Self-Regulatory Organizations; LCH SA; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, Security-Based Swap Submission, or Advance Notice To Adopt Revised Fee Schedule and Establish Annual Fixed Fee for General Members, 12481-12484 [2017-04089]
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Federal Register / Vol. 82, No. 41 / Friday, March 3, 2017 / Notices
mstockstill on DSK3G9T082PROD with NOTICES
unanticipated redemptions or trade
fails.3 The Funds will not borrow under
the facility for leverage purposes, and
the loans’ duration will be no more than
7 days.4
2. Applicants anticipate that the
proposed facility would provide a
borrowing Fund with significant savings
at times when the cash position of the
Fund is insufficient to meet temporary
cash requirements. In addition, Funds
making short-term cash loans directly to
other Funds would earn interest at a rate
higher than they otherwise could obtain
from investing their cash in repurchase
agreements or certain other short term
money market instruments. Thus,
applicants assert that the facility would
benefit both borrowing and lending
Funds.
3. Applicants agree that any order
granting the requested relief will be
subject to the terms and conditions
stated in the application. Among others,
the Adviser, through a designated
committee, would administer the
facility as a disinterested fiduciary as
part of its duties under the investment
management agreements with the Funds
and would receive no additional fee as
compensation for its services in
connection with the administration of
the facility. The facility would be
subject to oversight and certain
approvals by the Funds’ Board,
including, among others, approval of the
interest rate formula and of the method
for allocating loans across Funds, as
well as review of the process in place to
evaluate the liquidity implications for
the Funds. A Fund’s aggregate
outstanding interfund loans will not
exceed 15% of its net assets, and the
Fund’s loans to any one Fund will not
exceed 5% of the lending Fund’s net
assets.5
4. Applicants assert that the facility
does not raise the concerns underlying
section 12(d)(1) of the Act given that the
Funds are part of the same group of
investment companies and there will be
no duplicative costs or fees to the
3 Applicants request that the order also apply to
any existing or future series of the Funds and to any
other registered management investment company
or its series for which NBIA and each successor
thereto or a person controlling, controlled by, or
under common control with NBIA serves as
investment adviser (each such investment company
or series thereof included in the term ‘‘Fund,’’ and
each such investment adviser an ‘‘Adviser’’). A
‘‘successor’’ is defined as any entity resulting from
a reorganization of NBIA into another jurisdiction
or a change in the type of business organization.
4 Any Fund, however, will be able to call a loan
on one business day’s notice.
5 Under certain circumstances, a borrowing Fund
will be required to pledge collateral to secure the
loan.
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Funds.6 Applicants also assert that the
proposed transactions do not raise the
concerns underlying sections 17(a)(1),
17(a)(3), 17(d) and 21(b) of the Act as
the Funds would not engage in lending
transactions that unfairly benefit
insiders or are detrimental to the Funds.
Applicants state that the facility will
offer both reduced borrowing costs and
enhanced returns on loaned funds to all
participating Funds, and each Fund
would have an equal opportunity to
borrow and lend on equal terms based
on an interest rate formula that is
objective and verifiable. With respect to
the relief from section 17(a)(2) of the
Act, applicants note that any collateral
pledged to secure an interfund loan
would be subject to the same conditions
imposed by any other lender to a Fund
that imposes conditions on the quality
of or access to collateral for a borrowing
(if the lender is another Fund) or the
same or better conditions (in any other
circumstance).7
5. Applicants also believe that the
limited relief from section 18(f)(1) of the
Act that is necessary to implement the
facility (because the lending Funds are
not banks) is appropriate in light of the
conditions and safeguards described in
the application and because the Funds
would remain subject to the
requirement of section 18(f)(1) that all
borrowings of the Fund, including
combined interfund loans and bank
borrowings, have at least 300% asset
coverage.
6. 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
6 Applicants state that the obligation to repay an
interfund loan could be deemed to constitute a
security for the purposes of sections 17(a)(1) and
12(d)(1) of the Act.
7 Applicants state that any pledge of securities to
secure an interfund loan could constitute a
purchase of securities for purposes of section
17(a)(2) of the Act.
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12481
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.
Rule 17d–1(b) under the Act provides
that in passing upon an application filed
under the rule, the Commission will
consider whether the participation of
the registered investment company in a
joint enterprise, joint arrangement or
profit sharing plan on the basis
proposed is consistent with the
provisions, policies and purposes of the
Act and the extent to which such
participation is on a basis different from
or less advantageous than that of the
other participants.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–04106 Filed 3–2–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–80114; File No. SR–LCH
SA–2017–001]
Self-Regulatory Organizations; LCH
SA; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change, Security-Based Swap
Submission, or Advance Notice To
Adopt Revised Fee Schedule and
Establish Annual Fixed Fee for General
Members
February 27, 2017.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
17, 2017, Banque Centrale de
Compensation, which conducts
business under the name LCH SA (‘‘LCH
SA’’), filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change described in
Items I, II, and III below, which Items
have been primarily prepared by LCH
SA. LCH SA filed the proposal pursuant
to Section 19(b)(3)(A) of the Act,3 and
Rule 19b–4(f)(2) 4 thereunder, so that the
proposal was effective upon filing with
the Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(2).
2 17
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Federal Register / Vol. 82, No. 41 / Friday, March 3, 2017 / Notices
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change, Security-Based Swap
Submission, or Advance Notice
The proposed rule change will: (1)
Modify the annual fixed fee that covers
all self-clearing activity for a Clearing
Member 5 and its affiliates under the
Unlimited Tariff, (2) establish an annual
fixed fee for all General Members that
participate in the CDS Clearing Services
under the Introductory Tariff, and (3)
remove the volume-based discounts
currently in effect for the client clearing
activities of the CDS Clearing Service.
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change, Security-Based
Swap Submission, or Advance Notice
In its filing with the Commission,
LCH SA 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. LCH SA has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change, Security-Based
Swap Submission, or Advance Notice
1. Purpose
The purpose of the proposed rule
change is to: (1) Modify the annual fixed
fee that covers all self-clearing activity
for a Clearing Member and its affiliates
under the Unlimited Tariff, (2) establish
an annual fixed fee for all General
Members that participate in the CDS
Clearing Services under the
Introductory Tariff, and (3) remove the
volume-based discounts currently in
effect for the client clearing activities of
the CDS Clearing Service.
mstockstill on DSK3G9T082PROD with NOTICES
Unlimited Tariff
The proposed rule change will reduce
the annual fixed fee for General
Members that covers all self-clearing
activity for Clearing Members and their
affiliate(s) that have opted for the
Unlimited Tariff. Currently, General
Members that participate in the CDS
Clearing Service can elect to pay an
annual fixed fee of Ö2,250,000 (the
‘‘Unlimited Tariff’’), which covers all
self-clearing fees for the Clearing
Member and its affiliates. Clearing
Members that select to pay this fixed fee
are not charged any variable fee that
would otherwise be assessed with each
cleared CDS on their house activity.
General Clearing Members that do not
select the Unlimited Tariff fall under the
Introductory Tariff and are currently
charged a variable volume based selfclearing fee. The fee is calculated and
charged per million gross notional
cleared (EUR/USD, as applicable) and
varies depending on the type of CDS
cleared, i.e., European indices,
European single names, US indices, US
single names. The amount of variable
fees paid for trades cleared by the
General Clearing Member and its
affiliates under the Introductory Tariff
annually is currently capped at
Ö2,250,000.
The rule change will reduce the
annual fixed fee to be paid by General
Members that select the Unlimited
Tariff from Ö2,250,000 to Ö2,000,000.
The cap on annual fees paid by General
Members that select the Introductory
Tariff will similarly be reduced from
Ö2,250,000 to Ö2,000,000, and will
include the fixed fee along with all
variable fees for the Clearing Member
and its affiliates.
LCH SA believes that the reduced fee
more accurately reflects the
proportionate costs and expenses that
LCH SA will incur in connection with
self-cleared transactions following the
introduction of mandatory clearing of
OTC derivatives and the anticipated
increase in CDS client clearing
activities.
Annual Clearing Fee (Introductory
Tariff)
In addition, the proposed rule change
will establish an annual fixed fee for all
General Members that participate in the
CDS Clearing Service under the
Introductory Tariff. The annual fixed fee
is independent from and in addition to
the self-clearing and client clearing
variable fees currently charged, but will
count toward the Ö2,000,000 cap
described above. Currently, General
Members that participate in the CDS
Clearing Service pay either the
Discounts for clients will be implemented as follows: Band
Base Fee ...................................
16% fee discount .......................
25% fee discount .......................
Volume-Based Discount
Lastly, the proposed rule change will
remove the volume-based discounts that
had been in effect for CDS client
clearing activities since early 2014.
Currently, clients that participate in the
CDS Clearing Service are charged a
clearing fee per EUR/USD million gross
notional cleared as follows:
European products
U.S. Products
16:42 Mar 02, 2017
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Ö4
Ö12
Base fees
Index (per million) .....................
Single Name (per million) .........
$5
$17
In order to encourage client clearing
of CDS back in 2014 ahead of the
mandatory clearing requirement at the
time, LCH SA has been offering volumebased discounts as follows:
Monthly gross notional cleared
Ö0 to Ö2 billion.
Ö2 billion to Ö6 billion.
Ö6 billion+.
5 Capitalized terms not defined herein are defined
in LCH SA’s Rulebook, available at https://
www.lch.com/rules-regulations/rulebooks/sa.
VerDate Sep<11>2014
Base fees
Index (per million) .....................
Single Name (per million) .........
Benefit
Band A .....................................................................................
Band B .....................................................................................
Band C .....................................................................................
Unlimited Tariff, which covers all selfclearing fees for the Clearing Member
and its affiliates, or the Introductory
Tariff, which is calculated per million
gross notional cleared (EUR/USD, as
applicable) and varies depending on the
type of CDS cleared, i.e., European
indices, European single names, US
indices, US single names. Therefore,
Clearing Members under the
Introductory Tariff with no clearing
activity have full access to the CDS
Clearing Service resources, are
consulted on potential rules, product
and service changes, and benefit from
unlimited support for training and
system training at no cost.
LCH SA believes that all General
Members under the Introductory Tariff
that have access to, and benefit from,
the CDS Clearing Service resources
should pay a fixed fee for such access,
even if the General Member has no
clearing activity. The rule change will
require every General Member under the
Introductory Tariff to pay an annual
fixed fee of Ö200,000, which will
increase to Ö400,000 for members with
more than Ö15 billion gross notional in
clearing activity per year, across selfclearing or clearing for clients. Onetwelfth of the fee will be charged each
month, and a pro-rata amount will be
applied for Clearing Members starting or
resigning during the calendar year.
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With mandatory clearing of CDS now
becoming effective in 2017 in Europe,
LCH SA believes it is no longer
necessary or appropriate to provide
these discounts in light of the costs and
expenses that LCH SA will incur in
providing the CDS Clearing Service to
clients. The rule change, therefore, will
remove the volume-based discounts for
CDS client clearing activities.
2. Statutory Basis
Section 17A(b)(3)(D) of the Act
requires that the rules of a clearing
agency provide for the equitable
allocation of reasonable dues, fees, and
other charges.6 With respect to the
Unlimited Tariff, LCH SA has
determined that the reduction in the
Unlimited Tariff fixed fee for General
Members with respect to self-clearing
activity on behalf of the Clearing
Member and its affiliates is reasonable
and appropriate given the costs and
expenses to LCH SA. With CDSClear
now reaching a maturity stage in its
development and the introduction of
mandatory clearing of OTC derivatives
in 2017, which will result in an increase
in CDS client clearing activities, it is
appropriate that the costs and expenses
that LCH SA will incur in providing the
CDS Clearing Service are shared more
broadly among General Members and
their clients that participate in the
service. For the same reasons, LCH SA
has determined that the cap on selfclearing fees, inclusive of the annual
fixed fee, applicable to General
Members electing the Introductory
Tariff, should be lowered to the same
amount as the revised Unlimited Tariff.
With respect to the annual fixed fee
for General Members under the
Introductory Tariff, LCH SA has
determined that implementing an
annual fixed fee for all General
Members that participate in the CDS
Clearing Service under the Introductory
Tariff (which fee is separate from and in
addition to the self-clearing and client
clearing variable fees currently
assessed), is reasonable and appropriate
given the costs and expenses to LCH SA
in providing the services to General
Members. The fee assures that all
General Members that benefit from the
CDS Clearing Service pay an
appropriate fee for such services, such
as being consulted on potential rules,
product and service changes, as well as
benefiting from unlimited support for
product and system training and testing,
without regard to whether such General
Members engage in CDS clearing
activities. The proposed rule changes,
therefore, are consistent with the
requirements of Section 17A of the Act 7
and regulations thereunder applicable to
it, because they provide for the
equitable allocation of reasonable fees,
dues, and other charges among clearing
members and market participants by
ensuring that General Members and
their clients pay reasonable fees and
dues for the services that LCH SA
provides.
With respect to the removal of
volume-based discounts, LCH SA has
determined that removing the volumebased discounts for CDS client clearing
activities is reasonable and appropriate,
given the costs and expenses to LCH SA
in providing such services. The
elimination of volume-based discounts
will assure that clients pay an
appropriate proportionate share of the
costs and expenses that LCH SA will
incur in providing the CDS Clearing
Service.
B. Clearing Agency’s Statement on
Burden on Competition
Section 17A(b)(3)(I) of the Act
requires that the rules of a clearing
agency not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.8 LCH SA does not
believe that the proposed rule change
would impose any burden on
competition. As noted above, LCH SA
believes that the reduction in the annual
Tariffs assessed on General Members
with respect to self-clearing activity are
reasonable and appropriate, as the
Tariffs will apply equally to all General
Members that self-clear CDS.
Additionally, LCH SA believes that an
annual fixed fee for all General
Members that participate in the CDS
Clearing Service under the Introductory
Tariff, which fee is separate from and in
addition to the self-clearing and client
clearing variable fees currently assessed,
is appropriate in light of the expenses
incurred by LCH SA in providing its
services. Further, LCH SA believes that
removing the volume-based discounts
for CDS client clearing activities is
reasonable and appropriate, as the
clearing fees will apply equally to all
clients that participate in the CDS
Clearing Service.
LCH SA does not believe that the
proposed rule change would have a
burden on competition because it does
not adversely affect the ability of such
Clearing Members or other market
participants generally to engage in
cleared transactions or to access clearing
services.
7 15
6 15
U.S.C. 78q–1(b)(3)(D).
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16:42 Mar 02, 2017
8 15
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PO 00000
U.S.C. 78q–1.
U.S.C. 78q–1(b)(3)(I).
Frm 00057
Fmt 4703
C. Clearing Agency’s Statement on
Comments on the Proposed Rule
Change Received From Members,
Participants or Others
Written comments relating to the
proposed rule change have not been
solicited or received. LCH SA will
notify the Commission of any written
comments received by LCH SA.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change
has become effective upon filing
pursuant to Section 19(b)(3)(A) 9 of the
Act and Rule 19b–4(f)(2) 10 thereunder
because it establishes a fee or other
charge imposed by LCH SA on its
Clearing Members. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such proposed rule
change if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in furtherance of the purposes of the
Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
LCH SA–2017–001 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–LCH SA–2017–001. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
9 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
10 17
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12483
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Federal Register / Vol. 82, No. 41 / Friday, March 3, 2017 / Notices
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filings will also be available for
inspection and copying at the principal
office of LCH SA and on LCH SA’s Web
site at https://www.lch.com/assetclasses/cdsclear. All comments received
will be posted without change; the
Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
All submissions should refer to File
Number SR–LCH SA–2017–001 and
should be submitted on or before March
24, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.11
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–04089 Filed 3–2–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32512; 812–14706]
Tortoise Index Solutions, LLC, et al.;
Notice of Application
February 27, 2017.
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
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AGENCY:
11 17
CFR 200.30–3(a)(12).
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16:42 Mar 02, 2017
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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.
Tortoise Index Solutions,
LLC (the ‘‘Initial Adviser’’), a Delaware
limited liability company that is
registered as an investment adviser
under the Investment Advisers Act of
1940; Montage Managers Trust (the
‘‘Trust’’), a Delaware statutory trust
registered under the Act as an open-end
management investment company with
multiple series, and Foreside Fund
Services, LLC (the ‘‘Distributor’’), a
Delaware limited liability company and
broker-dealer registered under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’).
FILING DATES: The application was filed
on October 7, 2016 and amended on
February 16, 2017.
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 March 27, 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: Secretary, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090;
Applicants: The Initial Adviser, 11550
Ash Street, Suite 300, Leawood, KS
66211; the Trust, 11300 Tomahawk
Creek Parkway, Suite 200, Leawood, KS
66211; and the Distributor, Three Canal
Plaza, Suite 100, Portland, ME 04101.
FOR FURTHER INFORMATION CONTACT: Jean
E. Minarick, Senior Counsel, at (202)
551–6811, or Daniele Marchesani,
Assistant Chief Counsel, at (202) 551–
APPLICANTS:
PO 00000
Frm 00058
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6825 (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 indexbased 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.
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
1 Applicants request that the order apply to the
Tortoise North American Pipeline Fund 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 (such entity or any successor thereto
is included in the term, an ‘‘Adviser’’) and (b)
comply with the terms and conditions of the
application.
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.
E:\FR\FM\03MRN1.SGM
03MRN1
]]>Agencies
[Federal Register Volume 82, Number 41 (Friday, March 3, 2017)]
[Notices]
[Pages 12481-12484]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-04089]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80114; File No. SR-LCH SA-2017-001]
Self-Regulatory Organizations; LCH SA; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change, Security-Based Swap
Submission, or Advance Notice To Adopt Revised Fee Schedule and
Establish Annual Fixed Fee for General Members
February 27, 2017.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on February 17, 2017, Banque Centrale de Compensation, which conducts
business under the name LCH SA (``LCH SA''), filed with the Securities
and Exchange Commission (``Commission'') the proposed rule change
described in Items I, II, and III below, which Items have been
primarily prepared by LCH SA. LCH SA filed the proposal pursuant to
Section 19(b)(3)(A) of the Act,\3\ and Rule 19b-4(f)(2) \4\ thereunder,
so that the proposal was effective upon filing with the Commission. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A).
\4\ 17 CFR 240.19b-4(f)(2).
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[[Page 12482]]
I. Clearing Agency's Statement of the Terms of Substance of the
Proposed Rule Change, Security-Based Swap Submission, or Advance Notice
The proposed rule change will: (1) Modify the annual fixed fee that
covers all self-clearing activity for a Clearing Member \5\ and its
affiliates under the Unlimited Tariff, (2) establish an annual fixed
fee for all General Members that participate in the CDS Clearing
Services under the Introductory Tariff, and (3) remove the volume-based
discounts currently in effect for the client clearing activities of the
CDS Clearing Service.
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\5\ Capitalized terms not defined herein are defined in LCH SA's
Rulebook, available at https://www.lch.com/rules-regulations/rulebooks/sa.
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II. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change, Security-Based Swap Submission, or
Advance Notice
In its filing with the Commission, LCH SA 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. LCH SA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Clearing Agency's Statement of the Purpose of, and Statutory Basis
for, the Proposed Rule Change, Security-Based Swap Submission, or
Advance Notice
1. Purpose
The purpose of the proposed rule change is to: (1) Modify the
annual fixed fee that covers all self-clearing activity for a Clearing
Member and its affiliates under the Unlimited Tariff, (2) establish an
annual fixed fee for all General Members that participate in the CDS
Clearing Services under the Introductory Tariff, and (3) remove the
volume-based discounts currently in effect for the client clearing
activities of the CDS Clearing Service.
Unlimited Tariff
The proposed rule change will reduce the annual fixed fee for
General Members that covers all self-clearing activity for Clearing
Members and their affiliate(s) that have opted for the Unlimited
Tariff. Currently, General Members that participate in the CDS Clearing
Service can elect to pay an annual fixed fee of [euro]2,250,000 (the
``Unlimited Tariff''), which covers all self-clearing fees for the
Clearing Member and its affiliates. Clearing Members that select to pay
this fixed fee are not charged any variable fee that would otherwise be
assessed with each cleared CDS on their house activity.
General Clearing Members that do not select the Unlimited Tariff
fall under the Introductory Tariff and are currently charged a variable
volume based self-clearing fee. The fee is calculated and charged per
million gross notional cleared (EUR/USD, as applicable) and varies
depending on the type of CDS cleared, i.e., European indices, European
single names, US indices, US single names. The amount of variable fees
paid for trades cleared by the General Clearing Member and its
affiliates under the Introductory Tariff annually is currently capped
at [euro]2,250,000.
The rule change will reduce the annual fixed fee to be paid by
General Members that select the Unlimited Tariff from [euro]2,250,000
to [euro]2,000,000. The cap on annual fees paid by General Members that
select the Introductory Tariff will similarly be reduced from
[euro]2,250,000 to [euro]2,000,000, and will include the fixed fee
along with all variable fees for the Clearing Member and its
affiliates.
LCH SA believes that the reduced fee more accurately reflects the
proportionate costs and expenses that LCH SA will incur in connection
with self-cleared transactions following the introduction of mandatory
clearing of OTC derivatives and the anticipated increase in CDS client
clearing activities.
Annual Clearing Fee (Introductory Tariff)
In addition, the proposed rule change will establish an annual
fixed fee for all General Members that participate in the CDS Clearing
Service under the Introductory Tariff. The annual fixed fee is
independent from and in addition to the self-clearing and client
clearing variable fees currently charged, but will count toward the
[euro]2,000,000 cap described above. Currently, General Members that
participate in the CDS Clearing Service pay either the Unlimited
Tariff, which covers all self-clearing fees for the Clearing Member and
its affiliates, or the Introductory Tariff, which is calculated per
million gross notional cleared (EUR/USD, as applicable) and varies
depending on the type of CDS cleared, i.e., European indices, European
single names, US indices, US single names. Therefore, Clearing Members
under the Introductory Tariff with no clearing activity have full
access to the CDS Clearing Service resources, are consulted on
potential rules, product and service changes, and benefit from
unlimited support for training and system training at no cost.
LCH SA believes that all General Members under the Introductory
Tariff that have access to, and benefit from, the CDS Clearing Service
resources should pay a fixed fee for such access, even if the General
Member has no clearing activity. The rule change will require every
General Member under the Introductory Tariff to pay an annual fixed fee
of [euro]200,000, which will increase to [euro]400,000 for members with
more than [euro]15 billion gross notional in clearing activity per
year, across self-clearing or clearing for clients. One-twelfth of the
fee will be charged each month, and a pro-rata amount will be applied
for Clearing Members starting or resigning during the calendar year.
Volume-Based Discount
Lastly, the proposed rule change will remove the volume-based
discounts that had been in effect for CDS client clearing activities
since early 2014. Currently, clients that participate in the CDS
Clearing Service are charged a clearing fee per EUR/USD million gross
notional cleared as follows:
------------------------------------------------------------------------
------------------------------------------------------------------------
European products Base fees
------------------------------------------------------------------------
Index (per million)........................................ [euro]4
Single Name (per million).................................. [euro]12
------------------------------------------------------------------------
U.S. Products Base fees
------------------------------------------------------------------------
Index (per million)........................................ $5
Single Name (per million).................................. $17
------------------------------------------------------------------------
In order to encourage client clearing of CDS back in 2014 ahead of
the mandatory clearing requirement at the time, LCH SA has been
offering volume-based discounts as follows:
------------------------------------------------------------------------
Discounts for clients will be Monthly gross
implemented as follows: Band Benefit notional cleared
------------------------------------------------------------------------
Band A.......................... Base Fee.......... [euro]0 to [euro]2
billion.
Band B.......................... 16% fee discount.. [euro]2 billion to
[euro]6 billion.
Band C.......................... 25% fee discount.. [euro]6 billion+.
------------------------------------------------------------------------
[[Page 12483]]
With mandatory clearing of CDS now becoming effective in 2017 in
Europe, LCH SA believes it is no longer necessary or appropriate to
provide these discounts in light of the costs and expenses that LCH SA
will incur in providing the CDS Clearing Service to clients. The rule
change, therefore, will remove the volume-based discounts for CDS
client clearing activities.
2. Statutory Basis
Section 17A(b)(3)(D) of the Act requires that the rules of a
clearing agency provide for the equitable allocation of reasonable
dues, fees, and other charges.\6\ With respect to the Unlimited Tariff,
LCH SA has determined that the reduction in the Unlimited Tariff fixed
fee for General Members with respect to self-clearing activity on
behalf of the Clearing Member and its affiliates is reasonable and
appropriate given the costs and expenses to LCH SA. With CDSClear now
reaching a maturity stage in its development and the introduction of
mandatory clearing of OTC derivatives in 2017, which will result in an
increase in CDS client clearing activities, it is appropriate that the
costs and expenses that LCH SA will incur in providing the CDS Clearing
Service are shared more broadly among General Members and their clients
that participate in the service. For the same reasons, LCH SA has
determined that the cap on self-clearing fees, inclusive of the annual
fixed fee, applicable to General Members electing the Introductory
Tariff, should be lowered to the same amount as the revised Unlimited
Tariff.
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\6\ 15 U.S.C. 78q-1(b)(3)(D).
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With respect to the annual fixed fee for General Members under the
Introductory Tariff, LCH SA has determined that implementing an annual
fixed fee for all General Members that participate in the CDS Clearing
Service under the Introductory Tariff (which fee is separate from and
in addition to the self-clearing and client clearing variable fees
currently assessed), is reasonable and appropriate given the costs and
expenses to LCH SA in providing the services to General Members. The
fee assures that all General Members that benefit from the CDS Clearing
Service pay an appropriate fee for such services, such as being
consulted on potential rules, product and service changes, as well as
benefiting from unlimited support for product and system training and
testing, without regard to whether such General Members engage in CDS
clearing activities. The proposed rule changes, therefore, are
consistent with the requirements of Section 17A of the Act \7\ and
regulations thereunder applicable to it, because they provide for the
equitable allocation of reasonable fees, dues, and other charges among
clearing members and market participants by ensuring that General
Members and their clients pay reasonable fees and dues for the services
that LCH SA provides.
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\7\ 15 U.S.C. 78q-1.
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With respect to the removal of volume-based discounts, LCH SA has
determined that removing the volume-based discounts for CDS client
clearing activities is reasonable and appropriate, given the costs and
expenses to LCH SA in providing such services. The elimination of
volume-based discounts will assure that clients pay an appropriate
proportionate share of the costs and expenses that LCH SA will incur in
providing the CDS Clearing Service.
B. Clearing Agency's Statement on Burden on Competition
Section 17A(b)(3)(I) of the Act requires that the rules of a
clearing agency not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act.\8\ LCH SA does
not believe that the proposed rule change would impose any burden on
competition. As noted above, LCH SA believes that the reduction in the
annual Tariffs assessed on General Members with respect to self-
clearing activity are reasonable and appropriate, as the Tariffs will
apply equally to all General Members that self-clear CDS. Additionally,
LCH SA believes that an annual fixed fee for all General Members that
participate in the CDS Clearing Service under the Introductory Tariff,
which fee is separate from and in addition to the self-clearing and
client clearing variable fees currently assessed, is appropriate in
light of the expenses incurred by LCH SA in providing its services.
Further, LCH SA believes that removing the volume-based discounts for
CDS client clearing activities is reasonable and appropriate, as the
clearing fees will apply equally to all clients that participate in the
CDS Clearing Service.
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\8\ 15 U.S.C. 78q-1(b)(3)(I).
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LCH SA does not believe that the proposed rule change would have a
burden on competition because it does not adversely affect the ability
of such Clearing Members or other market participants generally to
engage in cleared transactions or to access clearing services.
C. Clearing Agency's Statement on Comments on the Proposed Rule Change
Received From Members, Participants or Others
Written comments relating to the proposed rule change have not been
solicited or received. LCH SA will notify the Commission of any written
comments received by LCH SA.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing proposed rule change has become effective upon filing
pursuant to Section 19(b)(3)(A) \9\ of the Act and Rule 19b-4(f)(2)
\10\ thereunder because it establishes a fee or other charge imposed by
LCH SA on its Clearing Members. At any time within 60 days of the
filing of the proposed rule change, the Commission summarily may
temporarily suspend such proposed rule change if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or otherwise in furtherance
of the purposes of the Act.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml) or
Send an email to rule-comments@sec.gov. Please include
File Number SR-LCH SA-2017-001 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-LCH SA-2017-001. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the
[[Page 12484]]
proposed rule change between the Commission and any person, other than
those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such filings will also be available
for inspection and copying at the principal office of LCH SA and on LCH
SA's Web site at https://www.lch.com/asset-classes/cdsclear. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.
All submissions should refer to File Number SR-LCH SA-2017-001 and
should be submitted on or before March 24, 2017.
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\11\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-04089 Filed 3-2-17; 8:45 am]
BILLING CODE 8011-01-P
