AQR Funds, et al., 44474-44475 [2017-20177]
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Federal Register / Vol. 82, No. 183 / Friday, September 22, 2017 / Notices
terms consistent with the other EM
Contracts approved for clearing at ICC
and governed by Subchapter 26D of the
Rules.5 ICC has also represented that
clearing of the additional EM Contracts
will not require any changes to ICC’s
Risk Management Framework or other
policies and procedures constituting
rules within the meaning of the Act.6
III. Discussion and Commission
Findings
Section 19(b)(2)(C) of the Act directs
the Commission to approve a proposed
rule change of a self-regulatory
organization if the Commission finds
that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to such selfregulatory organization.7 Section
17A(b)(3)(F) of the Act 8 requires that,
among other things, that the rules of a
clearing agency be designed to promote
the prompt and accurate clearance and
settlement of securities transactions
and, to the extent applicable, derivative
agreements, contracts, and transactions,
to assure the safeguarding of securities
and funds which are in the custody or
control of the clearing agency or for
which it is responsible and, in general,
to protect investors and the public
interest.
The Commission finds that the rule
change is consistent with the
requirements of Section 17A of the Act 9
and the rules and regulations
thereunder applicable to ICC. The
Commission has reviewed the terms and
conditions of these contracts and has
determined that they are substantially
similar to the other contracts listed in
Subchapter 26D of the ICC Rules, all of
which ICC currently clears, the key
difference being that the underlying
reference obligations will be issuances
by the Kingdom of Saudi Arabia and the
Republic of Kazakhstan, the new
Eligible SES Reference Entities.
Moreover, the Commission has
reviewed the Notice and ICC’s Rules,
policies and procedures, which provide
that the additional EM Contracts will be
cleared pursuant to ICC’s existing
clearing arrangements and related
financial safeguards, protections and
risk management procedures.10 In
addition, the Commission has evaluated
information submitted by ICC, including
data on volume, open interest, and the
number of ICC clearing participants
82 FR at 30931.
at 30931–32.
7 15 U.S.C. 78s(b)(2)(C).
8 15 U.S.C. 78q–1(b)(3)(F).
9 15 U.S.C. 78q–1.
10 Notice, 82 FR at 30932.
6 Id.
18:11 Sep 21, 2017
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposal is
consistent with the requirements of the
Act and in particular with the
requirements of Section 17A of the
Act 12 and the rules and regulations
thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,13 that the
proposed rule change (File No. SR–ICC–
2017–008) be, and hereby is,
approved.14
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–20203 Filed 9–21–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32821; File No. 812–14741]
AQR Funds, et al.
September 18, 2017.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application for an order
pursuant to: (a) Section 6(c) of the
11 15
U.S.C. 78q–1(b)(3)(F).
U.S.C. 78q–1.
13 15 U.S.C. 78s(b)(2).
14 In approving the proposed rule change, the
Commission considered the proposal’s impact on
efficiency, competition and capital formation. 15
U.S.C. 78c(f).
15 17 CFR 200.30–3(a)(12).
12 15
5 Notice,
VerDate Sep<11>2014
(‘‘CPs’’) that currently trade in the
additional EM Contracts as well as
certain model parameters for the
additional EM Contracts. Based on this
review, the Commission finds that ICC’s
rules, policies, and procedures are
reasonably designed to price and
measure the potential risk presented by
these products; collect financial
resources in proportion to such risk; and
liquidate these products in the event of
a CP default. Thus, the Commission
finds that acceptance of the additional
EM Contracts, on the terms and
conditions set out in ICC’s Rules, is
consistent with the prompt and accurate
clearance of and settlement of securities
transactions and derivative agreements,
contracts and transactions cleared by
ICC, the safeguarding of securities and
funds in the custody or control of ICC,
and the protection of investors and the
public interest, within the meaning of
Section 17A(b)(3)(F) of the Act.11
Jkt 241001
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Frm 00099
Fmt 4703
Sfmt 4703
Investment Company Act of 1940
(‘‘Act’’) granting an exemption from
sections 18(f) and 21(b) of the Act; (b)
section 12(d)(1)(J) of the Act granting an
exemption from section 12(d)(1) of the
Act; (c) sections 6(c) and 17(b) of the
Act granting an exemption from sections
17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
and (d) section 17(d) of the Act and rule
17d–1 under the Act to permit certain
joint arrangements and transactions.
Applicants request an order that would
permit certain registered open-end
management investment companies to
participate in a joint lending and
borrowing facility.
Applicants: AQR Funds (the ‘‘Trust’’),
registered under the Act as an open-end
management investment company, and
AQR Capital Management, LLC
(‘‘AQR’’), registered as an investment
adviser under the Investment Advisers
Act of 1940.
Filing Dates: The application was
filed on February 2, 2017 and amended
on July 6, 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 13, 2017 and
should be accompanied by proof of
service on the 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, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090;
Applicants: AQR Capital Management,
LLC, Two Greenwich Plaza, 4th Floor,
Greenwich, CT 06830.
FOR FURTHER INFORMATION CONTACT:
James Maclean, Senior Counsel, at (202)
551–7794, or Robert Shapiro, Branch
Chief, at (202) 551–7758 (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 an applicant using the
Company name box, at https://
E:\FR\FM\22SEN1.SGM
22SEN1
Federal Register / Vol. 82, No. 183 / Friday, September 22, 2017 / Notices
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of the Application
1. Applicants request an order that
would permit the applicants to
participate in an interfund lending
facility where each Fund could lend
money directly to and borrow money
directly from other Funds to cover
unanticipated cash shortfalls, such as
unanticipated redemptions or trade
fails.1 The Funds will not borrow under
the facility for leverage purposes and
the loans’ duration will be no more than
7 days.2
2. Applicants anticipate that the
proposed facility would provide a
borrowing Fund with a source of
liquidity at a rate lower than the bank
borrowing rate 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 U.S. Treasury bills 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,
an 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
1 Applicants request that the order apply to the
applicants and to any existing or future series of the
Trust and any existing or future registered open-end
management investment company or series thereof
(each a ‘‘Fund’’) for which AQR, or an entity
controlling, controlled by, or under common
control with AQR or any successor thereto serves
as investment adviser (with AQR, each an
‘‘Adviser’’). For purposes of the requested order,
‘‘successor’’ is limited to any entity that results
from a reorganization into another jurisdiction or a
change in the type of a business organization.
Although the applicants do not currently operate
any money market funds, applicants request that
the order also apply to any future Fund that is a
money market fund that complies with rule 2a–7 of
the Act (each a ‘‘Money Market Fund’’). Money
Market Funds will not participate as borrowers
under the interfund lending facility because such
funds rarely need to borrow cash to meet
redemptions.
2 Any Fund, however, will be able to call a loan
on one business day’s notice.
VerDate Sep<11>2014
18:11 Sep 21, 2017
Jkt 241001
44475
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.3
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
Funds.4 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).5
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 a 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
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.
3 Under certain circumstances, a borrowing Fund
will be required to pledge collateral to secure the
loan.
4 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.
5 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.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget this
request for extension of the previously
approved collection of information
discussed below.
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–20177 Filed 9–21–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–558, OMB Control No.
3235–0617]
Submission for OMB Review;
Comment Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
Washington, DC 20549–2736
Extension:
Rule 433
E:\FR\FM\22SEN1.SGM
22SEN1
]]>Agencies
[Federal Register Volume 82, Number 183 (Friday, September 22, 2017)]
[Notices]
[Pages 44474-44475]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-20177]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32821; File No. 812-14741]
AQR Funds, et al.
September 18, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
Notice of an application for an order pursuant to: (a) Section 6(c)
of the Investment Company Act of 1940 (``Act'') granting an exemption
from sections 18(f) and 21(b) of the Act; (b) section 12(d)(1)(J) of
the Act granting an exemption from section 12(d)(1) of the Act; (c)
sections 6(c) and 17(b) of the Act granting an exemption from sections
17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) section 17(d) of
the Act and rule 17d-1 under the Act to permit certain joint
arrangements and transactions. Applicants request an order that would
permit certain registered open-end management investment companies to
participate in a joint lending and borrowing facility.
Applicants: AQR Funds (the ``Trust''), registered under the Act as
an open-end management investment company, and AQR Capital Management,
LLC (``AQR''), registered as an investment adviser under the Investment
Advisers Act of 1940.
Filing Dates: The application was filed on February 2, 2017 and
amended on July 6, 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 13, 2017 and should be accompanied by proof of
service on the 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, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090; Applicants: AQR Capital
Management, LLC, Two Greenwich Plaza, 4th Floor, Greenwich, CT 06830.
FOR FURTHER INFORMATION CONTACT: James Maclean, Senior Counsel, at
(202) 551-7794, or Robert Shapiro, Branch Chief, at (202) 551-7758
(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 an applicant
using the Company name box, at https://
[[Page 44475]]
www.sec.gov/search/search.htm or by calling (202) 551-8090.
Summary of the Application
1. Applicants request an order that would permit the applicants to
participate in an interfund lending facility where each Fund could lend
money directly to and borrow money directly from other Funds to cover
unanticipated cash shortfalls, such as unanticipated redemptions or
trade fails.\1\ The Funds will not borrow under the facility for
leverage purposes and the loans' duration will be no more than 7
days.\2\
---------------------------------------------------------------------------
\1\ Applicants request that the order apply to the applicants
and to any existing or future series of the Trust and any existing
or future registered open-end management investment company or
series thereof (each a ``Fund'') for which AQR, or an entity
controlling, controlled by, or under common control with AQR or any
successor thereto serves as investment adviser (with AQR, each an
``Adviser''). For purposes of the requested order, ``successor'' is
limited to any entity that results from a reorganization into
another jurisdiction or a change in the type of a business
organization. Although the applicants do not currently operate any
money market funds, applicants request that the order also apply to
any future Fund that is a money market fund that complies with rule
2a-7 of the Act (each a ``Money Market Fund''). Money Market Funds
will not participate as borrowers under the interfund lending
facility because such funds rarely need to borrow cash to meet
redemptions.
\2\ Any Fund, however, will be able to call a loan on one
business day's notice.
---------------------------------------------------------------------------
2. Applicants anticipate that the proposed facility would provide a
borrowing Fund with a source of liquidity at a rate lower than the bank
borrowing rate 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 U.S. Treasury bills 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, an 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.\3\
---------------------------------------------------------------------------
\3\ Under certain circumstances, a borrowing Fund will be
required to pledge collateral to secure the loan.
---------------------------------------------------------------------------
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 Funds.\4\ 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).\5\
---------------------------------------------------------------------------
\4\ 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.
\5\ 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.
---------------------------------------------------------------------------
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 a 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 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. 2017-20177 Filed 9-21-17; 8:45 am]
BILLING CODE 8011-01-P
