SerenityShares Investments LLC, et al.; Notice of Application, 67404-67406 [2016-23611]
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Federal Register / Vol. 81, No. 190 / Friday, September 30, 2016 / Notices
invites public comment, and takes other
administrative steps.
DATES: Comments are due: October 4,
2016 (Comment due date applies to all
Docket Nos. listed above)
ADDRESSES: Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
mstockstill on DSK3G9T082PROD with NOTICES
I. Introduction
II. Docketed Proceeding(s)
I. Introduction
The Commission gives notice that the
Postal Service filed request(s) for the
Commission to consider matters related
to negotiated service agreement(s). The
request(s) may propose the addition or
removal of a negotiated service
agreement from the market dominant or
the competitive product list, or the
modification of an existing product
currently appearing on the market
dominant or the competitive product
list.
Section II identifies the docket
number(s) associated with each Postal
Service request, the title of each Postal
Service request, the request’s acceptance
date, and the authority cited by the
Postal Service for each request. For each
request, the Commission appoints an
officer of the Commission to represent
the interests of the general public in the
proceeding, pursuant to 39 U.S.C. 505
(Public Representative). Section II also
establishes comment deadline(s)
pertaining to each request.
The public portions of the Postal
Service’s request(s) can be accessed via
the Commission’s Web site (https://
www.prc.gov). Non-public portions of
the Postal Service’s request(s), if any,
can be accessed through compliance
with the requirements of 39 CFR
3007.40.
The Commission invites comments on
whether the Postal Service’s request(s)
in the captioned docket(s) are consistent
with the policies of title 39. For
request(s) that the Postal Service states
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3010, and 39
CFR part 3020, subpart B. For request(s)
that the Postal Service states concern
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competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3015, and
39 CFR part 3020, subpart B. Comment
deadline(s) for each request appear in
section II.
are available at www.prc.gov, Docket
Nos. MC2016–206, CP2016–295.
Stanley F. Mires,
Attorney, Federal Compliance.
[FR Doc. 2016–23618 Filed 9–29–16; 8:45 am]
BILLING CODE 7710–12–P
II. Docketed Proceeding(s)
1. Docket No(s).: CP2014–1; Filing
Title: Notice of United States Postal
Service of Amendment to Parcel Select
and Parcel Return Service Contract 5,
with Portions Filed Under Seal; Filing
Acceptance Date: September 23, 2016;
Filing Authority: 39 CFR 3015.5; Public
Representative: Natalie R. Ward;
Comments Due: October 4, 2016.
2. Docket No(s).: MC2016–206 and
CP2016–295; Filing Title: Request of the
United States Postal Service to Add
First-Class Package Service Contract 64
to Competitive Product List and Notice
of Filing (Under Seal) of Unredacted
Governors’ Decision, Contract, and
Supporting Data; Filing Acceptance
Date: September 26, 2016; Filing
Authority: 39 U.S.C. 3642 and 39 CFR
3020.30 et seq.; Public Representative:
Lyudmila Y. Bzhilyanskaya; Comments
Due: October 4, 2016.
This Notice will be published in the
Federal Register.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2016–23694 Filed 9–29–16; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
Product Change—First-Class Package
Service Negotiated Service Agreement
Postal ServiceTM.
Notice.
AGENCY:
ACTION:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Effective date: September 30,
2016.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on September 26,
2016, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add First-Class
Package Service Contract 64 to
Competitive Product List. Documents
SUPPLEMENTARY INFORMATION:
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32283; 812–14641]
SerenityShares Investments LLC, et
al.; Notice of Application
September 26, 2016.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: 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) index-based series of certain
open-end management investment
companies (‘‘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.
AGENCY:
SerenityShares Investments
LLC (the ‘‘Initial Adviser’’), a Delaware
limited liability company that will be
registered as an investment adviser
under the Investment Advisers Act of
1940, ETF Series Solutions (the
‘‘Trust’’), a Delaware statutory trust
registered under the Act as an open-end
management investment company with
multiple series, and Quasar Distributors,
LLC (the ‘‘Distributor’’), a Delaware
limited liability company and brokerdealer registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’).
APPLICANTS:
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Federal Register / Vol. 81, No. 190 / Friday, September 30, 2016 / Notices
The application was filed
on April 12, 2016, and amended on
September 1, 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 October 21, 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: The Initial Adviser, 6615
Hillandale Road, Chevy Chase, MD
20815; the Trust and the Distributor,
615 East Michigan Street, 4th Floor,
Milwaukee, Wisconsin 53202.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879, or David J.
Marcinkus, Branch Chief, 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:
mstockstill on DSK3G9T082PROD with NOTICES
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as index
exchange traded funds (‘‘ETFs’’).1 Fund
shares will be purchased and redeemed
at their NAV in Creation Units only. All
orders to purchase Creation Units and
1 Applicants request that the order apply to the
new series of the Trust and any additional series of
the Trust, 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.
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20:49 Sep 29, 2016
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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.
2. Each Fund will hold investment
positions selected to correspond
generally to the performance of an
Underlying Index. In the case of SelfIndexing Funds, 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 the Trust 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.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
2 Each Self-Indexing 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 Self-Indexing
Funds to maintain full portfolio transparency will
help address, together with other protections,
conflicts of interest with respect to such Funds.
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67405
not involve a Fund as a party and will
not result in dilution of an investment
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
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Federal Register / Vol. 81, No. 190 / Friday, September 30, 2016 / Notices
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.
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.
Brent J. Fields,
Secretary.
[FR Doc. 2016–23611 Filed 9–29–16; 8:45 am]
mstockstill on DSK3G9T082PROD with NOTICES
Self-Regulatory Organizations; The
Depository Trust Company; Notice of
Filing of Amendment No. 1 and Order
Granting Accelerated Approval of a
Proposed Rule Change, as Modified by
Amendment No. 1, Regarding the
Implementation of Functionality To
Submit a Cover of Protect on Behalf of
Another Participant and the Removal
of the Option To Cover of Protect
Directly With Agent
September 26, 2016.
On July 29, 2016, The Depository
Trust Company (‘‘DTC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) proposed rule change
SR–DTC–2016–005 pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder.2 The proposed rule change
was published for comment in the
Federal Register on August 15, 2016.3
The Commission did not receive any
comment letters on the proposed rule
change. On September 14, 2016, DTC
filed Amendment No. 1 to the proposed
rule change, as discussed below. The
Commission is publishing this notice to
solicit comments on Amendment No. 1
from interested persons and is
approving on an accelerated basis the
proposed rule change, as modified by
Amendment No. 1.
I. Description of the Proposed Rule
Change and Notice of Filing
Amendment No. 1
The proposed rule change by DTC, as
modified by Amendment No. 1, would
update its Procedures 4 set forth in the
Guide to make changes to certain
options within its Participant
Subscription Offer Program (‘‘PSOP’’) 5
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 78520
(August 9, 2016), 81 FR 54170 (August 15, 2016)
(SR–DTC–2016–005) (‘‘Notice’’).
4 Capitalized terms not otherwise defined herein
have the meaning set forth in the Rules, By-Laws
and Organization Certificate of DTC (the ‘‘Rules’’),
available at https://www.dtcc.com/legal/rules-andprocedures.aspx and the Reorganizations Service
Guide (the ‘‘Guide’’), available at https://
www.dtcc.com/∼/media/Files/Downloads/legal/
service-guides/Reorganizations.pdf.
5 References in this notice and order to ‘‘PSOP’’
refer to both the PSOP function within the DTC
Participant Terminal System (‘‘PTS’’) interface and
the equivalent ‘‘Rights Subscription’’ function
within the Participant Browser System (‘‘PBS’’)
interface. PSOP is a function that is used by
Participants to submit instructions including
oversubscriptions, submit protects, submit cover of
protects, submit cover of protects on behalf of
another Participant, and submit Rights sell
2 17
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.
20:49 Sep 29, 2016
[Release No. 34–78935; File No. SR–DTC–
2016–005]
1 15
BILLING CODE 8011–01–P
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COMMISSION
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and Participant Tender Offer Program
(‘‘PTOP’’) functions.6 Specifically, DTC
proposes to add an option called ‘‘Cover
of Protect on Behalf of Another
Participant’’ (‘‘CPAP’’) to both PSOP
and PTOP (‘‘PSOP/PTOP’’) that would
allow a Participant to tender
subscription rights (‘‘Rights’’) or
Securities through DTC to an agent
(‘‘Offer Agent’’),7 on behalf of another
Participant that needs to tender such
Rights or Securities in order to receive
the shares and/or consideration from (i)
a subscription rights offering (a ‘‘Rights
Offer’’); or (ii) a cash tender offer or
exchange offer (collectively, a ‘‘Tender/
Exchange Offer’’) (together with Rights
Offer, ‘‘Offer’’). DTC would also
eliminate an option called ‘‘Cover of
Protect Submitted Directly to Agent’’
(‘‘CPDA’’) from PSOP/PTOP that has
allowed a Participant to tender Rights or
Securities through DTC to be eligible to
receive the shares and/or consideration
from an Offer, when such Participant
submitted its initial acceptance directly
to the Offer Agent outside of DTC. In
addition, DTC proposes to make
ministerial changes to the text of the
Guide, as more fully described below.8
A. Proposal
As DTC describes in the Notice, there
are times when a Participant that
submitted a Protect 9 (the ‘‘Protecting
Participant’’) may need to have another
Participant (the ‘‘Covering Participant’’)
instructions on Rights Subscription events. PTS and
PBS are user interfaces for DTC’s Settlement and
Asset Services functions. PTS is mainframe-based
and PBS is web-based with a mainframe back-end.
Participants may use either PTS or PBS, as they are
functionally equivalent.
6 References in this notice and order to ‘‘PTOP’’
refer to both the PTOP function within the PTS
interface and the equivalent ‘‘Voluntary Tenders
and Exchanges’’ function within the PBS interface.
PTOP is a function that is used by Participants to
submit instructions, submit protects, submit cover
of protects, submit cover of protects on behalf of
another Participant, and submit withdrawals on
various Voluntary Reorganization events.
7 The Offer Agent is the fiscal agent of the offeror,
typically a bank or trust company that is designated
to coordinate the process of the Offer.
8 The description of the proposed rule change
herein is based on the statements prepared by DTC
in the Notice. Notice, supra note 3, 81 FR at 54170–
72.
9 DTC states that an investor or its broker
(‘‘Investor’’) may want to accept an Offer but will
not have the necessary Rights or Securities, as the
case may be, before the expiration date of the Offer.
If permitted by the terms of the Offer, the Investor
may submit to the Offer Agent the notice of
guaranteed delivery for such Offer (‘‘Notice of
Guaranteed Delivery’’) which serves as (i)
protection of the Investor’s acceptance of the Offer
(the ‘‘Protect’’), and sets forth the number of shares
being subscribed to or the amount of Securities
being tendered, and (ii) a guarantee that the Rights
or Securities (the ‘‘Cover’’) will be delivered to the
Offer Agent within the period prescribed by the
Offer (the ‘‘Protect Period’’). Notice, supra note 3,
81 FR at 54171.
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]]>Agencies
[Federal Register Volume 81, Number 190 (Friday, September 30, 2016)]
[Notices]
[Pages 67404-67406]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-23611]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32283; 812-14641]
SerenityShares Investments LLC, et al.; Notice of Application
September 26, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: 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) index-
based series of certain open-end management investment companies
(``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.
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Applicants: SerenityShares Investments LLC (the ``Initial Adviser''), a
Delaware limited liability company that will be registered as an
investment adviser under the Investment Advisers Act of 1940, ETF
Series Solutions (the ``Trust''), a Delaware statutory trust registered
under the Act as an open-end management investment company with
multiple series, and Quasar Distributors, LLC (the ``Distributor''), a
Delaware limited liability company and broker-dealer registered under
the Securities Exchange Act of 1934 (``Exchange Act'').
[[Page 67405]]
Filing Dates: The application was filed on April 12, 2016, and amended
on September 1, 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 October 21, 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: The Initial Adviser, 6615
Hillandale Road, Chevy Chase, MD 20815; the Trust and the Distributor,
615 East Michigan Street, 4th Floor, Milwaukee, Wisconsin 53202.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879, or David J. Marcinkus, Branch Chief, 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
index exchange traded funds (``ETFs'').\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.
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\1\ Applicants request that the order apply to the new series of
the Trust and any additional series of the Trust, 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.
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2. Each Fund will hold investment positions selected to correspond
generally to the performance of an Underlying Index. In the case of
Self-Indexing Funds, 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 the Trust 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.\2\
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\2\ Each Self-Indexing 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 Self-Indexing Funds to
maintain full portfolio transparency will help address, together
with other protections, conflicts of interest with respect to such
Funds.
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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 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
[[Page 67406]]
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.
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\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.
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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.
Brent J. Fields,
Secretary.
[FR Doc. 2016-23611 Filed 9-29-16; 8:45 am]
BILLING CODE 8011-01-P
