iShares Trust, et al.; Notice of Application, 59710-59711 [2016-20739]
Download as PDF
59710
Federal Register / Vol. 81, No. 168 / Tuesday, August 30, 2016 / Notices
[Investment Company Act Release No.
32235; 812–14678]
iShares Trust, et al.; Notice of
Application
August 24, 2016.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application for
an order under section 6(c) of the
Investment Company Act of 1940 (the
‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d), and 22(e) of the
Act and rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
17(a)(2) of the Act, and under section
12(d)(1)(J) for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of
the Act. The requested order would
permit (a) series of certain open-end
management investment companies that
track the performance of an index
provided by an affiliated person
(‘‘Funds’’) to issue shares redeemable in
large aggregations only (‘‘Creation
Units’’); (b) secondary market
transactions in Fund shares to occur at
negotiated market prices rather than at
net asset value (‘‘NAV’’); (c) certain
Funds to pay redemption proceeds,
under certain circumstances, more than
seven days after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; and
(e) certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Funds of Funds’’) to acquire
shares of the Funds.
APPLICANTS: iShares Trust (the ‘‘Trust’’),
a Delaware statutory trust registered
under the Act as an open-end
management investment company with
multiple series, and iShares, Inc. (the
‘‘Corporation’’), a Maryland corporation
registered under the Act as an open-end
management investment company with
multiple series, (each a ‘‘Company,’’
and, together, the ‘‘Companies’’),
BlackRock Fund Advisors (the ‘‘Initial
Adviser’’), a California corporation
registered as an investment adviser
under the Investment Advisers Act of
1940, and BlackRock Investments, LLC
(the ‘‘Distributor’’), a broker-dealer
registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’).
mstockstill on DSK3G9T082PROD with NOTICES
SUMMARY:
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20:04 Aug 29, 2016
Jkt 238001
The application was filed
on July 22, 2016.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on September 19, 2016,
and should be accompanied by proof of
service on applicants, in the form of an
affidavit, or for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, the reason for the
request, and the issues contested.
Persons who wish to be notified of a
hearing may request notification by
writing to the Commission’s Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090;
Applicants: Deepa Damre, Esq.,
BlackRock Fund Advisors, 400 Howard
Street, San Francisco, CA 94105.
FOR FURTHER INFORMATION CONTACT:
Mark N. Zaruba, Senior Counsel, at
(202) 551–6878, or Mary Kay Frech, at
(202) 551–6821 (Division of Investment
Management, Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
FILING DATES:
SECURITIES AND EXCHANGE
COMMISSION
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as
exchange traded funds (‘‘ETFs’’) that
track an Underlying Index provided by
an Affiliated Index Provider (as defined
below).1 Fund shares will be purchased
and redeemed at their NAV in Creation
Units only. All orders to purchase
Creation Units and all redemption
requests will be placed by or through an
1 Applicants request that the order apply to a new
series and any additional series of a Company, and
any other open-end management investment
company or series thereof, that may be created in
the future (each, included in the term ‘‘Fund’’),
each of which will operate as an ETF and will track
a specified index comprised of domestic or foreign
equity and/or fixed income securities (each, an
‘‘Underlying Index’’). Any Fund will (a) be advised
by the Initial Adviser or an entity controlling,
controlled by, or under common control with the
Initial Adviser (each, an ‘‘Adviser’’) and (b) comply
with the terms and conditions of the application.
PO 00000
Frm 00114
Fmt 4703
Sfmt 4703
‘‘Authorized Participant,’’ which will
have signed a participant agreement
with the Distributor. Shares will be
listed and traded individually on a
national securities exchange, where
share prices will be based on the current
bid/offer market. Any order granting the
requested relief would be subject to the
terms and conditions stated in the
application.
2. Each Fund will hold investment
positions selected to correspond
generally to the performance of an
Underlying Index. An affiliated person,
as defined in section 2(a)(3) of the Act
(‘‘Affiliated Person’’), or an affiliated
person of an Affiliated Person (‘‘SecondTier Affiliate’’), of a Company or a
Fund, of the Adviser, of any sub-adviser
to or promoter of a Fund, or of the
Distributor will compile, create, sponsor
or maintain the Underlying Index (an
‘‘Affiliated Index Provider’’).2
3. Shares will be purchased and
redeemed in Creation Units and
generally on an in-kind basis. Except
where the purchase or redemption will
include cash under the limited
circumstances specified in the
application, purchasers will be required
to purchase Creation Units by
depositing specified instruments
(‘‘Deposit Instruments’’), and
shareholders redeeming their shares
will receive specified instruments
(‘‘Redemption Instruments’’). The
Deposit Instruments and the
Redemption Instruments will each
correspond pro rata to the positions in
the Fund’s portfolio (including cash
positions) except as specified in the
application.
4. Because shares will not be
individually redeemable, applicants
request an exemption from section
5(a)(1) and section 2(a)(32) of the Act
that would permit the Funds to register
as open-end management investment
companies and issue shares that are
redeemable in Creation Units only.
5. Applicants also request an
exemption from section 22(d) of the Act
and rule 22c–1 under the Act as
secondary market trading in shares will
take place at negotiated prices, not at a
current offering price described in a
Fund’s prospectus, and not at a price
based on NAV. Applicants state that (a)
secondary market trading in shares does
not involve a Fund as a party and will
not result in dilution of an investment
2 Each Fund will post on its Web site the
identities and quantities of the investment positions
that will form the basis for the Fund’s calculation
of its NAV at the end of the day. Applicants believe
that requiring the Funds to maintain full portfolio
transparency will help address, together with other
protections, conflicts of interest with respect to
such Funds.
E:\FR\FM\30AUN1.SGM
30AUN1
mstockstill on DSK3G9T082PROD with NOTICES
Federal Register / Vol. 81, No. 168 / Tuesday, August 30, 2016 / Notices
in shares, and (b) to the extent different
prices exist during a given trading day,
or from day to day, such variances occur
as a result of third-party market forces,
such as supply and demand. Therefore,
applicants assert that secondary market
transactions in shares will not lead to
discrimination or preferential treatment
among purchasers. Finally, applicants
represent that share market prices will
be disciplined by arbitrage
opportunities, which should prevent
shares from trading at a material
discount or premium from NAV.
6. With respect to Funds that effect
creations and redemptions of Creation
Units in kind and that are based on
certain Underlying Indexes that include
foreign securities, applicants request
relief from the requirement imposed by
section 22(e) in order to allow such
Funds to pay redemption proceeds
within fifteen calendar days following
the tender of Creation Units for
redemption. Applicants assert that the
requested relief would not be
inconsistent with the spirit and intent of
section 22(e) to prevent unreasonable,
undisclosed or unforeseen delays in the
actual payment of redemption proceeds.
7. Applicants request an exemption to
permit Funds of Funds to acquire Fund
shares beyond the limits of section
12(d)(1)(A) of the Act; and the Funds,
and any principal underwriter for the
Funds, and/or any broker or dealer
registered under the Exchange Act, to
sell shares to Funds of Funds beyond
the limits of section 12(d)(1)(B) of the
Act. The application’s terms and
conditions are designed to, among other
things, help prevent any potential (i)
undue influence over a Fund through
control or voting power, or in
connection with certain services,
transactions, and underwritings, (ii)
excessive layering of fees, and (iii)
overly complex fund structures, which
are the concerns underlying the limits
in sections 12(d)(1)(A) and (B) of the
Act.
8. Applicants request an exemption
from sections 17(a)(1) and 17(a)(2) of the
Act to permit persons that are Affiliated
Persons, or Second Tier Affiliates, of the
Funds, solely by virtue of certain
ownership interests, to effectuate
purchases and redemptions in-kind. The
deposit procedures for in-kind
purchases of Creation Units and the
redemption procedures for in-kind
redemptions of Creation Units will be
the same for all purchases and
redemptions and Deposit Instruments
and Redemption Instruments will be
valued in the same manner as those
investment positions currently held by
the Funds. Applicants also seek relief
from the prohibitions on affiliated
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20:04 Aug 29, 2016
Jkt 238001
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from a Fund of Funds, and to
engage in the accompanying in-kind
transactions with the Fund of Funds.3
The purchase of Creation Units by a
Fund of Funds directly from a Fund will
be accomplished in accordance with the
policies of the Fund of Funds and will
be based on the NAVs of the Funds.
9. Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Section 17(b) of the Act authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–20739 Filed 8–29–16; 8:45 am]
BILLING CODE 8011–01–P
59711
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–78644; File No. SR–
NYSEArca–2016–87]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Withdrawal of a
Proposed Rule Change, as Modified by
Amendment No. 1, To List and Trade
Shares of the First Trust Horizon
Managed Volatility Domestic ETF and
the First Trust Horizon Managed
Volatility Developed International ETF
Under NYSE Arca Equities Rule 8.600
August 23, 2016.
On June 16, 2016, NYSE Arca, Inc.
(‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
list and trade shares of the First Trust
Horizon Managed Volatility Domestic
ETF and the First Trust Horizon
Managed Volatility Developed
International ETF. The proposed rule
change was published for comment in
the Federal Register on July 6, 2016.3
On July 18, 2016, the Exchange
submitted Amendment No. 1 to the
proposed rule change.4 On August 16,
2016, pursuant to Section 19(b)(2) of the
Act,5 the Commission designated a
longer period within which to approve
the proposed rule change, disapprove
the proposed rule change, or institute
proceedings to determine whether to
disapprove the proposed rule change.6
The Commission received no comment
letters on the proposed rule change.
On August 18, 2016, the Exchange
withdrew the proposed rule change, as
modified by Amendment No. 1 (SR–
NYSEArca–2016–87).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016–20740 Filed 8–29–16; 8:45 am]
BILLING CODE 8011–01–P
3 The
requested relief would apply to direct sales
of shares in Creation Units by a Fund to a Fund of
Funds and redemptions of those shares. Applicants,
moreover, are not seeking relief from section 17(a)
for, and the requested relief will not apply to,
transactions where a Fund could be deemed an
Affiliated Person, or a Second-Tier Affiliate, of a
Fund of Funds because an Adviser or an entity
controlling, controlled by or under common control
with an Adviser provides investment advisory
services to that Fund of Funds.
PO 00000
Frm 00115
Fmt 4703
Sfmt 9990
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 78191
(June 29, 2016), 81 FR 44056.
4 Amendment No. 1 replaced and superseded the
original filing in its entirety. Amendment No. 1 is
available at https://www.sec.gov/comments/srnysearca-2016-87/nysearca201687-1.pdf.
5 15 U.S.C. 78s(b)(2).
6 See Securities Exchange Act Release No. 78587,
81 FR 56728 (August 22, 2016).
7 17 CFR 200.30–3(a)(12).
2 17
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Agencies
[Federal Register Volume 81, Number 168 (Tuesday, August 30, 2016)]
[Notices]
[Pages 59710-59711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-20739]
[[Page 59710]]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32235; 812-14678]
iShares Trust, et al.; Notice of Application
August 24, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: Notice of an application for an order under section 6(c) of
the Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1
under the Act, under sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under
section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act. The requested order would permit (a) series of
certain open-end management investment companies that track the
performance of an index provided by an affiliated person (``Funds'') to
issue shares redeemable in large aggregations only (``Creation
Units''); (b) secondary market transactions in Fund shares to occur at
negotiated market prices rather than at net asset value (``NAV''); (c)
certain Funds to pay redemption proceeds, under certain circumstances,
more than seven days after the tender of shares for redemption; (d)
certain affiliated persons of a Fund to deposit securities into, and
receive securities from, the Fund in connection with the purchase and
redemption of Creation Units; and (e) certain registered management
investment companies and unit investment trusts outside of the same
group of investment companies as the Funds (``Funds of Funds'') to
acquire shares of the Funds.
Applicants: iShares Trust (the ``Trust''), a Delaware statutory trust
registered under the Act as an open-end management investment company
with multiple series, and iShares, Inc. (the ``Corporation''), a
Maryland corporation registered under the Act as an open-end management
investment company with multiple series, (each a ``Company,'' and,
together, the ``Companies''), BlackRock Fund Advisors (the ``Initial
Adviser''), a California corporation registered as an investment
adviser under the Investment Advisers Act of 1940, and BlackRock
Investments, LLC (the ``Distributor''), a broker-dealer registered
under the Securities Exchange Act of 1934 (``Exchange Act'').
Filing Dates: The application was filed on July 22, 2016.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on September 19, 2016, and should be accompanied by proof of
service on applicants, in the form of an affidavit, or for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street
NE., Washington, DC 20549-1090; Applicants: Deepa Damre, Esq.,
BlackRock Fund Advisors, 400 Howard Street, San Francisco, CA 94105.
FOR FURTHER INFORMATION CONTACT: Mark N. Zaruba, Senior Counsel, at
(202) 551-6878, or Mary Kay Frech, at (202) 551-6821 (Division of
Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Summary of the Application
1. Applicants request an order that would allow Funds to operate as
exchange traded funds (``ETFs'') that track an Underlying Index
provided by an Affiliated Index Provider (as defined below).\1\ Fund
shares will be purchased and redeemed at their NAV in Creation Units
only. All orders to purchase Creation Units and all redemption requests
will be placed by or through an ``Authorized Participant,'' which will
have signed a participant agreement with the Distributor. Shares will
be listed and traded individually on a national securities exchange,
where share prices will be based on the current bid/offer market. Any
order granting the requested relief would be subject to the terms and
conditions stated in the application.
---------------------------------------------------------------------------
\1\ Applicants request that the order apply to a new series and
any additional series of a Company, and any other open-end
management investment company or series thereof, that may be created
in the future (each, included in the term ``Fund''), each of which
will operate as an ETF and will track a specified index comprised of
domestic or foreign equity and/or fixed income securities (each, an
``Underlying Index''). Any Fund will (a) be advised by the Initial
Adviser or an entity controlling, controlled by, or under common
control with the Initial Adviser (each, an ``Adviser'') and (b)
comply with the terms and conditions of the application.
---------------------------------------------------------------------------
2. Each Fund will hold investment positions selected to correspond
generally to the performance of an Underlying Index. An affiliated
person, as defined in section 2(a)(3) of the Act (``Affiliated
Person''), or an affiliated person of an Affiliated Person (``Second-
Tier Affiliate''), of a Company or a Fund, of the Adviser, of any sub-
adviser to or promoter of a Fund, or of the Distributor will compile,
create, sponsor or maintain the Underlying Index (an ``Affiliated Index
Provider'').\2\
---------------------------------------------------------------------------
\2\ Each Fund will post on its Web site the identities and
quantities of the investment positions that will form the basis for
the Fund's calculation of its NAV at the end of the day. Applicants
believe that requiring the Funds to maintain full portfolio
transparency will help address, together with other protections,
conflicts of interest with respect to such Funds.
---------------------------------------------------------------------------
3. Shares will be purchased and redeemed in Creation Units and
generally on an in-kind basis. Except where the purchase or redemption
will include cash under the limited circumstances specified in the
application, purchasers will be required to purchase Creation Units by
depositing specified instruments (``Deposit Instruments''), and
shareholders redeeming their shares will receive specified instruments
(``Redemption Instruments''). The Deposit Instruments and the
Redemption Instruments will each correspond pro rata to the positions
in the Fund's portfolio (including cash positions) except as specified
in the application.
4. Because shares will not be individually redeemable, applicants
request an exemption from section 5(a)(1) and section 2(a)(32) of the
Act that would permit the Funds to register as open-end management
investment companies and issue shares that are redeemable in Creation
Units only.
5. Applicants also request an exemption from section 22(d) of the
Act and rule 22c-1 under the Act as secondary market trading in shares
will take place at negotiated prices, not at a current offering price
described in a Fund's prospectus, and not at a price based on NAV.
Applicants state that (a) secondary market trading in shares does not
involve a Fund as a party and will not result in dilution of an
investment
[[Page 59711]]
in shares, and (b) to the extent different prices exist during a given
trading day, or from day to day, such variances occur as a result of
third-party market forces, such as supply and demand. Therefore,
applicants assert that secondary market transactions in shares will not
lead to discrimination or preferential treatment among purchasers.
Finally, applicants represent that share market prices will be
disciplined by arbitrage opportunities, which should prevent shares
from trading at a material discount or premium from NAV.
6. With respect to Funds that effect creations and redemptions of
Creation Units in kind and that are based on certain Underlying Indexes
that include foreign securities, applicants request relief from the
requirement imposed by section 22(e) in order to allow such Funds to
pay redemption proceeds within fifteen calendar days following the
tender of Creation Units for redemption. Applicants assert that the
requested relief would not be inconsistent with the spirit and intent
of section 22(e) to prevent unreasonable, undisclosed or unforeseen
delays in the actual payment of redemption proceeds.
7. Applicants request an exemption to permit Funds of Funds to
acquire Fund shares beyond the limits of section 12(d)(1)(A) of the
Act; and the Funds, and any principal underwriter for the Funds, and/or
any broker or dealer registered under the Exchange Act, to sell shares
to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act.
The application's terms and conditions are designed to, among other
things, help prevent any potential (i) undue influence over a Fund
through control or voting power, or in connection with certain
services, transactions, and underwritings, (ii) excessive layering of
fees, and (iii) overly complex fund structures, which are the concerns
underlying the limits in sections 12(d)(1)(A) and (B) of the Act.
8. Applicants request an exemption from sections 17(a)(1) and
17(a)(2) of the Act to permit persons that are Affiliated Persons, or
Second Tier Affiliates, of the Funds, solely by virtue of certain
ownership interests, to effectuate purchases and redemptions in-kind.
The deposit procedures for in-kind purchases of Creation Units and the
redemption procedures for in-kind redemptions of Creation Units will be
the same for all purchases and redemptions and Deposit Instruments and
Redemption Instruments will be valued in the same manner as those
investment positions currently held by the Funds. Applicants also seek
relief from the prohibitions on affiliated transactions in section
17(a) to permit a Fund to sell its shares to and redeem its shares from
a Fund of Funds, and to engage in the accompanying in-kind transactions
with the Fund of Funds.\3\ The purchase of Creation Units by a Fund of
Funds directly from a Fund will be accomplished in accordance with the
policies of the Fund of Funds and will be based on the NAVs of the
Funds.
---------------------------------------------------------------------------
\3\ The requested relief would apply to direct sales of shares
in Creation Units by a Fund to a Fund of Funds and redemptions of
those shares. Applicants, moreover, are not seeking relief from
section 17(a) for, and the requested relief will not apply to,
transactions where a Fund could be deemed an Affiliated Person, or a
Second-Tier Affiliate, of a Fund of Funds because an Adviser or an
entity controlling, controlled by or under common control with an
Adviser provides investment advisory services to that Fund of Funds.
---------------------------------------------------------------------------
9. Section 6(c) of the Act permits the Commission to exempt any
persons or transactions from any provision of the Act if such exemption
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from any provision of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.
Section 17(b) of the Act authorizes the Commission to grant an order
permitting a transaction otherwise prohibited by section 17(a) if it
finds that (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company involved; and (c) the proposed
transaction is consistent with the general purposes of the Act.
For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-20739 Filed 8-29-16; 8:45 am]
BILLING CODE 8011-01-P