Morgan Stanley ETF Trust, et al.; Notice of Application, 890-892 [2016-31860]
Download as PDF
890
Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices
www.prc.gov, Docket Nos. MC2017–74,
CP2017–101.
POSTAL SERVICE
International Product Change—Global
Expedited Package Services—NonPublished Rates
Stanley F. Mires,
Attorney, Federal Compliance.
[FR Doc. 2016–31852 Filed 1–3–17; 8:45 am]
Postal ServiceTM.
ACTION: Notice.
AGENCY:
BILLING CODE 7710–12–P
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add Global
Expedited Package Services—NonPublished Rates 11 (GEPS–NPR 11) to
the Competitive Products List.
DATES: Effective date: January 4, 2017.
FOR FURTHER INFORMATION CONTACT:
Christopher C. Meyerson, 202–268–
7820.
SUMMARY:
The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642, on December 27, 2016, it filed
with the Postal Regulatory Commission
a Request of the United States Postal
Service to add Global Expedited
Package Services—Non-Published Rates
11 (GEPS–NPR 11) to the Competitive
Products List, and Notice of Filing
GEPS–NPR 11 Model Contract and
Application for Non-Public Treatment
of Materials Filed Under Seal.
Documents are available at
www.prc.gov, Docket Nos. MC2017–72
and CP2017–99.
SUPPLEMENTARY INFORMATION:
Stanley F. Mires,
Attorney, Federal Compliance.
[FR Doc. 2016–31854 Filed 1–3–17; 8:45 am]
BILLING CODE 7710–12–P
Product Change—Priority Mail Express
and Priority Mail 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: January 4, 2017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 27,
2016, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Priority
Mail Express & Priority Mail Contract 42
to Competitive Product List. Documents
are available at www.prc.gov, Docket
Nos. MC2017–73, CP2017–100.
SUMMARY:
BILLING CODE 7710–12–P
Product Change—Priority Mail
Negotiated Service Agreement
POSTAL SERVICE
Postal ServiceTM.
ACTION: Notice.
Product Change—Priority Mail
Negotiated Service Agreement
AGENCY:
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: January 4, 2017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 28,
2016, it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Priority
Mail Contract 284 to Competitive
Product List. Documents are available at
mstockstill on DSK3G9T082PROD with NOTICES
SUMMARY:
VerDate Sep<11>2014
16:46 Jan 03, 2017
Jkt 241001
Postal ServiceTM.
ACTION: Notice.
AGENCY:
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: January 4, 2017.
FOR FURTHER INFORMATION CONTACT:
Elizabeth A. Reed, 202–268–3179.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on December 28,
2016, it filed with the Postal Regulatory
Commission a Request of the United
SUMMARY:
PO 00000
Frm 00076
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32405; File No. 812–14655]
[FR Doc. 2016–31853 Filed 1–3–17; 8:45 am]
POSTAL SERVICE
Stanley F. Mires,
Attorney, Federal Compliance.
[FR Doc. 2016–31851 Filed 1–3–17; 8:45 am]
POSTAL SERVICE
Stanley F. Mires,
Attorney, Federal Compliance.
BILLING CODE 7710–12–P
States Postal Service to Add Priority
Mail Contract 285 to Competitive
Product List. Documents are available at
www.prc.gov, Docket Nos. MC2017–75,
CP2017–102.
Morgan Stanley ETF Trust, et al.;
Notice of Application
December 28, 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) actively-managed 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; (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; (f) certain Funds
(‘‘Feeder Funds’’) to create and redeem
Creations Units in-kind in a masterfeeder structure; and (g) the Funds to
issue Shares in less than Creation Unit
size to investors participating in a
distribution reinvestment program.
AGENCY:
Morgan Stanley ETF Trust
(the ‘‘Trust’’), a Delaware statutory trust
that will register under the Act as an
open-end management investment
APPLICANTS:
E:\FR\FM\04JAN1.SGM
04JAN1
Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices
company with multiple series, Morgan
Stanley Investment Management Inc.
(the ‘‘Initial Adviser’’), a Delaware
corporation registered as an investment
adviser under the Investment Advisers
Act of 1940, and Morgan Stanley
Distribution, Inc. (the ‘‘Distributor’’), a
Pennsylvania corporation and brokerdealer registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’).
FILING DATES: The application was filed
on June 3, 2016 and amended on
November 7, 2016 and December 20,
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 January 23, 2017, 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: Brent J. Fields, Secretary,
Securities and Exchange Commission,
100 F Street NE., Washington, DC
20549–1090; Applicants: c/o Joseph C.
Benedetti, Esq., Morgan Stanley
Investment Management Inc., 522 Fifth
Avenue, New York New York 10036.
FOR FURTHER INFORMATION CONTACT:
Laura J. Riegel, Senior Counsel, at (202)
551–3038, or Mary Kay Frech, 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.
mstockstill on DSK3G9T082PROD with NOTICES
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as
actively-managed exchange traded
funds (‘‘ETFs’’).1 Fund shares will be
1 Applicants request that the order apply to the
initial Fund, as well as to future series of the Trust
and any future open-end management investment
VerDate Sep<11>2014
16:46 Jan 03, 2017
Jkt 241001
purchased and redeemed at their NAV
in Creation Units only (other than
pursuant to a distribution reinvestment
program described in the application).
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.
2. Each Fund will consist of a
portfolio of securities and other assets
and investment positions (‘‘Portfolio
Instruments’’). Each Fund will disclose
on its Web site the identities and
quantities of the Portfolio Instruments
that will form the basis for the Fund’s
calculation of NAV at the end of the
day.
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)
companies or series thereof (each, included in the
term ‘‘Fund’’), each of which will operate as an
actively-managed ETF. 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 00077
Fmt 4703
Sfmt 4703
891
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 hold
non-U.S. Portfolio Instruments and that
effect creations and redemptions of
Creation Units in kind, 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
Portfolio Instruments currently held by
E:\FR\FM\04JAN1.SGM
04JAN1
892
Federal Register / Vol. 82, No. 2 / Wednesday, January 4, 2017 / Notices
mstockstill on DSK3G9T082PROD with 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.2
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. Applicants also request relief to
permit a Feeder Fund to acquire shares
of another registered investment
company managed by the Adviser
having substantially the same
investment objectives as the Feeder
Fund (‘‘Master Fund’’) beyond the
limitations in section 12(d)(1)(A) and
permit the Master Fund, and any
principal underwriter for the Master
Fund, to sell shares of the Master Fund
to the Feeder Fund beyond the
limitations in section 12(d)(1)(B).
10. 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.
2 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.
VerDate Sep<11>2014
16:46 Jan 03, 2017
Jkt 241001
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016–31860 Filed 1–3–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–79699; File No. SR–
BatsEDGA–2016–32]
Self-Regulatory Organizations; Bats
EDGA Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Market Data Section of Its Fee
Schedule To Adopt Fees for EDGA
Summary Depth and Amend Fees for
EDGA Depth
December 28, 2016.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
15, 2016, Bats EDGA Exchange, Inc.
(‘‘EDGA’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I, II, and III below, which Items
have been prepared by the Exchange.
The Exchange has designated the
proposed rule change as one
establishing or changing a member due,
fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii)
of the Act 3 and Rule 19b–4(f)(2)
thereunder,4 which renders the
proposed rule change effective upon
filing with the Commission. 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 filed a proposal to
amend the Market Data section of its fee
schedule to: (i) Adopt fees for a new
market data product called EDGA
Summary Depth; and (ii) amend the fees
for EDGA Depth.
The text of the proposed rule change
is available at the Exchange’s Web site
at www.batstrading.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
2 17
PO 00000
Frm 00078
Fmt 4703
Sfmt 4703
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
Exchange 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 these
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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Market Data section of its fee schedule
to: (i) Adopt fees for a new market data
product called EDGA Summary Depth;
and (ii) amend the fees for EDGA Depth.
EDGA Summary Depth
EDGA Summary Depth is a data feed
that will provide aggregated two-sided
quotations for all displayed orders
entered into the System 5 for up to five
(5) price levels for securities traded on
the Exchange and for which the
Exchange reports quotes under the
Consolidated Tape Association (‘‘CTA’’)
Plan or the Nasdaq/UTP Plan.6 EDGA
Summary Depth will also contain the
individual last sale information, Market
Status, Trading Status, and Trade Break
messages. The individual last sale
information will include the price, size,
and time of execution. The last sale
message will also include the
cumulative number of shares executed
on the Exchange for that trading day.
The Exchange intends to begin to offer
EDGA Summary Depth on January 3,
2017.7
The Exchange now proposes to amend
its fee schedule to incorporate fees for
distribution of EDGA Summary Depth to
subscribers.8 The proposed fees include
5 ‘‘System’’ is defined as the ‘‘the electronic
communications and trading facility designated by
the Board through which securities orders of Users
Are consolidated for ranking, execution and, when
applicable, routing away.’’ See Exchange Rule
1.5(cc).
6 See Exchange Rule 13.8(f).
7 See Reminder: Bats Global Markets to Introduce
Bats Summary Depth Feeds on January 3, 2017,
https://cdn.batstrading.com/resources/release_
notes/2017/Reminder-Bats-Global-Markets-toIntroduce-Bats-Summary-Depth-Feeds-on-Jan-32017.pdf.
8 The Exchange notes that its affiliated exchanges,
Bats EDGX Exchange, Inc. (‘‘EDGX’’), Bats BZX
Exchange, Inc. (‘‘BZX’’) and Bats BYX Exchange,
E:\FR\FM\04JAN1.SGM
04JAN1
Agencies
[Federal Register Volume 82, Number 2 (Wednesday, January 4, 2017)]
[Notices]
[Pages 890-892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31860]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32405; File No. 812-14655]
Morgan Stanley ETF Trust, et al.; Notice of Application
December 28, 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) actively-
managed 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; (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; (f) certain Funds (``Feeder
Funds'') to create and redeem Creations Units in-kind in a master-
feeder structure; and (g) the Funds to issue Shares in less than
Creation Unit size to investors participating in a distribution
reinvestment program.
-----------------------------------------------------------------------
Applicants: Morgan Stanley ETF Trust (the ``Trust''), a Delaware
statutory trust that will register under the Act as an open-end
management investment
[[Page 891]]
company with multiple series, Morgan Stanley Investment Management Inc.
(the ``Initial Adviser''), a Delaware corporation registered as an
investment adviser under the Investment Advisers Act of 1940, and
Morgan Stanley Distribution, Inc. (the ``Distributor''), a Pennsylvania
corporation and broker-dealer registered under the Securities Exchange
Act of 1934 (``Exchange Act'').
FILING DATES: The application was filed on June 3, 2016 and amended on
November 7, 2016 and December 20, 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 January 23, 2017, 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: Brent J. Fields, Secretary, Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: c/
o Joseph C. Benedetti, Esq., Morgan Stanley Investment Management Inc.,
522 Fifth Avenue, New York New York 10036.
FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at
(202) 551-3038, or Mary Kay Frech, 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
actively-managed exchange traded funds (``ETFs'').\1\ Fund shares will
be purchased and redeemed at their NAV in Creation Units only (other
than pursuant to a distribution reinvestment program described in the
application). 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 the initial Fund,
as well as to future series of the Trust and any future open-end
management investment companies or series thereof (each, included in
the term ``Fund''), each of which will operate as an actively-
managed ETF. 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 consist of a portfolio of securities and other
assets and investment positions (``Portfolio Instruments''). Each Fund
will disclose on its Web site the identities and quantities of the
Portfolio Instruments that will form the basis for the Fund's
calculation of NAV at the end of the day.
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 hold non-U.S. Portfolio Instruments
and that effect creations and redemptions of Creation Units in kind,
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
Portfolio Instruments currently held by
[[Page 892]]
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.\2\ 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.
---------------------------------------------------------------------------
\2\ 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. Applicants also request relief to permit a Feeder Fund to
acquire shares of another registered investment company managed by the
Adviser having substantially the same investment objectives as the
Feeder Fund (``Master Fund'') beyond the limitations in section
12(d)(1)(A) and permit the Master Fund, and any principal underwriter
for the Master Fund, to sell shares of the Master Fund to the Feeder
Fund beyond the limitations in section 12(d)(1)(B).
10. 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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-31860 Filed 1-3-17; 8:45 am]
BILLING CODE 8011-01-P