word
"generally" or revise each Fund's concentration policy to state when
and under what
conditions any changes between concentration and non-concentration
would be made. See
Statements of Investment Policies of Money Market Funds Relating to
Industry
Concentration, Investment Company Act Release No. 9011 (Oct. 30,
1975) and The First
W. John McGuire, Esq.
October 30, 2019
Page 3 of 5
Australia no-action letter (July 29, 1999). Also, to the extent any
Index is currently
concentrated, please disclose the industry or group of industries that
the Index is concentrated
in and include appropriate risk disclosure.
11. With respect to the BNY Mellon Emerging Markets Equity ETF, please
define "emerging
markets."
12. We note that the BNY Mellon Core Bond ETF will invest in asset-backed
and mortgage-
related securities. Please tailor your principal strategy and risk
disclosure with reference to
the specific asset-backed securities and mortgage-related securities
that the Fund intends to
invest in.
13. Disclosure on page 23 states that the BNY Mellon Short Duration
Corporate Bond ETF will
invest in bonds that have a remaining maturity of greater than or equal
to one year and less
than five years. Please explain your basis for defining short duration
as bonds with
remaining maturity of less than five years. In the staff's view, short
duration is more
commonly understood as less than three years.
14. With respect to the BNY Mellon High Yield Beta ETF, please explain in
plain English the
term "Beta."
15. o the extent that a fund will invest in instruments that pay interest
at floating rates based on
T
LIBOR, please include risk disclosure on how the transition from LIBOR
could affect the
fund's investments. For example, will the fund invest in instruments
that pay interest at
floating rates based on LIBOR that do not include "fall back
provisions" that address how
interest rates will be determined if LIBOR stops being published? If
so, how it will affect the
liquidity of those investments? Please also disclose how the transition
to any successor rate
could impact the value of investments that reference LIBOR.
16. For each Fund, please disclose in the summary and in the disclosure in
response to Item 9(c)
of Form N-1A the risks associated with investing in a new fund (e.g.,
the Fund may have
higher expenses, may not grow to an economically viable size and may
cease operations) and
in a Fund where the adviser has no prior experience managing an ETF or
other registered
investment company. Please also add risks of investing in large
capitalization companies for
the BNY Mellon U.S. Large Cap Core Equity ETF.
17. Please provide risk disclosure as to depository receipts for the BNY
Mellon International
Equity ETF and the BNY Mellon Emerging Markets ETF. Also, disclose
that, where all or a
portion of the Index's underlying securities trade in a market that is
closed when the market
in which the Fund's shares are listed and trading is open, there may be
changes between the
last quote from its closed foreign market and the value of such
security during the Fund's
domestic trading day. Please also note that this in turn could lead to
differences between the
market price of the Fund's shares and their underlying value.
18. With respect to the BNY Mellon International Equity ETF, please enhance
your Brexit risk
disclosure in the summary and in the disclosure in response to Item
9(c) of Form N-1A.
W. John McGuire, Esq.
October 30, 2019
Page 4 of 5
Performance, page 28
19. Please supplementally identify the appropriate broad-based securities
market index that each
Fund intends to use in the performance table.
Portfolio Management, page 28
20. Please state the month and year that each portfolio manager started in
that role for each Fund
rather than stating "since inception."
Fund Details-Goals and Approach, page 30
21. For each bond fund, please provide a definition of duration (e.g.,
duration is a measure of the
price sensitivity of a debt security or portfolio of debt securities
relative to changes in interest
rates).
Investment Risks, page 36
22. The disclosure of the principal and additional risks is confusing as to
which risks apply to
which Funds. Please consider utilizing a chart, table or some other
means to clearly identify
in one place each Fund's principal and additional risks.
Part B: Statement of Additional Information
Purchase and Redemption of Creation Units, page II-1
23. In the "Fund Deposit" section you state that either in-kind securities
or Deposit Cash may be
accepted for purchase transactions. Please reconcile with the Funds'
exemptive order which
provides that consideration for purchase and redemption transactions
should be primarily in-
kind.
Part C: Other Information
24. The license agreement for each Index should be filed as an exhibit.
* * *
Responses to this letter should be made in a letter to me filed on
Edgar and in the form of a
pre-effective amendment filed pursuant to Rule 472 under the Securities
Act. Where no change
will be made in the filing in response to a comment, please indicate this
fact in the letter to us
and briefly state the basis for your position.
You should review and comply with all applicable requirements of the
federal securities
laws in connection with the preparation and distribution of a preliminary
prospectus.
Although we have completed our initial review of the registration
statement, the filing will
be reviewed further after we receive your response. Therefore, we reserve
the right to comment
W. John McGuire, Esq.
October 30, 2019
Page 5 of 5
further on the registration statement and any amendments. After we have
resolved all issues, the
Trust and its underwriter must request acceleration of the effective
date of the registration
statement.
In closing, we remind you that the Trust is responsible for the
accuracy and adequacy of its
disclosure in the registration statement, notwithstanding any review,
comments, action, or
absence of action by the staff.
Should you have any questions prior to filing a pre-effective
amendment, please feel free to
contact me at (202) 551-3767 or hardyje@sec.gov.
Sincerely,
/s/ Jennifer
R. Hardy
Jennifer R.
Hardy
Attorney-Adviser
cc: William Kotapish. Assistant Director
Sally Samuel, Branch Chief