Order Granting Limited Exemptions From Exchange Act Rule 10b-17 and Rules 101 and 102 of Regulation M to iShares, Inc. and iShares MSCI Frontier 100 Index Fund Pursuant to Exchange Act Rule 10b-17(b)(2) and Rule 101(d) and 102(e) of Regulation M, 56681-56683 [2012-22522]
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Federal Register / Vol. 77, No. 178 / Thursday, September 13, 2012 / Notices
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Stanley F. Mires,
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[FR Doc. 2012–22511 Filed 9–12–12; 8:45 am]
BILLING CODE 7710–12–P
Ted Wackler,
Deputy Chief of Staff and Assistant Director.
OFFICE OF SCIENCE AND
TECHNOLOGY POLICY
[FR Doc. 2012–22676 Filed 9–12–12; 8:45 am]
BILLING CODE P
Nanoscale Science, Engineering, and
Technology Subcommittee; Committee
on Technology, National Science and
Technology Council; Public
Engagement Through Nano.gov
Webinar
Executive Office of the
President, Office of Science and
Technology Policy.
ACTION: Notice of webinar.
AGENCY:
The National Nanotechnology
Coordination Office (NNCO), on behalf
of the Nanoscale Science, Engineering,
and Technology (NSET) Subcommittee
of the Committee on Technology,
National Science and Technology
Council (NSTC), will hold a webinar on
September 20, 2012 to provide an open
forum to answer questions and hear
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the primary mechanism for public
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updates to, improvements on, and
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DATES: Thursday, September 20, 2012
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ADDRESSES: For information about the
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mstockstill on DSK4VPTVN1PROD with NOTICES
SUMMARY:
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Submitting Questions: Questions may
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during the 20 minute question-andanswer segment of the webinar. The
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Information about the webinar is
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The webinar will feature brief
comments by public engagement and
Web site subject area experts, followed
by approximately 20 minutes to answer
audience questions.
FOR FURTHER INFORMATION CONTACT: For
information regarding this Notice,
please contact Marlowe EpsteinNewman, telephone (703) 292–7128,
National Nanotechnology Coordination
Office. Email: webinar@nnco.nano.gov.
Jkt 226001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67804; File No. TP 12–10]
Order Granting Limited Exemptions
From Exchange Act Rule 10b–17 and
Rules 101 and 102 of Regulation M to
iShares, Inc. and iShares MSCI Frontier
100 Index Fund Pursuant to Exchange
Act Rule 10b–17(b)(2) and Rule 101(d)
and 102(e) of Regulation M
September 7, 2012.
By letter dated September 7, 2012 (the
‘‘Letter’’), as supplemented by
conversations with the staff of the
Division of Trading and Markets,
counsel for iShares, Inc. (the
‘‘Company’’) on behalf of the Company,
the iShares MSCI Frontier 100 Index
Fund (the ‘‘Fund’’), any national
securities exchange on or through which
shares issued by the Fund (‘‘Shares’’)
may subsequently trade, and persons or
entities engaging in transactions in
Shares (collectively, the ‘‘Requestors’’)
requested exemptions, or interpretive or
no-action relief, from Rule 10b–17 of the
Securities Exchange Act of 1934, as
amended (‘‘Exchange Act’’) and Rules
101 and 102 of Regulation M in
connection with secondary market
transactions in Shares and the creation
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56681
or redemption of aggregations of Shares
of at least 50,000 shares (‘‘Creation
Units’’).
The Company was organized on
August 31, 1994, as a Maryland
corporation. The Company is registered
with the Commission under the
Investment Company Act of 1940, as
amended (‘‘1940 Act’’), as an open-end
management investment company. The
Company currently consists of
approximately 50 investment series or
portfolios. The Requestors request relief
related to the Fund, a newly created
series of the Company. The Fund will
invest in stocks consisting of the
component securities of the MSCI
Frontier Markets 100 Index (the
‘‘Index’’), consistent with the Fund’s
investment strategy. The Fund will use
a ‘‘passive’’ or indexing approach to try
to achieve the Fund’s investment
objectives. The Index is a free floatadjusted market-capitalization index
designed to measure equity market
performance of a subset of the MSCI
Frontier Markets index while putting
greater emphasis on tradability and
liquidity as compared to the larger MSCI
Frontier Markets index.
The Requestors represent, among
other things, the following:
• Shares of the Fund will be issued
by the Company, an open-end
management investment company that
is registered with the Commission;
• The Company will continuously
redeem Creation Units at net asset value
(‘‘NAV’’) and the secondary market
price of the Shares should not vary
substantially from the NAV of such
Shares;
• Shares of the Fund will be listed
and traded on the NYSE Arca (the
‘‘Exchange’’);
• The Fund will hold 20 or more
portfolio securities with no one
portfolio security constituting more than
25% of the Fund;
• The Fund will be managed to track
a particular index all the components of
which have publicly available last sale
trade information;
• The intra-day proxy value of the
Fund per share and the value of the
Index will be publicly disseminated by
a major market data vendor throughout
the trading day;
• On each business day before the
opening of business on the Exchange
(normally 9:30 a.m., Eastern time),
BlackRock Fund Advisors (an
investment advisor registered under the
Investment Advisors Act of 1940 that
serves as the Fund’s advisor) and
Blackrock Investments, LLC (a brokerdealer who is registered with the
Commission under the Exchange Act
and acts as the Fund’s principal
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13SEN1
56682
Federal Register / Vol. 77, No. 178 / Thursday, September 13, 2012 / Notices
underwriter as defined in Section
2(a)(29) of the 1940 Act), through the
National Securities Clearing
Corporation, will make available the
identities and quantities of the
securities and other assets held by the
Fund which will form the basis for their
calculation of NAV at the end of the
business day;
• The Exchange or other market
information provider will disseminate
every 15 seconds throughout the trading
day through the facilities of the
Consolidated Tape Association an
amount representing on a per-share
basis, the current value of the securities
and cash to be deposited as
consideration for the purchase of
Creation Units;
• The arbitrage mechanism will be
facilitated by the transparency of the
Fund’s portfolio and the availability of
the intra-day indicative value, the
liquidity of securities and other assets
held by the Fund, ability to acquire such
securities, as well as the arbitrageurs’
ability to create workable hedges;
• The Fund will invest solely in
liquid securities;
• The Fund will invest in securities
that will facilitate an effective and
efficient arbitrage mechanism and the
ability to create workable hedges;
• The Requestors believe that
arbitrageurs are expected to take
advantage of price variations between
the Fund’s market price and its NAV;
and
• A close alignment between the
market price of Shares and the Fund’s
NAV is expected.
mstockstill on DSK4VPTVN1PROD with NOTICES
Regulation M
While redeemable securities issued by
an open-end management investment
company are excepted from the
provisions of Rule 101 and 102 of
Regulation M, the Requestors may not
rely upon that exception for the Shares.1
However, we find that it is appropriate
in the public interest and is consistent
with the protection of investors to grant
a conditional exception from Rules 101
and 102 to persons who may be deemed
to be participating in a distribution of
Shares and the Fund as described in
more detail below.
Rule 101 of Regulation M
Generally, Rule 101 of Regulation M
is an anti-manipulation rule that,
subject to certain exceptions, prohibits
any ‘‘distribution participant’’ and its
‘‘affiliated purchasers’’ from bidding for,
1 While
ETFs operate under exemptions from the
definitions of ‘‘open-end company’’ under Section
5(a)(1) of the 1940 Act and ‘‘redeemable security’’
under Section 2(a)(32) of the 1940 Act, the ETFs
and their securities do not meet those definitions.
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19:13 Sep 12, 2012
Jkt 226001
purchasing, or attempting to induce any
person to bid for or purchase any
security, which is the subject of a
distribution until after the applicable
restricted period, except as specifically
permitted in the rule. Rule 100 of
Regulation M defines ‘‘distribution’’ to
mean any offering of securities that is
distinguished from ordinary trading
transactions by the magnitude of the
offering and the presence of special
selling efforts and selling methods. The
provisions of Rule 101 of Regulation M
apply to underwriters, prospective
underwriters, brokers, dealers, or other
persons who have agreed to participate
or are participating in a distribution of
securities. The Shares are in a
continuous distribution and, as such,
the restricted period in which
distribution participants and their
affiliated purchasers are prohibited from
bidding for, purchasing, or attempting to
induce others to bid for or purchase
extends indefinitely.
Based on the representations and facts
presented in the Letter, particularly that
the Company is a registered open-end
management investment company that
will continuously redeem at the NAV
Creation Unit size aggregations of the
Shares of the Fund and that a close
alignment between the market price of
Shares and the Fund’s NAV is expected,
the Commission finds that it is
appropriate in the public interest and
consistent with the protection of
investors to grant the Company an
exemption under paragraph (d) of Rule
101 of Regulation M with respect to the
Fund, thus permitting persons who may
be deemed to be participating in a
distribution of Shares of the Fund to bid
for or purchase such Shares during their
participation in such distribution.2
Rule 102 of Regulation M
Rule 102 of Regulation M prohibits
issuers, selling security holders, or any
affiliated purchaser of such person from
bidding for, purchasing, or attempting to
induce any person to bid for or purchase
a covered security during the applicable
restricted period in connection with a
distribution of securities effected by or
on behalf of an issuer or selling security
holder.
Based on the representations and facts
presented in the Letter, particularly that
the Company is a registered open-end
2 Additionally, we confirm the interpretation that
a redemption of Creation Unit size aggregations of
Shares of the Fund and the receipt of securities in
exchange by a participant in a distribution of Shares
of the Fund would not constitute an ‘‘attempt to
induce any person to bid for or purchase, a covered
security during the applicable restricted period’’
within the meaning of Rule 101 of Regulation M
and therefore would not violate that rule.
PO 00000
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Fmt 4703
Sfmt 4703
management investment company that
will redeem at the NAV Creation Units
of Shares of the Fund and that a close
alignment between the market price of
Shares and the Fund’s NAV is expected,
the Commission finds that it is
appropriate in the public interest and
consistent with the protection of
investors to grant the Company an
exemption under paragraph (e) of Rule
102 of Regulation M with respect to the
Fund, thus permitting the Fund to
redeem Shares of the Fund during the
continuous offering of such Shares.
Rule 10b–17
Rule 10b–17, with certain exceptions,
requires an issuer of a class of publicly
traded securities to give notice of certain
specified actions (for example, a
dividend distribution) relating to such
class of securities in accordance with
Rule 10b–17(b). Based on the
representations and facts in the Letter,
in particular that the concerns that the
Commission raised in adopting Rule
10b–17 generally will not be implicated
if exemptive relief, subject to the
conditions below, is granted to the
Company because market participants
will receive timely notification of the
existence and timing of a pending
distribution,3 we find that it is
appropriate in the public interest, and
consistent with the protection of
investors to grant the Company a
conditional exemption from Rule 10b–
17.
Conclusion
It is hereby ordered, pursuant to Rule
101(d) of Regulation M, that the
Company, based on the representations
and facts presented in the Letter and
subject to the condition contained in
this order, is exempt from the
requirements of Rule 101 with respect to
the Fund, thus permitting persons who
may be deemed to be participating in a
distribution of Shares of the Fund to bid
for or purchase such Shares during their
participation in such distribution.
This exemptive relief is subject to the
condition that such transactions in
Shares of the Fund or any related
securities including those deposited
with the Fund or received from the
Fund as part of the creation or
redemption process are not made for the
purpose of creating actual, or apparent,
active trading in or raising or otherwise
affecting the price of such securities.
3 We also note that timely compliance with Rule
10b–17(b)(1)(v)(a) and (b) would be impractical in
light of the nature of the Fund. This is because it
is not possible for the Fund to accurately project ten
days in advance what dividend, if any, would be
paid on a particular record date.
E:\FR\FM\13SEN1.SGM
13SEN1
mstockstill on DSK4VPTVN1PROD with NOTICES
Federal Register / Vol. 77, No. 178 / Thursday, September 13, 2012 / Notices
It is further ordered, pursuant to Rule
102(e) of Regulation M, that the
Company, based on the representations
and the facts presented in the Letter and
subject to the condition contained in
this order, is exempt from the
requirements of Rule 102 with respect to
the Fund, thus permitting the Fund to
redeem Shares of the Fund during the
continuous offering of such Shares.
This exemptive relief is subject to the
condition that such transactions in
Shares of the Fund or any related
securities including those deposited
with the Fund or received from the
Fund as part of the creation or
redemption process are not made for the
purpose of creating actual, or apparent,
active trading in or raising or otherwise
affecting the price of such securities.
It is further ordered, pursuant to Rule
10b–17(b)(2), that the Company, based
on the representations and the facts
presented in the Letter and subject to
the conditions contained in this order,
is exempt from the requirements of Rule
10b–17 with respect to transactions in
the shares of the Fund.
This exemptive relief is subject to the
following conditions:
• The Company will comply with
Rule 10b–17 except for Rule 10b–
17(b)(1)(v)(a) and (b); and
• The Company will provide the
information required by Rule 10b–
17(b)(1)(v)(a) and (b) to the Exchange as
soon as practicable before trading begins
on the ex-dividend date, but in no event
later than the time when the Exchange
last accepts information relating to
distributions on the day before the exdividend date.
This exemptive relief is subject to
modification or revocation at any time
the Commission determines that such
action is necessary or appropriate in
furtherance of the purposes of the
Exchange Act. Persons relying upon this
exemption shall discontinue
transactions involving the Shares of the
Fund under the circumstances
described above and in the Letter,
pending presentation of the facts for the
Commission’s consideration, in the
event that any material change occurs
with respect to any of the facts or
representations made by the Requestors.
In addition, persons relying on this
exemption are directed to the anti-fraud
and anti-manipulation provisions of the
Exchange Act, particularly Sections 9(a),
10(b), and Rule 10b–5 thereunder.
Responsibility for compliance with
these and any other applicable
provisions of the federal securities laws
must rest with the persons relying on
this exemption. This order should not
be considered a view with respect to
any other question that the proposed
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19:13 Sep 12, 2012
Jkt 226001
transactions may raise, including, but
not limited to the adequacy of the
disclosure concerning, and the
applicability of other federal or state
laws to, the proposed transactions.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.4
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–22522 Filed 9–12–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67806; File No. SR–
NYSEArca–2012–97]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Amending the NYSE Arca
Equities Schedule of Fees and
Charges for Exchange Services to
Eliminate the Tape A Step Up Tier,
Modify the Remaining Tape Step Up
Tiers and Introduce an Alternative
Method of Qualifying for Tier 1
September 7, 2012.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’)2 and Rule 19b–4 thereunder,3
notice is hereby given that, on August
27, 2012, NYSE Arca, Inc. (the
‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with
the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
NYSE Arca Equities Schedule of Fees
and Charges for Exchange Services
(‘‘Fee Schedule’’) to (i) eliminate the
Tape A Step Up Tier; (ii) modify the
remaining Tape Step Up Tiers to
exclude ETP Holders that qualify for the
Cross-Asset Tier or Investor Tier 4; and
(iii) introduce an alternative method of
qualifying for Tier 1. The Exchange
proposes to implement the fee changes
on September 1, 2012. The text of the
proposed rule change is available on the
Exchange’s Web site at www.nyse.com,
4 17
CFR 200.30–3(a)(6) and (9).
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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56683
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Fee Schedule to (i) eliminate the Tape
A Step Up Tier; (ii) modify the
remaining Tape Step Up Tiers to
exclude ETP Holders that qualify for the
Cross-Asset Tier or Investor Tier 4; and
(iii) introduce an alternative method of
qualifying for Tier 1. The Exchange
proposes to implement the fee changes
on September 1, 2012.
The Exchange proposes to eliminate
the Tape A Step Up Tier, which
currently provides for a $0.0029 per
share fee for orders of qualifying ETP
Holders that take liquidity from the
Book in Tape A Securities.4 The
Exchange has determined to eliminate
the Tape A Step Up Tier because it has
generally not incentivized ETP Holders
to submit additional liquidity in Tape A
Securities.
The Exchange also proposes to specify
in the Fee Schedule that ETP Holders
that qualify for the Cross-Asset Tier or
Investor Tier 4 would not be eligible to
qualify for the Tape B and Tape C Step
Up Tiers and the Tape C Step Up Tier
2.5 Currently, Investor Tier 1–3 ETP
Holders are ineligible to qualify for the
reduced fees provided under the Tape B
and Tape C Step Up Tiers and the Tape
C Step Up Tier 2. The Exchange believes
that the credit per share of $0.0030 is
sufficient enough that an ETP Holder
4 Because the first instance of footnote 4 in the
Fee Schedule, which describes average daily
volume (‘‘ADV’’), is currently included within the
Tape A Step Up Tier, the Exchange proposes to
instead make the first instance of footnote 4 in the
Fee Schedule appear with the proposed new
footnote 4 reference in Tier 1.
5 As described above, the Exchange has proposed
to eliminate the Tape A Step Up Tier.
E:\FR\FM\13SEN1.SGM
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]]>Agencies
[Federal Register Volume 77, Number 178 (Thursday, September 13, 2012)]
[Notices]
[Pages 56681-56683]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-22522]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67804; File No. TP 12-10]
Order Granting Limited Exemptions From Exchange Act Rule 10b-17
and Rules 101 and 102 of Regulation M to iShares, Inc. and iShares MSCI
Frontier 100 Index Fund Pursuant to Exchange Act Rule 10b-17(b)(2) and
Rule 101(d) and 102(e) of Regulation M
September 7, 2012.
By letter dated September 7, 2012 (the ``Letter''), as supplemented
by conversations with the staff of the Division of Trading and Markets,
counsel for iShares, Inc. (the ``Company'') on behalf of the Company,
the iShares MSCI Frontier 100 Index Fund (the ``Fund''), any national
securities exchange on or through which shares issued by the Fund
(``Shares'') may subsequently trade, and persons or entities engaging
in transactions in Shares (collectively, the ``Requestors'') requested
exemptions, or interpretive or no-action relief, from Rule 10b-17 of
the Securities Exchange Act of 1934, as amended (``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 of at least 50,000 shares (``Creation Units'').
The Company was organized on August 31, 1994, as a Maryland
corporation. The Company is registered with the Commission under the
Investment Company Act of 1940, as amended (``1940 Act''), as an open-
end management investment company. The Company currently consists of
approximately 50 investment series or portfolios. The Requestors
request relief related to the Fund, a newly created series of the
Company. The Fund will invest in stocks consisting of the component
securities of the MSCI Frontier Markets 100 Index (the ``Index''),
consistent with the Fund's investment strategy. The Fund will use a
``passive'' or indexing approach to try to achieve the Fund's
investment objectives. The Index is a free float-adjusted market-
capitalization index designed to measure equity market performance of a
subset of the MSCI Frontier Markets index while putting greater
emphasis on tradability and liquidity as compared to the larger MSCI
Frontier Markets index.
The Requestors represent, among other things, the following:
Shares of the Fund will be issued by the Company, an open-
end management investment company that is registered with the
Commission;
The Company will continuously redeem Creation Units at net
asset value (``NAV'') and the secondary market price of the Shares
should not vary substantially from the NAV of such Shares;
Shares of the Fund will be listed and traded on the NYSE
Arca (the ``Exchange'');
The Fund will hold 20 or more portfolio securities with no
one portfolio security constituting more than 25% of the Fund;
The Fund will be managed to track a particular index all
the components of which have publicly available last sale trade
information;
The intra-day proxy value of the Fund per share and the
value of the Index will be publicly disseminated by a major market data
vendor throughout the trading day;
On each business day before the opening of business on the
Exchange (normally 9:30 a.m., Eastern time), BlackRock Fund Advisors
(an investment advisor registered under the Investment Advisors Act of
1940 that serves as the Fund's advisor) and Blackrock Investments, LLC
(a broker-dealer who is registered with the Commission under the
Exchange Act and acts as the Fund's principal
[[Page 56682]]
underwriter as defined in Section 2(a)(29) of the 1940 Act), through
the National Securities Clearing Corporation, will make available the
identities and quantities of the securities and other assets held by
the Fund which will form the basis for their calculation of NAV at the
end of the business day;
The Exchange or other market information provider will
disseminate every 15 seconds throughout the trading day through the
facilities of the Consolidated Tape Association an amount representing
on a per-share basis, the current value of the securities and cash to
be deposited as consideration for the purchase of Creation Units;
The arbitrage mechanism will be facilitated by the
transparency of the Fund's portfolio and the availability of the intra-
day indicative value, the liquidity of securities and other assets held
by the Fund, ability to acquire such securities, as well as the
arbitrageurs' ability to create workable hedges;
The Fund will invest solely in liquid securities;
The Fund will invest in securities that will facilitate an
effective and efficient arbitrage mechanism and the ability to create
workable hedges;
The Requestors believe that arbitrageurs are expected to
take advantage of price variations between the Fund's market price and
its NAV; and
A close alignment between the market price of Shares and
the Fund's NAV is expected.
Regulation M
While redeemable securities issued by an open-end management
investment company are excepted from the provisions of Rule 101 and 102
of Regulation M, the Requestors may not rely upon that exception for
the Shares.\1\ However, we find that it is appropriate in the public
interest and is consistent with the protection of investors to grant a
conditional exception from Rules 101 and 102 to persons who may be
deemed to be participating in a distribution of Shares and the Fund as
described in more detail below.
---------------------------------------------------------------------------
\1\ While ETFs operate under exemptions from the definitions of
``open-end company'' under Section 5(a)(1) of the 1940 Act and
``redeemable security'' under Section 2(a)(32) of the 1940 Act, the
ETFs and their securities do not meet those definitions.
---------------------------------------------------------------------------
Rule 101 of Regulation M
Generally, Rule 101 of Regulation M is an anti-manipulation rule
that, subject to certain exceptions, prohibits any ``distribution
participant'' and its ``affiliated purchasers'' from bidding for,
purchasing, or attempting to induce any person to bid for or purchase
any security, which is the subject of a distribution until after the
applicable restricted period, except as specifically permitted in the
rule. Rule 100 of Regulation M defines ``distribution'' to mean any
offering of securities that is distinguished from ordinary trading
transactions by the magnitude of the offering and the presence of
special selling efforts and selling methods. The provisions of Rule 101
of Regulation M apply to underwriters, prospective underwriters,
brokers, dealers, or other persons who have agreed to participate or
are participating in a distribution of securities. The Shares are in a
continuous distribution and, as such, the restricted period in which
distribution participants and their affiliated purchasers are
prohibited from bidding for, purchasing, or attempting to induce others
to bid for or purchase extends indefinitely.
Based on the representations and facts presented in the Letter,
particularly that the Company is a registered open-end management
investment company that will continuously redeem at the NAV Creation
Unit size aggregations of the Shares of the Fund and that a close
alignment between the market price of Shares and the Fund's NAV is
expected, the Commission finds that it is appropriate in the public
interest and consistent with the protection of investors to grant the
Company an exemption under paragraph (d) of Rule 101 of Regulation M
with respect to the Fund, thus permitting persons who may be deemed to
be participating in a distribution of Shares of the Fund to bid for or
purchase such Shares during their participation in such
distribution.\2\
---------------------------------------------------------------------------
\2\ Additionally, we confirm the interpretation that a
redemption of Creation Unit size aggregations of Shares of the Fund
and the receipt of securities in exchange by a participant in a
distribution of Shares of the Fund would not constitute an ``attempt
to induce any person to bid for or purchase, a covered security
during the applicable restricted period'' within the meaning of Rule
101 of Regulation M and therefore would not violate that rule.
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Rule 102 of Regulation M
Rule 102 of Regulation M prohibits issuers, selling security
holders, or any affiliated purchaser of such person from bidding for,
purchasing, or attempting to induce any person to bid for or purchase a
covered security during the applicable restricted period in connection
with a distribution of securities effected by or on behalf of an issuer
or selling security holder.
Based on the representations and facts presented in the Letter,
particularly that the Company is a registered open-end management
investment company that will redeem at the NAV Creation Units of Shares
of the Fund and that a close alignment between the market price of
Shares and the Fund's NAV is expected, the Commission finds that it is
appropriate in the public interest and consistent with the protection
of investors to grant the Company an exemption under paragraph (e) of
Rule 102 of Regulation M with respect to the Fund, thus permitting the
Fund to redeem Shares of the Fund during the continuous offering of
such Shares.
Rule 10b-17
Rule 10b-17, with certain exceptions, requires an issuer of a class
of publicly traded securities to give notice of certain specified
actions (for example, a dividend distribution) relating to such class
of securities in accordance with Rule 10b-17(b). Based on the
representations and facts in the Letter, in particular that the
concerns that the Commission raised in adopting Rule 10b-17 generally
will not be implicated if exemptive relief, subject to the conditions
below, is granted to the Company because market participants will
receive timely notification of the existence and timing of a pending
distribution,\3\ we find that it is appropriate in the public interest,
and consistent with the protection of investors to grant the Company a
conditional exemption from Rule 10b-17.
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\3\ We also note that timely compliance with Rule 10b-
17(b)(1)(v)(a) and (b) would be impractical in light of the nature
of the Fund. This is because it is not possible for the Fund to
accurately project ten days in advance what dividend, if any, would
be paid on a particular record date.
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Conclusion
It is hereby ordered, pursuant to Rule 101(d) of Regulation M, that
the Company, based on the representations and facts presented in the
Letter and subject to the condition contained in this order, is exempt
from the requirements of Rule 101 with respect to the Fund, thus
permitting persons who may be deemed to be participating in a
distribution of Shares of the Fund to bid for or purchase such Shares
during their participation in such distribution.
This exemptive relief is subject to the condition that such
transactions in Shares of the Fund or any related securities including
those deposited with the Fund or received from the Fund as part of the
creation or redemption process are not made for the purpose of creating
actual, or apparent, active trading in or raising or otherwise
affecting the price of such securities.
[[Page 56683]]
It is further ordered, pursuant to Rule 102(e) of Regulation M,
that the Company, based on the representations and the facts presented
in the Letter and subject to the condition contained in this order, is
exempt from the requirements of Rule 102 with respect to the Fund, thus
permitting the Fund to redeem Shares of the Fund during the continuous
offering of such Shares.
This exemptive relief is subject to the condition that such
transactions in Shares of the Fund or any related securities including
those deposited with the Fund or received from the Fund as part of the
creation or redemption process are not made for the purpose of creating
actual, or apparent, active trading in or raising or otherwise
affecting the price of such securities.
It is further ordered, pursuant to Rule 10b-17(b)(2), that the
Company, based on the representations and the facts presented in the
Letter and subject to the conditions contained in this order, is exempt
from the requirements of Rule 10b-17 with respect to transactions in
the shares of the Fund.
This exemptive relief is subject to the following conditions:
The Company will comply with Rule 10b-17 except for Rule
10b-17(b)(1)(v)(a) and (b); and
The Company will provide the information required by Rule
10b-17(b)(1)(v)(a) and (b) to the Exchange as soon as practicable
before trading begins on the ex-dividend date, but in no event later
than the time when the Exchange last accepts information relating to
distributions on the day before the ex-dividend date.
This exemptive relief is subject to modification or revocation at
any time the Commission determines that such action is necessary or
appropriate in furtherance of the purposes of the Exchange Act. Persons
relying upon this exemption shall discontinue transactions involving
the Shares of the Fund under the circumstances described above and in
the Letter, pending presentation of the facts for the Commission's
consideration, in the event that any material change occurs with
respect to any of the facts or representations made by the Requestors.
In addition, persons relying on this exemption are directed to the
anti-fraud and anti-manipulation provisions of the Exchange Act,
particularly Sections 9(a), 10(b), and Rule 10b-5 thereunder.
Responsibility for compliance with these and any other applicable
provisions of the federal securities laws must rest with the persons
relying on this exemption. This order should not be considered a view
with respect to any other question that the proposed transactions may
raise, including, but not limited to the adequacy of the disclosure
concerning, and the applicability of other federal or state laws to,
the proposed transactions.
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\4\ 17 CFR 200.30-3(a)(6) and (9).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\4\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-22522 Filed 9-12-12; 8:45 am]
BILLING CODE 8011-01-P
