Active Weighting Funds ETF Trust and Active Weighting Advisors LLC, 44232-44234 [2017-20143]
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Federal Register / Vol. 82, No. 182 / Thursday, September 21, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
V. Commission’s Solicitation of
Comments
The Commission requests that
interested persons provide written
submissions of their views, data, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposal is consistent with Section
6(b)(5), or any other provision of the
Exchange Act, or the rules and
regulations thereunder. Although there
do not appear to be any issues relevant
to approval or disapproval that would
be facilitated by an oral presentation of
views, data, and arguments, the
Commission will consider, pursuant to
Rule 19b-4, any request for an
opportunity to make an oral
presentation.37
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by October 12, 2017. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by October 26, 2017. The
Commission asks that commenters
address the sufficiency of the
Exchange’s statements in support of the
proposal which are set forth in the
Notice, in addition to any other
comments they may wish to submit
about the proposed rule change. In
particular, the Commission seeks
comment, including, where relevant,
any specific data, statistics, or studies,
on the following:
1. Would a direct listing based only
on an Exchange Act registration without
prior trading and Securities Act
registration present unique
considerations, including with respect
to the role of various distribution
participants, the extent and nature of
pricing information available to market
participants prior to the commencement
of trading, and the availability of
information indicative of the number of
shares that are likely to be made
available for sale at the commencement
of trading? Would these considerations
raise any concerns, including with
respect to promoting just and equitable
37 Section 19(b)(2) of the Exchange Act, as
amended by the Securities Act Amendments of
1975, Public Law 94–29 (June 4, 1975), grants the
Commission flexibility to determine what type of
proceeding—either oral or notice and opportunity
for written comments—is appropriate for
consideration of a particular proposal by a selfregulatory organization. See Securities Act
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
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principles of trade, removing
impediments to and perfecting the
mechanism of a free and open market
and a national market system, and, in
general, protecting investors and the
public interest? If so, please identify
those risks and explain their
significance.
2. To what extent would a direct
listing impact the ability of the DMM to
facilitate the opening (or otherwise
fulfill its obligations as a DMM) on the
first day of trading of a security listed
only with an Exchange Act registration?
To the extent there would be an impact,
please identify it and explain its
significance. To what extent would any
such impact be mitigated by the
proposed requirement that the DMM
consult with a financial adviser to the
issuer in order to effect a fair and
orderly opening of the security?
Comments may be submitted by any of
the following methods:
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–NYSE–
2017–30 and should be submitted on or
before October 12, 2017. Rebuttal
comments should be submitted by
October 26, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.38
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–20101 Filed 9–20–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32820; 812–14696]
Electronic Comments
• 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–
NYSE–2017–30 on the subject line.
Active Weighting Funds ETF Trust and
Active Weighting Advisors LLC
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
Numbers SR–NYSE–2017–30. 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
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 these
filings also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
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; and
(e) certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Acquiring Funds’’) to acquire
shares of the Funds.
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September 18, 2017.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
38 17
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CFR 200.30–3(a)(57).
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Federal Register / Vol. 82, No. 182 / Thursday, September 21, 2017 / Notices
Active Weighting Funds
ETF Trust (the ‘‘Trust’’), a Delaware
statutory trust registered under the Act
as an open-end management investment
company with multiple series, and
Active Weighting Advisors LLC (the
‘‘Initial Adviser’’), a Delaware limited
liability company registered as an
investment adviser under the
Investment Advisers Act of 1940.
FILING DATE: The application was filed
on August 31, 2016, and amended on
January 13, 2017, May 25, 2017, and
September 15, 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 October 10, 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, 200 Vesey Street, 24th
Floor, New York, NY 10281.
FOR FURTHER INFORMATION CONTACT:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879, or Robert H. Shapiro,
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.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
APPLICANTS:
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 future
series of the Trust or of other open-end management
investment companies that currently exist or that
may be created in the future (each, included in the
term ‘‘Fund’’), each of which will operate as an
actively-managed ETF. Any Fund will (a) be
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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 a broker-dealer
registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’)
(together with any future distributor, 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
Positions’’). Each Fund will disclose on
its Web site the identities and quantities
of the Portfolio Positions 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
advised by the Initial Adviser or an entity
controlling, controlled by, or under common
control with the Initial Adviser (each such entity or
any successor thereto is included in the term
‘‘Adviser’’) and (b) comply with the terms and
conditions of the application. For purposes of the
requested order, the term ‘‘successor’’ is limited to
an entity that results from a reorganization into
another jurisdiction or a change in the type of
business organization.
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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 Positions 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 Acquiring 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 Acquiring 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
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Federal Register / Vol. 82, No. 182 / Thursday, September 21, 2017 / Notices
Portfolio Positions currently held by the
Funds. Applicants also seek relief from
the prohibitions on affiliated
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from an Acquiring Fund, and to
engage in the accompanying in-kind
transactions with the Acquiring Fund.2
The purchase of Creation Units by an
Acquiring Fund directly from a Fund
will be accomplished in accordance
with the policies of the Acquiring Fund
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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–20143 Filed 9–20–17; 8:45 am]
asabaliauskas on DSKBBXCHB2PROD with NOTICES
BILLING CODE 8011–01–P
2 The requested relief would apply to direct sales
of shares in Creation Units by a Fund to an
Acquiring Fund 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 an Acquiring Fund because an Adviser
or an entity controlling, controlled by or under
common control with an Adviser provides
investment advisory services to that Acquiring
Fund.
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81638; File No. SR–FICC–
2017–002]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Notice of
Designation of Longer Period for
Commission Action on Proceedings To
Determine Whether To Approve or
Disapprove a Proposed Rule Change
To Implement the Capped Contingency
Liquidity Facility in the Government
Securities Division Rulebook
September 15, 2017.
On March 1, 2017, Fixed Income
Clearing Corporation (‘‘FICC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule change SR–FICC–2017–002
(‘‘Proposed Rule Change’’) pursuant to
Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’),1 and
Rule 19b–4 thereunder,2 to implement a
Capped Contingency Liquidity Facility
in FICC’s Government Securities
Division Rulebook.3 The Proposed Rule
Change was published for comment in
the Federal Register on March 20,
2017.4 The Commission received five
comment letters 5 to the Proposed Rule
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
also filed the Proposed Rule Change as
advance notice SR–FICC–2017–802 (‘‘Advance
Notice’’) pursuant to Section 806(e)(1) of the
Payment, Clearing, and Settlement Supervision Act
of 2010, 12 U.S.C. 5465(e)(1), and Rule 19b–
4(n)(1)(i) under the Act, 17 CFR 240.19b–4(n)(1)(i).
Notice of filing of the Advance Notice was
published for comment in the Federal Register on
March 15, 2017. Securities Exchange Act Release
No. 80191 (March 9, 2017), 82 FR 13876 (March 15,
2017) (SR–FICC–2017–802). The Commission
extended the deadline for its review period of the
Advance Notice from April 30, 2017 to June 29,
2017. Securities Exchange Act Release No. 80520
(April 25, 2017), 82 FR 20404 (May 1, 2017) (SR–
FICC–2017–802). The Commission issued a notice
of no objection to the Advance Notice on June 29,
2017. Securities Exchange Act Release No. 81054
(June 29, 2017), 82 FR 31356 (July 6, 2017). The
proposal in the Proposed Rule Change and the
Advance Notice shall not take effect until all
regulatory actions required with respect to the
proposal are completed.
4 Securities Exchange Act Release No. 80234
(March 14, 2017), 82 FR 14401 (March 20, 2017)
(SR–FICC–2017–002).
5 See letter from Robert E. Pooler Jr., Chief
Financial Officer, Ronin Capital LLC (‘‘Ronin’’),
dated April 10, 2017, to Robert W. Errett, Deputy
Secretary, Commission; letter from Alan B. Levy,
Managing Director, Industrial and Commercial Bank
of China Financial Services LLC (‘‘ICBC’’), Philip
Vandermause, Director, Aardvark Securities LLC
(‘‘Aardvark’’), David Rutter, Chief Executive Officer,
LiquidityEdge LLC, Robert Pooler, Chief Financial
Officer, Ronin, Jason Manumaleuna, Chief Financial
Officer and EVP, Rosenthal Collins Group LLC, and
Scott Skyrm, Managing Director, Wedbush
Securities Inc. (‘‘Wedbush’’); letter from Timothy J.
Cuddihy, Managing Director, FICC, dated April 25,
2017, to Robert W. Errett, Deputy Secretary,
Commission; letter from Robert E. Pooler Jr., Chief
2 17
3 FICC
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Change, including a response letter from
FICC. On May 30, 2017, the Commission
instituted proceedings under Section
19(b)(2)(B)(i) of the Act 6 to determine
whether to approve or disapprove the
Proposed Rule Change.7
Section 19(b)(2)(B)(ii) of the Act
provides that, after initiating
proceedings, the Commission shall issue
an order approving or disapproving the
proposed rule change not later than 180
days after the date of publication of
notice of filing of the proposed rule
change.8 The Commission may,
however, extend the period for issuing
an order approving or disapproving the
proposed rule change by not more than
60 days if the Commission determines
that a longer period is appropriate and
publishes the reasons for such
determination.9
The 180th day after publication of the
notice for the Proposed Rule Change in
the Federal Register is September 16,
2017. The Commission finds it
appropriate to designate a longer period
within which to issue an order
approving or disapproving the Proposed
Rule Change so that it has sufficient
time to consider the Proposed Rule
Change and the comments received.
Accordingly, the Commission, pursuant
to Section 19(b)(2)(B)(ii) of the Act,10
designates November 15, 2017 as the
date by which the Commission shall
either approve or disapprove the
Proposed Rule Change.
The Commission also seeks additional
comment to help further inform its
analysis of the Proposed Rule Change.
Specifically, the Commission invites
interested persons to provide views,
data, and arguments concerning the
Proposed Rule Change, including
whether the Proposed Rule Change is
consistent with the Act and the
applicable rules or regulations
thereunder. Please note that comments
previously received on the substance of
the Proposed Rule Change will be
considered together with comments
submitted in response to this notice.
Therefore, while commenters are free to
Financial Officer, Ronin, dated June 19, 2017, to
Robert W. Errett, Deputy Secretary, Commission;
and letter from Alan B. Levy, Managing Director,
ICBC, Philip Vandermause, Director, Aardvark,
Robert Pooler, Chief Financial Officer, Ronin, and
Scott Skyrm, Managing Director, Wedbush, dated
June 27, 2017, to Robert W. Errett, Deputy
Secretary, Commission, available at https://
www.sec.gov/comments/sr-ficc-2017-002/
ficc2017002.htm.
6 15 U.S.C. 78s(b)(2)(B)(i).
7 See Securities Exchange Act Release No. 80812
(May 30, 2017), 82 FR 25642 (June 2, 2017) (SR–
FICC–2017–002).
8 15 U.S.C. 78s(b)(2)(B)(ii).
9 Id.
10 Id.
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]]>Agencies
[Federal Register Volume 82, Number 182 (Thursday, September 21, 2017)]
[Notices]
[Pages 44232-44234]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20143]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32820; 812-14696]
Active Weighting Funds ETF Trust and Active Weighting Advisors
LLC
September 18, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
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; and (e) certain
registered management investment companies and unit investment trusts
outside of the same group of investment companies as the Funds
(``Acquiring Funds'') to acquire shares of the Funds.
[[Page 44233]]
Applicants: Active Weighting Funds ETF Trust (the ``Trust''), a
Delaware statutory trust registered under the Act as an open-end
management investment company with multiple series, and Active
Weighting Advisors LLC (the ``Initial Adviser''), a Delaware limited
liability company registered as an investment adviser under the
Investment Advisers Act of 1940.
Filing Date: The application was filed on August 31, 2016, and amended
on January 13, 2017, May 25, 2017, and September 15, 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 October 10, 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, 200 Vesey Street, 24th
Floor, New York, NY 10281.
FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879, or Robert H. Shapiro, 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. 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 a broker-dealer registered under
the Securities Exchange Act of 1934 (``Exchange Act'') (together with
any future distributor, 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 future series of
the Trust or of other open-end management investment companies that
currently exist or that may be created in the future (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 such entity or any successor thereto is
included in the term ``Adviser'') and (b) comply with the terms and
conditions of the application. For purposes of the requested order,
the term ``successor'' is limited to an entity that results from a
reorganization into another jurisdiction or a change in the type of
business organization.
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2. Each Fund will consist of a portfolio of securities and other
assets and investment positions (``Portfolio Positions''). Each Fund
will disclose on its Web site the identities and quantities of the
Portfolio Positions 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 Positions 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 Acquiring 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 Acquiring 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
[[Page 44234]]
Portfolio Positions currently held by the Funds. Applicants also seek
relief from the prohibitions on affiliated transactions in section
17(a) to permit a Fund to sell its shares to and redeem its shares from
an Acquiring Fund, and to engage in the accompanying in-kind
transactions with the Acquiring Fund.\2\ The purchase of Creation Units
by an Acquiring Fund directly from a Fund will be accomplished in
accordance with the policies of the Acquiring Fund and will be based on
the NAVs of the Funds.
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\2\ The requested relief would apply to direct sales of shares
in Creation Units by a Fund to an Acquiring Fund 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 an Acquiring Fund because an Adviser or an
entity controlling, controlled by or under common control with an
Adviser provides investment advisory services to that Acquiring
Fund.
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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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-20143 Filed 9-20-17; 8:45 am]
BILLING CODE 8011-01-P
