Order Granting Limited Exemptions From Exchange Act Rule 10b-17 and Rules 101 and 102 of Regulation M to VanEck Vectors NDR CMG Long/Flat Allocation ETF Pursuant to Exchange Act Rule 10b-17(b)(2) and Rules 101(d) and 102(e) of Regulation M, 46546-46548 [2017-21400]

Download as PDF 46546 Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices comments electronically should contact the person identified in the FOR FURTHER INFORMATION CONTACT section by telephone for advice on filing alternatives. FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 202–789–6820. SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction II. Docketed Proceeding(s) ethrower on DSK3G9T082PROD with NOTICES I. Introduction The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list. Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request’s acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request. The public portions of the Postal Service’s request(s) can be accessed via the Commission’s Web site (http:// www.prc.gov). Non-public portions of the Postal Service’s request(s), if any, can be accessed through compliance with the requirements of 39 CFR 3007.40. The Commission invites comments on whether the Postal Service’s request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3010, and 39 CFR part 3020, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comment deadline(s) for each request appear in section II. VerDate Sep<11>2014 19:52 Oct 04, 2017 Jkt 244001 II. Docketed Proceeding(s) 1. Docket No(s).: MC2017–213 and CP2017–321; Filing Title: Request of the United States Postal Service to Add Priority Mail Contract 365 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors’ Decision, Contract, and Supporting Data; Filing Acceptance Date: September 29, 2017; Filing Authority: 39 U.S.C. 3642 and 39 CFR 3020.30 et seq.; Public Representative: Michael L. Leibert; Comments Due: October 10, 2017. 2. Docket No(s).: MC2017–214 and CP2017–322; Filing Title: Request of the United States Postal Service to Add Priority Mail & First-Class Package Service Contract 58 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors’ Decision, Contract, and Supporting Data; Filing Acceptance Date: September 29, 2017; Filing Authority: 39 U.S.C. 3642 and 39 CFR 3020.30 et seq.; Public Representative: Michael L. Leibert; Comments Due: October 10, 2017. This notice will be published in the Federal Register. Stacy L. Ruble, Secretary. [FR Doc. 2017–21457 Filed 10–4–17; 8:45 am] BILLING CODE 7710–FW–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81771; File No. TP 17–11] Order Granting Limited Exemptions From Exchange Act Rule 10b–17 and Rules 101 and 102 of Regulation M to VanEck Vectors NDR CMG Long/Flat Allocation ETF Pursuant to Exchange Act Rule 10b–17(b)(2) and Rules 101(d) and 102(e) of Regulation M September 29, 2017. By letter dated September 29, 2017 (the ‘‘Letter’’), counsel for VanEck Vectors ETF Trust (the ‘‘Trust’’), on behalf of the Trust, VanEck Vectors NDR CMG Long/Flat Allocation ETF (the ‘‘Fund’’), any national securities exchange on or through which shares issued by the Fund (‘‘Shares’’) may subsequently trade, Van Eck Securities Corporation (the ‘‘Distributor’’), and persons or entities engaging in transactions in Shares (collectively, the ‘‘Applicants’’), requested exemptions, or interpretive or no-action relief, from Rule 10b–17 of the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), and Rules 101 and 102 of Regulation M, in connection with PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 secondary market transactions in Shares and the creation or redemption of aggregations of Shares of at least 50,000 shares (‘‘Creation Units’’). The Trust is registered with the Securities and Exchange Commission (‘‘Commission’’) under the Investment Company Act of 1940, as amended (‘‘1940 Act’’), as an open-end management investment company. The Fund is an exchange-traded fund (‘‘ETF’’) organized as a series of the Trust. The Fund will seek to provide investment results that closely correspond, before fees and expenses, to the performance of the Ned Davis Research CMG US Large Cap Long/Flat Index (the ‘‘Index’’).1 The Fund intends, at least initially, to operate as an ‘‘ETF of ETFs’’ by seeking to track the performance of its underlying Index by holding shares of one or more ETFs (each, an ‘‘Underlying ETF’’) whose investment objective is to track the performance of the S&P 500.2 In order to track the Index, the Fund will invest at least 80% of its total assets (but typically far more) in component securities of the Index (directly or by indirect investments through one or more Underlying ETFs). The Fund may invest the remaining 20% of its total assets in securities not included in the Index, money market instruments, including repurchase agreements or other funds which invest exclusively in money market instruments, convertible securities, structured notes, and certain derivatives, which the Investment Advisor believes will help the Fund track the Index. Depositary receipts not included in the Index may also be used by the Fund in seeking performance that 1 The Index is a rules-based index that follows a proprietary model developed by Ned Davis Research, Inc. in conjunction with Capital Management Group, Inc. To help limit loss associated with adverse market conditions, the model produces trade signals that dictate the Index’s equity allocation ranging from 100% fully invested (i.e., ‘‘long’’) to 100% in cash (i.e., ‘‘flat’’). The Index 100% replicates the S&P 500 Index (the ‘‘S&P 500’’) when the Index is long and holds U.S. Treasury Bills when the Index is flat (i.e., it will be allocated to the Solactive 13-week U.S. T-bill Index). When the Index is not completely long or flat, either 80% or 40% of it will be allocated to the S&P 500, with the remaining portion (20% or 60% respectively) allocated to U.S. Treasury Bills. 2 The Fund will operate as an ETF of ETFs until the Fund reaches, in the opinion of the Investment Adviser, an adequate asset size. When the Fund reaches an adequate size and the Index has an equity allocation, the Fund will then seek to track the Index by investing directly in the shares of the 500 companies comprising the S&P 500. In the rare event the Fund does not operate as an ETF of ETFs for that day, the Fund will operate to meet the conditions of the ETF Class Relief, including the Equity ETF Class Letter. Applicants do not believe that either option will have an effect on the efficacy of the arbitrage process for the Fund. E:\FR\FM\05OCN1.SGM 05OCN1 Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices ethrower on DSK3G9T082PROD with NOTICES corresponds to the Index.3 Except for the fact that the Fund will operate as an ETF of ETFs, the Fund will operate in a manner similar to the Underlying ETFs. The Applicants represent, among other things, the following: • Shares of the Fund will be issued by the Trust, an open-end management investment company that is registered with the Commission; • Creation Units will be continuously redeemable at the net asset value (the ‘‘NAV’’) next determined after receipt of a request for redemption by the Fund,4 and the secondary market price of the Shares should not vary substantially from the NAV of such Shares; • Shares of the Fund will be listed and traded on NYSE Arca, Inc. or another exchange in accordance with exchange listing standards that are, or will become, effective pursuant to Section 19(b) of the Exchange Act (the ‘‘Listing Exchange’’); • All Underlying ETFs in which the Fund invests will either meet all conditions set forth in relevant class relief, will have received individual relief from the Commission, or will be able to rely upon individual relief even though they are not named parties; • All of the components of the Index will have publicly available last sale trade information; • The intra-day indicative value of the Fund per share and the intra-day value of the Index will be publicly disseminated every 15 seconds throughout the trading day through the facilities of the Consolidated Tape Association; • On each business day before the opening of business on the Listing Exchange, the Fund’s custodian, through the National Securities Clearing Corporation, will make publicly available the list of the names and the numbers of securities of the Fund’s portfolio that will be applicable that day to creation and redemption requests; • The Listing Exchange will disseminate continuously every 15 seconds throughout the trading day, through the facilities of the Consolidated Tape Association, the market value of a Share, and the Listing Exchange, market data vendors, or other information providers will disseminate, every 15 seconds throughout the trading 3 American depositary receipts not included in the Index may be used by the Fund in seeking performance that corresponds to the Index, and in managing cash flows, and may count towards compliance with the Fund’s 80% policy. 4 The NAV of the Fund generally is determined each business day as of the close of trading (ordinarily 4:00 p.m., Eastern Time) on the New York Stock Exchange. VerDate Sep<11>2014 19:52 Oct 04, 2017 Jkt 244001 day, a calculation of the intra-day indicative value of a Share; • The arbitrage mechanism will be facilitated by the transparency of the Fund’s portfolio and the availability of the intra-day indicative value, the liquidity of securities and other assets held by the Fund, the ability to acquire such securities, as well as the arbitrageurs’ ability to create workable hedges; • The Fund will invest solely in liquid securities and financial instruments; • The Fund will invest in securities that will facilitate an effective and efficient arbitrage mechanism and the ability to create workable hedges; • The Applicants believe that arbitrageurs are expected to take advantage of price variations between the Fund’s market price and its NAV; and • A close alignment between the market price of Shares and the Fund’s NAV is expected. Regulation M While redeemable securities issued by an open-end management investment company are excepted from the provisions of Rule 101 and 102 of Regulation M, the Applicants may not rely upon that exception for the Shares.5 However, we find that it is appropriate in the public interest and is consistent with the protection of investors to grant a conditional exemption from Rules 101 and 102 to persons who may be deemed to be participating in a distribution of Shares of the Fund as described in more detail below. Rule 101 of Regulation M Generally, Rule 101 of Regulation M is an anti-manipulation rule that, subject to certain exceptions, prohibits any ‘‘distribution participant’’ and its ‘‘affiliated purchasers’’ from bidding for, purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of a distribution until after the applicable restricted period, except as specifically permitted in the rule. Rule 100 of Regulation M defines ‘‘distribution’’ to mean any offering of securities that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and selling methods. The provisions of Rule 101 of Regulation M apply to underwriters, prospective underwriters, brokers, dealers, or other 5 While ETFs operate under exemptions from the definitions of ‘‘open-end company’’ under Section 5(a)(1) of the 1940 Act and ‘‘redeemable security’’ under Section 2(a)(32) of the 1940 Act, the Fund and its securities do not meet those definitions. PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 46547 persons who have agreed to participate or are participating in a distribution of securities. The-Shares are in a continuous distribution and, as such, the restricted period in which distribution participants and their affiliated purchasers are prohibited from bidding for, purchasing, or attempting to induce others to bid for or purchase extends indefinitely. Based on the representations and facts presented in the Letter, particularly that the Trust is a registered open-end management investment company, that Creation Unit size aggregations of the Shares of the Fund will be continuously redeemable at the NAV next determined after receipt of a request for redemption by the Fund, and that a close alignment between the market price of Shares and the Fund’s NAV is expected, the Commission finds that it is appropriate in the public interest and consistent with the protection of investors to grant the Trust an exemption under paragraph (d) of Rule 101 of Regulation M with respect to the Fund, thus permitting persons participating in a distribution of Shares of the Fund to bid for or purchase such Shares during their participation in such distribution.6 Rule 102 of Regulation M Rule 102 of Regulation M prohibits issuers, selling security holders, and any affiliated purchaser of such person from bidding for, purchasing, or attempting to induce any person to bid for or purchase a covered security during the applicable restricted period in connection with a distribution of securities effected by or on behalf of an issuer or selling security holder. Based on the representations and facts presented in the Letter, particularly that the Trust is a registered open-end management investment company, that Creation Unit size aggregations of the Shares of the Fund will be continuously redeemable at the NAV next determined after receipt of a request for redemption by the Fund, and that a close alignment between the market price of Shares and the Fund’s NAV is expected, the Commission finds that it is appropriate in the public interest and consistent with the protection of investors to grant the Trust an exemption under paragraph (e) of Rule 102 of Regulation M with respect to the Fund, thus permitting the 6 Additionally, we confirm the interpretation that a redemption of Creation Unit size aggregations of Shares of the Fund and the receipt of securities in exchange by a participant in a distribution of Shares of the Fund would not constitute an ‘‘attempt to induce any person to bid for or purchase, a covered security during the applicable restricted period’’ within the meaning of Rule 101 of Regulation M and, therefore, would not violate that rule. E:\FR\FM\05OCN1.SGM 05OCN1 46548 Federal Register / Vol. 82, No. 192 / Thursday, October 5, 2017 / Notices Fund to redeem Shares of the Fund during the continuous offering of such Shares. Rule 10b–17 Rule 10b–17, with certain exceptions, requires an issuer of a class of publicly traded securities to give notice of certain specified actions (for example, a dividend distribution) relating to such class of securities in accordance with Rule 10b–17(b). Based on the representations and facts in the Letter, and subject to the conditions below, we find that it is appropriate in the public interest, and consistent with the protection of investors to grant the Trust a conditional exemption from Rule 10b– 17 because market participants will receive timely notification of the existence and timing of a pending distribution, and thus the concerns that the Commission raised in adopting Rule 10b–17 will not be implicated.7 Conclusion ethrower on DSK3G9T082PROD with NOTICES It is hereby ordered, pursuant to Rule 101(d) of Regulation M, that the Trust, based on the representations and facts presented in the Letter, is exempt from the requirements of Rule 101 with respect to the Fund, thus permitting persons who may be deemed to be participating in a distribution of Shares of the Fund to bid for or purchase such Shares during their participation in such distribution. It is further ordered, pursuant to Rule 102(e) of Regulation M, that the Trust, based on the representations and the facts presented in the Letter, is exempt from the requirements of Rule 102 with respect to the Fund, thus permitting the Fund to redeem Shares of the Fund during the continuous offering of such Shares. It is further ordered, pursuant to Rule 10b–17(b)(2), that the Trust, based on the representations and the facts presented in the Letter and subject to the conditions below, is exempt from the requirements of Rule 10b–17 with respect to transactions in the shares of the Fund. This exemptive relief is subject to the following conditions: 7 We also note that timely compliance with Rule 10b–17(b)(1)(v)(a) and (b) would be impractical in light of the nature of the Fund. This is because it is not possible for the Fund to accurately project ten days in advance what dividend, if any, would be paid on a particular record date. Further, the Commission finds, based on the Applicants’ representations in the Letter, that the provision of notices as described in the Letter would not constitute a manipulative or deceptive device or contrivance comprehended within the purpose of Rule 10b–17. VerDate Sep<11>2014 19:52 Oct 04, 2017 Jkt 244001 • The Trust will comply with Rule 10b–17 except for Rule 10b– 17(b)(1)(v)(a) and (b); and • The Trust will provide the information required by Rule 10b– 17(b)(1)(v)(a) and (b) to the Exchange as soon as practicable before trading begins on the ex-dividend date, but in no event later than the time when the Exchange last accepts information relating to distributions on the day before the exdividend date. This exemptive relief is subject to modification or revocation at any time the Commission determines that such action is necessary or appropriate in furtherance of the purposes of the Exchange Act. Persons relying upon this exemptive relief shall discontinue transactions involving the Shares of the Fund, pending presentation of the facts for the Commission’s consideration, in the event that any material change occurs with respect to any of the facts or representations made by the Applicants and, consistent with all preceding letters, particularly with respect to the close alignment between the market price of Shares and the Fund’s NAV. In addition, persons relying on this exemption are directed to the anti-fraud and anti-manipulation provisions of the Exchange Act, particularly Sections 9(a) and 10(b), and Rule 10b–5 thereunder. Responsibility for compliance with these and any other applicable provisions of the federal securities laws must rest with the persons relying on this exemption. This order should not be considered a view with respect to any other question that the proposed transactions may raise, including, but not limited to the adequacy of the disclosure concerning, and the applicability of other federal or state laws to, the proposed transactions. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.8 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–21400 Filed 10–4–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81776; File No. SR–NYSE– 2017–49] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Make Technical and Conforming Changes to Section 703.02 of the NYSE Listed Company Manual September 29, 2017. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on September 20, 2017, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to make technical and conforming changes to Section 703.02 (part2) (Stock Split/ Stock Rights/Stock Dividend Listing Process) (‘‘Section 703.02 (part2)’’) of the NYSE Listed Company Manual (‘‘Listed Company Manual’’). The proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization 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 those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. 1 15 U.S.C.78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 8 17 PO 00000 CFR 200.30–3(a)(6) and (9). Frm 00073 Fmt 4703 Sfmt 4703 E:\FR\FM\05OCN1.SGM 05OCN1

Agencies

[Federal Register Volume 82, Number 192 (Thursday, October 5, 2017)]
[Notices]
[Pages 46546-46548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21400]


=======================================================================
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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81771; File No. TP 17-11]


Order Granting Limited Exemptions From Exchange Act Rule 10b-17 
and Rules 101 and 102 of Regulation M to VanEck Vectors NDR CMG Long/
Flat Allocation ETF Pursuant to Exchange Act Rule 10b-17(b)(2) and 
Rules 101(d) and 102(e) of Regulation M

September 29, 2017.
    By letter dated September 29, 2017 (the ``Letter''), counsel for 
VanEck Vectors ETF Trust (the ``Trust''), on behalf of the Trust, 
VanEck Vectors NDR CMG Long/Flat Allocation ETF (the ``Fund''), any 
national securities exchange on or through which shares issued by the 
Fund (``Shares'') may subsequently trade, Van Eck Securities 
Corporation (the ``Distributor''), and persons or entities engaging in 
transactions in Shares (collectively, the ``Applicants''), requested 
exemptions, or interpretive or no-action relief, from Rule 10b-17 of 
the Securities Exchange Act of 1934, as amended (the ``Exchange Act''), 
and Rules 101 and 102 of Regulation M, in connection with secondary 
market transactions in Shares and the creation or redemption of 
aggregations of Shares of at least 50,000 shares (``Creation Units'').
    The Trust is registered with the Securities and Exchange Commission 
(``Commission'') under the Investment Company Act of 1940, as amended 
(``1940 Act''), as an open-end management investment company. The Fund 
is an exchange-traded fund (``ETF'') organized as a series of the 
Trust. The Fund will seek to provide investment results that closely 
correspond, before fees and expenses, to the performance of the Ned 
Davis Research CMG US Large Cap Long/Flat Index (the ``Index'').\1\ The 
Fund intends, at least initially, to operate as an ``ETF of ETFs'' by 
seeking to track the performance of its underlying Index by holding 
shares of one or more ETFs (each, an ``Underlying ETF'') whose 
investment objective is to track the performance of the S&P 500.\2\
---------------------------------------------------------------------------

    \1\ The Index is a rules-based index that follows a proprietary 
model developed by Ned Davis Research, Inc. in conjunction with 
Capital Management Group, Inc. To help limit loss associated with 
adverse market conditions, the model produces trade signals that 
dictate the Index's equity allocation ranging from 100% fully 
invested (i.e., ``long'') to 100% in cash (i.e., ``flat''). The 
Index 100% replicates the S&P 500 Index (the ``S&P 500'') when the 
Index is long and holds U.S. Treasury Bills when the Index is flat 
(i.e., it will be allocated to the Solactive 13-week U.S. T-bill 
Index). When the Index is not completely long or flat, either 80% or 
40% of it will be allocated to the S&P 500, with the remaining 
portion (20% or 60% respectively) allocated to U.S. Treasury Bills.
    \2\ The Fund will operate as an ETF of ETFs until the Fund 
reaches, in the opinion of the Investment Adviser, an adequate asset 
size. When the Fund reaches an adequate size and the Index has an 
equity allocation, the Fund will then seek to track the Index by 
investing directly in the shares of the 500 companies comprising the 
S&P 500. In the rare event the Fund does not operate as an ETF of 
ETFs for that day, the Fund will operate to meet the conditions of 
the ETF Class Relief, including the Equity ETF Class Letter. 
Applicants do not believe that either option will have an effect on 
the efficacy of the arbitrage process for the Fund.
---------------------------------------------------------------------------

    In order to track the Index, the Fund will invest at least 80% of 
its total assets (but typically far more) in component securities of 
the Index (directly or by indirect investments through one or more 
Underlying ETFs). The Fund may invest the remaining 20% of its total 
assets in securities not included in the Index, money market 
instruments, including repurchase agreements or other funds which 
invest exclusively in money market instruments, convertible securities, 
structured notes, and certain derivatives, which the Investment Advisor 
believes will help the Fund track the Index. Depositary receipts not 
included in the Index may also be used by the Fund in seeking 
performance that

[[Page 46547]]

corresponds to the Index.\3\ Except for the fact that the Fund will 
operate as an ETF of ETFs, the Fund will operate in a manner similar to 
the Underlying ETFs.
---------------------------------------------------------------------------

    \3\ American depositary receipts not included in the Index may 
be used by the Fund in seeking performance that corresponds to the 
Index, and in managing cash flows, and may count towards compliance 
with the Fund's 80% policy.
---------------------------------------------------------------------------

    The Applicants represent, among other things, the following:
     Shares of the Fund will be issued by the Trust, an open-
end management investment company that is registered with the 
Commission;
     Creation Units will be continuously redeemable at the net 
asset value (the ``NAV'') next determined after receipt of a request 
for redemption by the Fund,\4\ and the secondary market price of the 
Shares should not vary substantially from the NAV of such Shares;
---------------------------------------------------------------------------

    \4\ The NAV of the Fund generally is determined each business 
day as of the close of trading (ordinarily 4:00 p.m., Eastern Time) 
on the New York Stock Exchange.
---------------------------------------------------------------------------

     Shares of the Fund will be listed and traded on NYSE Arca, 
Inc. or another exchange in accordance with exchange listing standards 
that are, or will become, effective pursuant to Section 19(b) of the 
Exchange Act (the ``Listing Exchange'');
     All Underlying ETFs in which the Fund invests will either 
meet all conditions set forth in relevant class relief, will have 
received individual relief from the Commission, or will be able to rely 
upon individual relief even though they are not named parties;
     All of the components of the Index will have publicly 
available last sale trade information;
     The intra-day indicative value of the Fund per share and 
the intra-day value of the Index will be publicly disseminated every 15 
seconds throughout the trading day through the facilities of the 
Consolidated Tape Association;
     On each business day before the opening of business on the 
Listing Exchange, the Fund's custodian, through the National Securities 
Clearing Corporation, will make publicly available the list of the 
names and the numbers of securities of the Fund's portfolio that will 
be applicable that day to creation and redemption requests;
     The Listing Exchange will disseminate continuously every 
15 seconds throughout the trading day, through the facilities of the 
Consolidated Tape Association, the market value of a Share, and the 
Listing Exchange, market data vendors, or other information providers 
will disseminate, every 15 seconds throughout the trading day, a 
calculation of the intra-day indicative value of a Share;
     The arbitrage mechanism will be facilitated by the 
transparency of the Fund's portfolio and the availability of the intra-
day indicative value, the liquidity of securities and other assets held 
by the Fund, the ability to acquire such securities, as well as the 
arbitrageurs' ability to create workable hedges;
     The Fund will invest solely in liquid securities and 
financial instruments;
     The Fund will invest in securities that will facilitate an 
effective and efficient arbitrage mechanism and the ability to create 
workable hedges;
     The Applicants believe that arbitrageurs are expected to 
take advantage of price variations between the Fund's market price and 
its NAV; and
     A close alignment between the market price of Shares and 
the Fund's NAV is expected.

Regulation M

    While redeemable securities issued by an open-end management 
investment company are excepted from the provisions of Rule 101 and 102 
of Regulation M, the Applicants may not rely upon that exception for 
the Shares.\5\ However, we find that it is appropriate in the public 
interest and is consistent with the protection of investors to grant a 
conditional exemption from Rules 101 and 102 to persons who may be 
deemed to be participating in a distribution of Shares of the Fund as 
described in more detail below.
---------------------------------------------------------------------------

    \5\ While ETFs operate under exemptions from the definitions of 
``open-end company'' under Section 5(a)(1) of the 1940 Act and 
``redeemable security'' under Section 2(a)(32) of the 1940 Act, the 
Fund and its securities do not meet those definitions.
---------------------------------------------------------------------------

Rule 101 of Regulation M

    Generally, Rule 101 of Regulation M is an anti-manipulation rule 
that, subject to certain exceptions, prohibits any ``distribution 
participant'' and its ``affiliated purchasers'' from bidding for, 
purchasing, or attempting to induce any person to bid for or purchase 
any security which is the subject of a distribution until after the 
applicable restricted period, except as specifically permitted in the 
rule. Rule 100 of Regulation M defines ``distribution'' to mean any 
offering of securities that is distinguished from ordinary trading 
transactions by the magnitude of the offering and the presence of 
special selling efforts and selling methods. The provisions of Rule 101 
of Regulation M apply to underwriters, prospective underwriters, 
brokers, dealers, or other persons who have agreed to participate or 
are participating in a distribution of securities. The-Shares are in a 
continuous distribution and, as such, the restricted period in which 
distribution participants and their affiliated purchasers are 
prohibited from bidding for, purchasing, or attempting to induce others 
to bid for or purchase extends indefinitely.
    Based on the representations and facts presented in the Letter, 
particularly that the Trust is a registered open-end management 
investment company, that Creation Unit size aggregations of the Shares 
of the Fund will be continuously redeemable at the NAV next determined 
after receipt of a request for redemption by the Fund, and that a close 
alignment between the market price of Shares and the Fund's NAV is 
expected, the Commission finds that it is appropriate in the public 
interest and consistent with the protection of investors to grant the 
Trust an exemption under paragraph (d) of Rule 101 of Regulation M with 
respect to the Fund, thus permitting persons participating in a 
distribution of Shares of the Fund to bid for or purchase such Shares 
during their participation in such distribution.\6\
---------------------------------------------------------------------------

    \6\ Additionally, we confirm the interpretation that a 
redemption of Creation Unit size aggregations of Shares of the Fund 
and the receipt of securities in exchange by a participant in a 
distribution of Shares of the Fund would not constitute an ``attempt 
to induce any person to bid for or purchase, a covered security 
during the applicable restricted period'' within the meaning of Rule 
101 of Regulation M and, therefore, would not violate that rule.
---------------------------------------------------------------------------

Rule 102 of Regulation M

    Rule 102 of Regulation M prohibits issuers, selling security 
holders, and any affiliated purchaser of such person from bidding for, 
purchasing, or attempting to induce any person to bid for or purchase a 
covered security during the applicable restricted period in connection 
with a distribution of securities effected by or on behalf of an issuer 
or selling security holder.
    Based on the representations and facts presented in the Letter, 
particularly that the Trust is a registered open-end management 
investment company, that Creation Unit size aggregations of the Shares 
of the Fund will be continuously redeemable at the NAV next determined 
after receipt of a request for redemption by the Fund, and that a close 
alignment between the market price of Shares and the Fund's NAV is 
expected, the Commission finds that it is appropriate in the public 
interest and consistent with the protection of investors to grant the 
Trust an exemption under paragraph (e) of Rule 102 of Regulation M with 
respect to the Fund, thus permitting the

[[Page 46548]]

Fund to redeem Shares of the Fund during the continuous offering of 
such Shares.

Rule 10b-17

    Rule 10b-17, with certain exceptions, requires an issuer of a class 
of publicly traded securities to give notice of certain specified 
actions (for example, a dividend distribution) relating to such class 
of securities in accordance with Rule 10b-17(b). Based on the 
representations and facts in the Letter, and subject to the conditions 
below, we find that it is appropriate in the public interest, and 
consistent with the protection of investors to grant the Trust a 
conditional exemption from Rule 10b-17 because market participants will 
receive timely notification of the existence and timing of a pending 
distribution, and thus the concerns that the Commission raised in 
adopting Rule 10b-17 will not be implicated.\7\
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    \7\ We also note that timely compliance with Rule 10b-
17(b)(1)(v)(a) and (b) would be impractical in light of the nature 
of the Fund. This is because it is not possible for the Fund to 
accurately project ten days in advance what dividend, if any, would 
be paid on a particular record date. Further, the Commission finds, 
based on the Applicants' representations in the Letter, that the 
provision of notices as described in the Letter would not constitute 
a manipulative or deceptive device or contrivance comprehended 
within the purpose of Rule 10b-17.
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Conclusion

    It is hereby ordered, pursuant to Rule 101(d) of Regulation M, that 
the Trust, based on the representations and facts presented in the 
Letter, is exempt from the requirements of Rule 101 with respect to the 
Fund, thus permitting persons who may be deemed to be participating in 
a distribution of Shares of the Fund to bid for or purchase such Shares 
during their participation in such distribution.
    It is further ordered, pursuant to Rule 102(e) of Regulation M, 
that the Trust, based on the representations and the facts presented in 
the Letter, is exempt from the requirements of Rule 102 with respect to 
the Fund, thus permitting the Fund to redeem Shares of the Fund during 
the continuous offering of such Shares.
    It is further ordered, pursuant to Rule 10b-17(b)(2), that the 
Trust, based on the representations and the facts presented in the 
Letter and subject to the conditions below, is exempt from the 
requirements of Rule 10b-17 with respect to transactions in the shares 
of the Fund.
    This exemptive relief is subject to the following conditions:
     The Trust will comply with Rule 10b-17 except for Rule 
10b-17(b)(1)(v)(a) and (b); and
     The Trust will provide the information required by Rule 
10b-17(b)(1)(v)(a) and (b) to the Exchange as soon as practicable 
before trading begins on the ex-dividend date, but in no event later 
than the time when the Exchange last accepts information relating to 
distributions on the day before the ex-dividend date.
    This exemptive relief is subject to modification or revocation at 
any time the Commission determines that such action is necessary or 
appropriate in furtherance of the purposes of the Exchange Act. Persons 
relying upon this exemptive relief shall discontinue transactions 
involving the Shares of the Fund, pending presentation of the facts for 
the Commission's consideration, in the event that any material change 
occurs with respect to any of the facts or representations made by the 
Applicants and, consistent with all preceding letters, particularly 
with respect to the close alignment between the market price of Shares 
and the Fund's NAV. In addition, persons relying on this exemption are 
directed to the anti-fraud and anti-manipulation provisions of the 
Exchange Act, particularly Sections 9(a) and 10(b), and Rule 10b-5 
thereunder.
    Responsibility for compliance with these and any other applicable 
provisions of the federal securities laws must rest with the persons 
relying on this exemption. This order should not be considered a view 
with respect to any other question that the proposed transactions may 
raise, including, but not limited to the adequacy of the disclosure 
concerning, and the applicability of other federal or state laws to, 
the proposed transactions.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(6) and (9).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21400 Filed 10-4-17; 8:45 am]
 BILLING CODE 8011-01-P