OppenheimerFunds, Inc., et al., 47257-47262 [2017-21775]
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asabaliauskas on DSKBBXCHB2PROD with NOTICES
Federal Register / Vol. 82, No. 195 / Wednesday, October 11, 2017 / Notices
Rule 15c2–7 places disclosure
requirements on broker-dealers who
have correspondent relationships, or
agreements identified in the rule, with
other broker-dealers. Whenever any
such broker-dealer enters a quotation for
a security through an inter-dealer
quotation system, Rule 15c2–7 requires
the broker-dealer to disclose these
relationships and agreements in the
manner required by the rule. The interdealer quotation system must also be
able to make these disclosures public in
association with the quotation the
broker-dealer is making.
When rule 15c2–7 was adopted in
1964, the information it requires was
necessary for execution of the
Commission’s mandate under the
Securities Exchange Act of 1934 to
prevent fraudulent, manipulative and
deceptive acts by broker-dealers. In the
absence of the information collection
required under Rule 15c2–7, investors
and broker-dealers would have been
unable to accurately determine the
market depth of, and demand for,
securities in an inter-dealer quotation
system.
There are approximately 3,939 brokerdealers registered with the Commission.
Any of these broker-dealers could be
potential respondents for Rule 15c2–7,
so the Commission is using that figure
to represent the number of respondents.
Rule 15c2–7 applies only to quotations
entered into an inter-dealer quotation
system, such as the OTC Bulletin Board
(‘‘OTCBB’’), or OTC Link (formerly,
‘‘Pink Sheets’’), operated by OTC
Markets Group Inc. (‘‘OTC Link’’).
According to representatives of both
OTC Link and the OTCBB, neither
entity has recently received, or
anticipates receiving any Rule 15c2–7
notices. However, because such notices
could be made, the Commission
estimates that one filing is made
annually pursuant to Rule 15c2–7.
Based on prior industry reports, the
Commission estimates that the average
time required to enter a disclosure
pursuant to the rule is .75 minutes, or
45 seconds. The Commission sees no
reason to change this estimate. We
estimate that impacted respondents
spend a total of .0125 hours per year to
comply with the requirements of Rule
15c2–7 (1 notice (×) 45 seconds/notice).
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
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of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Pamela Dyson, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: October 4, 2017.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–21909 Filed 10–10–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81819; File No. SR–LCH
SA–2017–006]
Self-Regulatory Organizations; LCH
SA; Notice of Designation of Longer
Period for Commission Action on
Proposed Rule Change Relating to
Options on Index Credit Default Swaps
October 4, 2017.
On August 18, 2017, Banque Central
de Compensation, which conducts
business under the name LCH SA (‘‘LCH
SA’’), filed with the Securities and
Exchange Commission (‘‘Commission’’),
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change (SR–LCH SA–
2017–006) to amend LCH SA’s CDS
Clearing Rule Book, CDS Clearing
Supplement, CDS Clearing Procedures,
and CDS Dispute Resolution Protocol to
incorporate relevant terms and make
certain conforming and clarifying
changes in order to permit LCH SA to
clear options on index credit default
swaps. The proposed rule change was
published for comment in the Federal
Register on August 31, 2017.3 The
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Securities Exchange Act Release No. 34–81487
(Aug. 25, 2017), 82 FR 41438 (Aug. 31, 2017) (SR–
LCH SA–2017–006) (‘‘Notice’’).
2 17
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47257
Commission received no comments
regarding the proposed changes.
Section 19(b)(2) of the Act provides
that within 45 days of the publication of
the notice of the filing or a proposed
rule change, or within such longer
period up to 90 days as the Commission
may designate if it finds such longer
period to be appropriate and publishes
its reasons for so finding, or as to which
the self-regulatory organization
consents, the Commission shall either
approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether the proposed rule change
should be disapproved.4 The 45th day
from the publication of the Notice is
October 15, 2017.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. As noted
above, LCH SA proposed to revise its
CDS Clearing Rule Book, CDS Clearing
Supplement, CDS Clearing Procedures,
and CDS Dispute Resolution Protocol in
order to permit it to clear options on
index credit default swaps. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider LCH SA’s proposed rule
change and the associated risks.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the Act,
extends the period by which the
Commission shall either approve or
disapprove, or institute proceedings to
determine whether to disapprove, the
proposed rule change (File No. SR–LCH
SA–2017–006) to no later than
November 29, 2017.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.5
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–21816 Filed 10–10–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32849; 812–14248]
OppenheimerFunds, Inc., et al.
October 4, 2017.
Securities and Exchange
Commission (‘‘Commission’’)
ACTION: Notice.
AGENCY:
Notice of application for an order
under sections 6(c) and 17(b) of the
4 15
5 17
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U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
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Federal Register / Vol. 82, No. 195 / Wednesday, October 11, 2017 / Notices
Investment Company Act of 1940
(‘‘Act’’) for exemptions from section
17(a) of the Act, and under section 17(d)
of the Act and rule 17d–1 thereunder to
permit certain joint transactions.
SUMMARY OF APPLICATION: Applicants
requests an order to permit certain
registered open-end management
investment companies or series thereof
to invest in a private investment vehicle
established by their investment advisers
for the purpose of investing in China A
Shares and certain other Chinese
securities.
APPLICANTS: OppenheimerFunds, Inc.
(‘‘OFI’’), OFI Global Asset Management,
Inc. (‘‘OFI Global’’), and OFI Global
Institutional, Inc. (‘‘OFI Global
Institutional,’’ and together with OFI
and OFI Global, the ‘‘Initial Advisers’’);
OFI Global China Fund, LLC (the ‘‘OFI
Global China Fund’’); and Oppenheimer
Developing Markets Fund,
Oppenheimer Global Fund,
Oppenheimer Global Opportunities
Fund, Oppenheimer Global Value Fund,
Oppenheimer International Growth
Fund, Oppenheimer International
Small-Mid Company Fund and
Oppenheimer International Equity Fund
(together, the ‘‘Trusts’’).
FILING DATES: The application was filed
on December 12, 2013, and amended on
June 6, 2014, November 21, 2014, May
1, 2015, October 16, 2015, April 7, 2016,
August 9, 2016, May 12, 2017, August
29, 2017, and September 26, 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 30, 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, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
Applicants: 225 Liberty Street, New
York, NY 10281.
FOR FURTHER INFORMATION CONTACT:
Kieran G. Brown, Senior Counsel, at
(202) 551–6773, or Robert H. Shapiro,
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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 an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. Each Trust is a Delaware statutory
trust and is registered under Act as an
open-end management investment
company. One Trust, the Oppenheimer
Developing Markets Fund (the ‘‘Initial
Fund’’), currently invests in the OFI
Global China Fund, LLC (the ‘‘OFI
Global China Fund’’), which relies on
the exemptions from registration under
the Act provided by section 3(c)(1) and/
or 3(c)(7) of the Act.1
2. Each Adviser is registered as an
investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’), and OFI Global and
OFI Global Institutional are each a
wholly-owned subsidiary of OFI. OFI
Global serves as investment adviser to
the Initial Fund pursuant to an
investment advisory agreement between
OFI Global and the Initial Fund (the
‘‘Advisory Agreement’’). OFI serves as
sub-adviser to the Initial Fund pursuant
to a subadvisory agreement between OFI
Global and OFI. As the Initial Fund’s
investment adviser and sub-adviser, OFI
Global and OFI are responsible for
making investment decisions for the
Initial Fund and for administering the
business and affairs of the Initial Fund.
OFI Global is entitled, under the terms
of the Advisory Agreement, to receive
management fees from the Initial Fund
at a specified rate. OFI Global also
serves as the investment adviser to the
other Trusts and their series and has
entered into subadvisory agreements
1 Each entity that currently intends to rely on the
requested relief has been named as an applicant.
Any Trusts and their existing or future series and
any other existing or future registered open-end
management investment company or series thereof
for which an Initial Adviser, or an Initial Adviser’s
successor, or any person controlling, controlled by,
or under common control with an Initial Adviser
(an ‘‘OFI Affiliate’’) acts as investment adviser (such
Initial Adviser or OFI Affiliate acting as investment
adviser, an ‘‘Adviser’’) that may rely on the
requested relief in the future is a ‘‘Future Fund’’
(together with the Initial Fund, the ‘‘Funds’’). For
purposes of the requested order, ‘‘successor’’ is
limited to an entity that results from a
reorganization into another jurisdiction or a change
in the type of business organization. Each Fund or
other entity that may rely on the requested relief in
the future will do so only in accordance with the
terms and conditions of the requested order.
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with OFI whereby OFI also provides
investment advisory services to the
other Trusts and their series. As
investment adviser and sub-adviser, OFI
Global and OFI’s activities are subject to
the oversight of the Boards of Trustees
(the ‘‘Board’’ or ‘‘Boards,’’ as applicable)
of the Trusts, at least a majority of
whose members are not considered
‘‘interested persons’’ of the Trusts (as
defined in section 2(a)(19) of the Act)
(the ‘‘Independent Trustees’’).
3. OFI and the other Advisers also
manage or may manage collective
investment trusts, private pooled
investment vehicles and investment
companies registered in other
jurisdictions (together, ‘‘Other
Vehicles’’), as well as separately
managed accounts (together with the
Other Vehicles, ‘‘Other Accounts’’).2
Applicants state that these Other
Accounts may have similar investment
objectives and strategies as the Funds
and will invest in OFI Global China
Fund Series (defined below) along with
one or more Funds.
4. The Funds desire to purchase and
redeem limited liability company
interests (‘‘Interests’’) of separately
identified series of the OFI Global China
Fund (each separate series of the OFI
Global China Fund, an ‘‘OFI Global
China Fund Series’’). The OFI Global
China Fund Series invests in class A
Shares listed on People’s Republic of
China (‘‘PRC’’) stock exchanges, rights
to invest in such class A Shares,
corporate or government bonds listed on
PRC stock exchanges or traded in the
over-the-counter markets of the PRC and
warrants listed on PRC stock exchanges
(together, ‘‘Chinese Securities’’).3
Notwithstanding the foregoing, a
security will only be a ‘‘Chinese
Security’’ if it is subject to the quota
systems described in the application (as
such quota systems may be amended or
altered from time to time). Interests in
the OFI Global China Fund will be sold
only to the Funds and the Other
Accounts.
5. Applicants assert that, for a variety
of reasons, it is not practical or
economical for the Funds to invest a
significant amount of assets directly in
Chinese Securities. Applicants state
that, until 2002, the Chinese
government restricted investment in
China A Shares and other Chinese
Securities to domestic (i.e., Chinese)
2 The Applicants acknowledge that they are not
seeking nor receiving relief with respect to the
separately managed accounts.
3 Applicants represent that the OFI Global China
Fund will not invest in derivatives or in other
pooled investment vehicles.
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Federal Register / Vol. 82, No. 195 / Wednesday, October 11, 2017 / Notices
asabaliauskas on DSKBBXCHB2PROD with NOTICES
investors.4 According to Applicants,
since 2002, the Chinese Government has
permitted certain non-Chinese investors
to invest in China A Shares and
gradually has liberalized applicable
rules to permit non-Chinese investors to
invest in other types of Chinese
Securities. However, subject to limited
exceptions described in the application,
to do so, a foreign investor must receive
a license from PRC regulators and be
allotted a quota, representing the
amount in renminbi of Chinese
Securities that the investor may
purchase. As described more fully in the
application, individual applications on
behalf of each Fund or Other Account
would generally not be practical or
feasible. Accordingly, OFI has obtained
a license under the Qualified Foreign
Institutional Investor (‘‘QFII’’) quota
program, naming OFI Global China
Fund as the investing vehicle in its
application, and was granted a quota of
US$200 million in late 2014, and has
since obtained an additional $1.3 billion
of quota, so that it can invest in Chinese
Securities on behalf of the Funds and
Other Accounts.
6. Applicants state that the OFI Global
China Fund would allow the Funds, and
Other Accounts, to gain dedicated
exposure to Chinese Securities and
provide numerous additional
investment opportunities for the Funds
that are consistent with their investment
objectives and policies. Applicants state
that each OFI Global China Fund Series
will invest only in Chinese securities,
cash and cash equivalents.
7. The OFI Global China Fund is
organized as a Delaware limited liability
company. OFI serves as, and in the
future an OFI Affiliate may serve as, the
managing member of the OFI Global
China Fund. The OFI Global China
Fund does not have a board of directors
or trustees. A Fund or Other Account
may invest in some or all of the different
OFI Global China Fund Series.5 Each
OFI Global China Fund Series will have
its own portfolio manager or portfolio
management team at OFI who will be
responsible for selecting particular
Chinese Securities for investment by
4 Applicants assert that, for a variety of reasons,
China A Shares are a more attractive means to
invest in Chinese companies than are other
categories of stock that are available on the
Shanghai, Shenzhen and Hong Kong Stock
Exchanges (which is where a significant majority of
publicly traded Chinese companies list their
shares).
5 Applicants state that one OFI Global China
Fund Series is contemplated, but in the future
additional OFI Global China Fund Series may be
established to invest in different issuers, or types,
of Chinese Securities based generally on the
particular characteristics of those issuers, or types,
of Chinese Securities.
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that OFI Global China Fund Series. Each
Fund or Other Account investing in an
OFI Global China Fund Series will hold
Interests which will represent a
proportionate share of the OFI Global
China Fund Series’ net assets and a
proportionate claim on the OFI Global
China Fund Series’ net income. Interests
in an OFI Global China Fund Series
used by the Funds will be valued daily
in accordance with the Funds’ valuation
procedures as approved by the Funds’
Boards and in accordance with section
2(a)(41) of the Act. Each Interest would
have the same rights as any other
Interest, and the OFI Global China Fund
Series would not issue preferred
interests.
8. OFI will not charge advisory fees to
OFI Global China Fund Series used by
the Funds. OFI Global and the other
Advisers will, however, be entitled to
receive applicable advisory fees from
the Funds or Other Accounts. Expenses
of the OFI Global China Fund Series
will be charged to the OFI Global China
Fund Series as a whole and accrue on
a daily basis.6 The OFI Global China
Fund’s books and those of the OFI
Global China Fund Series will be
accounted for under standard
accounting principles and in accordance
with U.S. Generally Accepted
Accounting Principles (‘‘GAAP’’), and
they will be audited annually by a
nationally recognized and PCAOBregistered audit firm in accordance with
U.S. Generally Accepted Auditing
Standards (‘‘GAAS’’).7 The OFI Global
China Fund Series in which a Fund
invests will not borrow or engage in
leverage.
9. A Fund’s decision to invest in an
OFI Global China Fund Series will be
made by a Fund’s portfolio manager(s).
Because the PRC restricts repatriation of
the proceeds from sales of Chinese
Securities, each Fund will treat its
entire investment in the OFI Global
6 Expenses of the OFI Global China Fund Series
will include basic fees and expenses of service
providers, such as the administrator, transfer agent,
accountant, local custodian and legal counsel. OFI
will engage an OFI Affiliate as its transfer agent. No
fees will be paid by the OFI Global China Fund to
a transfer agent that is an OFI Affiliate except in
accordance with condition 3.
7 Applicants state that the GAAS standards
applicable to the audit of the OFI Global China
Fund would be the same standards as those
applicable to a registered investment company.
Further, applicants state that GAAP would apply to
both the OFI Global China Fund audit and a
registered investment company audit. Thus,
applicants assert that critical accounting policies
governing security valuation, accounting for
investment transactions, recognition of investment
income and of expenses, and accrual of expenses,
which are often the critical policies applicable to
investment companies, would apply in
substantially the same manner for the audit of the
OFI Global China Fund.
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China Fund as an investment that is not
liquid for purposes of any applicable
rules or guidance of the Commission or
its staff regarding the management of
liquidity and will otherwise be subject
to the limits described in condition 4.
Applicants state that access by the
Funds and Other Accounts to the quota
(i.e., to Chinese Securities) through the
OFI Global China Fund Series is a
limited opportunity and will be
allocated in accordance with the
Advisers’ trade order aggregation and
trade allocation policies and procedures
(the ‘‘Advisers’ Trade Allocation
Policy’’). Under the Advisers’ Trade
Allocation Policy, if fewer Interests are
available than requested by the portfolio
managers of the Funds and Other
Accounts, Interests will generally be
allocated across participating accounts
on a pro rata basis according to
requested order size. Similarly, if more
than one Fund or Other Account seeks
to repatriate proceeds at or about the
same time, and Chinese regulations
limit the aggregate amount of proceeds
that may be repatriated at any given
time to a level below the aggregate
amount sought to be repatriated, the
requests by the applicable portfolio
manager(s) will be aggregated, if
received at or about the same time, and
proceeds available for repatriation will
be allocated pro rata among requesting
Funds and Other Accounts.8 The
Advisers will not consider the potential
impact on the quota when making
investment decisions for the Funds or
Other Accounts.9
10. Applicants state that OFI
contemplates making a nominal (i.e.,
not to exceed $1,000) investment in the
OFI Global China Fund. OFI will
acquire Interests in the OFI Global
China Fund (or series thereof) having
rights, duties and obligations that are
identical in all respects to Interests
purchased by other investors in the OFI
Global China Fund (or series thereof).
The sole purpose of the proposed
investment is to permit OFI to serve as
the tax matters partner of the OFI Global
China Fund, which intends to be treated
as a partnership for U.S. federal tax
purposes. Applicants state that in the
absence of OFI’s investment, it is likely
that the U.S. Internal Revenue Service
would appoint a non-managing member
8 Applicants are not seeking comfort nor is the
Commission providing any opinion on whether the
Advisers’ Trade Allocation Policy meets the
standards applicable under the Act or the Advisers
Act.
9 Applicants state that the Chinese authorities
may reduce or revoke a QFII’s quota if the QFII does
not invest the full amount of its quota over a phasein period, or if it repatriates its investments below
the quota amount.
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Federal Register / Vol. 82, No. 195 / Wednesday, October 11, 2017 / Notices
partner of the OFI Global China Fund to
serve as tax matters partner in an audit
proceeding. In addition, absent such an
investment by the OFI Global China
Fund’s managing member, the tax
matters partner could change from yearto-year, which may disrupt preparation
of the OFI Global China Fund’s annual
tax return.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Applicants’ Legal Analysis
Section 17(a)—Purchase and Sale of
Interests
1. Section 17(a) generally provides, in
part, that it is unlawful for any affiliated
person of a registered investment
company (‘‘first-tier affiliate’’), or any
affiliated person of such person
(‘‘second tier affiliate’’), acting as
principal, to sell or purchase any
security or other property to or from
such investment company. Section
2(a)(3) of the Act defines an ‘‘affiliated
person’’ of another person to include (a)
any person directly or indirectly
owning, controlling, or holding with
power to vote, 5% or more of the
outstanding voting securities of the
other person; (b) any person 5% or more
of whose outstanding voting securities
are directly or indirectly owned,
controlled, or held with the power to
vote by the other person; and (c) any
person directly or indirectly controlling,
controlled by, or under common control
with the other person. Section 2(a)(9)
defines ‘‘control’’ to mean ‘‘the power to
exercise a controlling influence over the
management or policies of a company,
unless such power is solely the result of
an official position with such
company.’’
2. Applicants state that the Funds and
the OFI Global China Fund are expected
to be affiliated persons under section
2(a)(3) of the Act, because it is expected
that one or more Funds and Other
Vehicles will own at least 5%, and
potentially, more than 25% of the
Interests of the OFI Global China Fund
or an OFI Global China Fund Series.
While Interests of the OFI Global China
Fund (and OFI Global China Fund
Series) will be non-voting interests, a
Fund or Other Vehicle could have
power to exercise a controlling
influence over the management or
policies of the OFI Global China Fund
or Series and be deemed an affiliated
person of the OFI Global China Fund or
OFI Global China Fund Series under
section 2(a)(3)(C). In addition, OFI
Global is the investment adviser to the
Initial Fund, OFI serves as the initial
sub-adviser to the Initial Fund, and the
Advisers will be investment advisers
and sub-advisers to any Future Funds.
An Adviser or OFI Affiliate will also be
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the managing member of the OFI Global
China Fund. As a result, the OFI Global
China Fund or OFI Global China Fund
Series may be deemed to be under the
Adviser’s control under section
2(a)(3)(C), such that the OFI Global
China Fund may be deemed an affiliated
person of an affiliated person of the
Funds.
3. If a Fund and the OFI Global China
Fund are deemed affiliates of each
other, or even second-tier affiliates, the
sale of Interests of the OFI Global China
Fund to the Fund, and the redemption
of such Interests by the Fund, would be
prohibited under section 17(a) of the
Act.
4. Section 17(b) of the Act authorizes
the Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if the terms
of the proposed transaction, including
the consideration to be paid or received,
are fair and reasonable and do not
involve overreaching on the part of any
person concerned, and the proposed
transaction is consistent with the
policies of each registered investment
company involved and with the general
purposes of the Act. Section 6(c) of the
Act permits the Commission to exempt
any person or transactions from any
provisions 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.
5. Applicants submit that the
proposed arrangement satisfies the
standards for relief under sections 17(b)
and 6(c) of the Act. For the reasons
discussed below, Applicants submit that
the terms of the arrangement, including
the consideration to be paid, are fair and
reasonable and do not involve
overreaching on the part of any person
concerned, and that the proposed
transactions are consistent with the
policy of each registered investment
company concerned and with the
general purposes of the Act. Applicants
further submit that the Funds’
participation in the OFI Global China
Fund Series will be necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policies and provisions
of the Act.
6. Applicants state that each Fund
and Other Account will be treated
identically as a holder of Interest in the
OFI Global China Fund Series, and each
Fund and Other Account will purchase
and sell Interests of an OFI Global China
Fund Series on the same terms and on
the same basis as each other Fund and
Other Account that invests in that OFI
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Global China Fund Series. Applicants
note that no Adviser or OFI Affiliate
will receive a fee for advising any OFI
Global China Fund Series used by a
Fund. The Funds, as holders of Interests
of the OFI Global China Fund, will not
be subject to any sales load, redemption
fee, distribution fee or service fee,
except that the OFI Global China Fund
will have the discretion to impose a
redemption fee in accordance with
applicable law or regulation for the
purpose of offsetting brokerage, tax or
other costs. If a redemption fee is
charged, it will be charged only to the
extent that such a fee may be charged by
an open-end fund registered under the
Act. Each series of the OFI Global China
Fund will be audited. Moreover,
administrative fees and transfer agent
fees will be paid by the OFI Global
China Fund Series used by the Funds to
an Adviser or OFI Affiliate only upon
the determination by each Fund’s
Board, including a majority of
Independent Trustees, that the fees are
(i) for services in addition to, rather than
duplicative of, services rendered to the
Funds directly and (ii) fair and
reasonable in light of the usual and
customary charges imposed by others
for services of the same nature and
quality. Applicants argue that the fees
payable to the OFI Global China Fund’s
service providers will be for distinct
services, and the costs of such fees will
be outweighed by opportunity to invest
in Chinese Securities.
Section 17(d)
7. Section 17(d) of the Act and rule
17d–1 under the Act generally prohibit
joint transactions involving registered
investment companies and their
affiliates unless the Commission has
approved the transaction. In considering
whether to approve a joint transaction
under rule 17d–1, the Commission
considers whether the proposed
transaction is consistent with the
provisions, policies, and purposes of the
Act, and the extent to which the
participation of the investment
companies is on a basis different from
or less advantageous than that of the
other participants.
8. Applicants state that the Funds (by
purchasing Interests of the OFI Global
China Fund), OFI (by managing the
portfolio securities of the OFI Global
China Fund and the Funds at the same
time that the Funds are invested in
Interests of the OFI Global China Fund
and/or by providing a nominal tax
matters partner investment in the OFI
Global China Fund), and the OFI Global
China Fund (by selling its Interests to,
and redeeming its Interests from, the
Funds), could be deemed to be
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participants in a joint enterprise or
arrangement within the meaning of
section 17(d) and rule 17d–1.
9. Applicants request an order
pursuant to section 17(d) and rule
17d–1 to permit the proposed
transactions with the OFI Global China
Fund. Applicants submit that the
investment by the Funds in the OFI
Global China Fund on the basis
proposed is consistent with the
provisions, policies and purposes of the
Act, and that each Fund will invest in
Interests of the OFI Global China Fund
on the same basis as any other
shareholder (i.e., the other Funds and
Other Accounts). Applicants further
state that the Advisers will take
reasonable steps to make sure that
allocations among the Funds and Other
Accounts are fair and equitable.
Allocations of Chinese Securities to
different OFI Global China Fund Series,
and allocations of opportunities to
invest in the OFI Global China Fund
Series, by Funds and Other Accounts,
will be subject to the Advisers’ Trade
Allocation Policy, under the supervision
of the Advisers’ and the Funds’ CCO,
and compliance with the Advisers’
Trade Allocation Policy will be
overseen by the Funds’ Boards.
10. Applicants do not believe that
OFI’s nominal investment as tax matters
partner in the OFI Global China Fund
poses any potential conflict of interest
not addressed by the conditions
contained in the application. OFI will
acquire Interests having rights, duties
and obligations that are identical in all
respects to Interests purchased by other
investors in the OFI Global China Fund.
Section 17(a)—Cross Transactions
11. Applicants propose that the Funds
be permitted to continue to engage in
certain purchase and sale cross
transactions in securities (‘‘Cross
Transactions’’) between a Fund seeking
to implement a portfolio strategy and an
Other Vehicle seeking to raise or invest
cash. The Funds currently rely on rule
17a–7 to engage in such Cross
Transactions; however, if a Fund and an
Other Vehicle were deemed to be
second-tier affiliates of each other by
virtue of their ownership or control
affiliations with the OFI Global China
Fund or an OFI Global China Fund
Series, the Funds may not be entitled to
rely on rule 17a–7 because they would
no longer be affiliated solely for the
reasons permitted by the rule.
12. Applicants assert that the
potential affiliations created by the OFI
Global China Fund Series structure do
not affect the other protections provided
by the rule, including the integrity of
the pricing mechanism employed, and
VerDate Sep<11>2014
17:58 Oct 10, 2017
Jkt 244001
oversight by each Fund’s Board.
Applicants represent that the Funds and
Other Vehicles will comply with the
requirements set forth in rule 17a–(7)(a)
through (g). Applicants thus believe that
Cross Transactions will be reasonable
and fair, and will not involve
overreaching, and will be consistent
with the purposes of the Act and the
investment policy of each Fund.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief shall be
subject to the following conditions:
1. The Funds’ investments in Interests
of the OFI Global China Fund will be
undertaken only in accordance with the
Funds’ stated investment restrictions
and will be consistent with their stated
investment policies.
2. The Advisers and their affiliated
persons will receive no advisory fee
from the OFI Global China Fund in
connection with the Funds’ investment
in the OFI Global China Fund. The
Advisers and their affiliated persons
will receive no commissions, fees, or
other compensation (except for transfer
agent fees that are paid in accordance
with condition 3 as described in the
application) from a Fund or the OFI
Global China Fund in connection with
the purchase or redemption by the
Funds of Interests in the OFI Global
China Fund. Interests of the OFI Global
China Fund will not be subject to a sales
load, redemption fee, distribution fee or
service fee, except that the OFI Global
China Fund will have the discretion to
impose a redemption fee in accordance
with applicable law or regulation for the
purpose of offsetting brokerage, tax or
other costs. If a redemption fee is
charged, it will be charged only to the
extent that such a fee may be charged by
an open-end fund registered under the
Act.
3. Administrative fees and transfer
agent fees will be paid by the OFI Global
China Fund Series used by the Funds to
an Adviser, or OFI Affiliate, only upon
a determination by each Fund’s Board,
including a majority of its Independent
Trustees, that the fees are (i) for services
in addition to, rather than duplicative
of, services rendered to the Funds
directly and (ii) fair and reasonable in
light of the usual and customary charges
imposed by others for services of the
same nature and quality. If such
determination is not made by a Fund’s
Board, the Fund’s Adviser will
reimburse to that Fund the amount of
any administrative fee and transfer
agent fee borne by that Fund as an
investor in the OFI Global China Fund.
4. Each Fund will treat its entire
investment in the OFI Global China
PO 00000
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Fmt 4703
Sfmt 4703
47261
Fund as an investment that is not liquid
for purposes of any applicable rules or
guidance of the Commission or its staff
regarding the management of liquidity.
For example, under current guidelines,
each Fund must limit its aggregate
holdings of illiquid assets, which for
purposes of the requested relief include
any investments in the OFI Global
China Fund, to 15% of its net assets. In
addition, each Fund will, at all times,
limit its holdings in the OFI Global
China Fund to no more than 15% of its
net assets.
5. Each Fund’s Board, including a
majority of the Independent Trustees,
will determine initially and no less
frequently than annually that the Fund’s
investment in the OFI Global China
Fund is, and continues to be, in the best
interests of the Fund and the Fund’s
shareholders. As part of this
determination, the Fund’s Board will
consider the custody arrangements for
the OFI Global China Fund’s foreign
securities (under rule 17f–5) and the
bonding arrangements in place for
certain of the OFI Global China Fund’s
officers and employees (under rule
17g–1).
6. The Advisers will make the
accounts, books and other records of the
OFI Global China Fund available for
inspection by the Commission staff and,
if requested, will furnish copies of those
records to the Commission staff.
7. The OFI Global China Fund will
comply with the following sections of
the Act as if the OFI Global China Fund
were an open-end management
investment company registered under
the Act, except as noted: Section 9;
section 12; section 13 (the Interests
issued by OFI Global China Fund will
be regarded as voting securities under
section 2(a) (42) of the Act for purposes
of applying this condition and the
offering memorandum utilized by the
OFI Global China Fund to offer and sell
Interests will be regarded as a
registration statement for purposes of
applying this condition); section 17(a)
(except as described in the application);
section 17(d) (except as described in the
application); section 17(e); section 17(f);
section 17(h), section 18 (the Interests
issued by the OFI Global China Fund
will be regarded as voting securities
under section 2(a)(42) of the Act for
purposes of applying this condition);
section 21; section 36; and sections 37–
53. In addition, the OFI Global China
Fund will comply with the rules under
section 17(f) 10 and section 17(g) of the
10 Applicants note that they will operate the OFI
Global China Fund such that rule 17f–1, rule
17f–2, and rule 17f–3 will not be applicable to it.
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47262
Federal Register / Vol. 82, No. 195 / Wednesday, October 11, 2017 / Notices
Act, and rule 22c–1 under the Act as if
the OFI Global China Fund were an
open-end management investment
company registered under the Act. This
condition 7 will apply only to OFI
Global China Fund Series in which a
Fund has invested; this condition 7 will
not apply to OFI Global China Fund
Series invested in exclusively by Other
Accounts except insofar as necessary for
the OFI Global China Fund Series
invested in by a Fund to comply with
this condition.
OFI will adopt procedures designed to
ensure that the OFI Global China Fund
complies with the aforementioned
sections of the Act and rules under the
Act. OFI will periodically review and
periodically update as appropriate such
procedures and will maintain books and
records describing such procedures, and
maintain the records required by rules
31a–1(b)(1), 31a–1(b)(2)(ii) and 31a–
1(b)(9) under the Act. All books and
records required to be made pursuant to
this condition will be maintained and
preserved for a period of not less than
six years from the end of the fiscal year
in which any transaction occurred, the
first two years in an easily accessible
place, and will be subject to
examination by the Commission and its
staff.
For purpose of implementing
condition 7, any action that the abovereferenced statutory and regulatory
provisions require to be taken by the
directors, officers and/or employees of a
registered investment company will be
performed by OFI (or its successor) 11 as
the managing member of the OFI Global
China Fund, except to the extent that
the order requires the Funds’ Boards to
exercise oversight or take action with
respect to the OFI Global China Fund as
an extension of such Board’s duties to
the Funds.
8. To engage in Cross Transactions,
the Funds will comply with rule
17a–7 under the Act in all respects other
than the requirement that the parties to
the transaction be affiliated persons (or
affiliated persons of affiliated persons)
of each other solely by reason of having
a common investment adviser or
investment advisers which are affiliated
persons of each other, common officers,
and/or common directors, solely
because a Fund and Other Vehicle
might become affiliated persons within
the meaning of section 2(a)(3)(A), (B) or
(C) of the Act because of their
investments in the OFI Global China
Fund.
9. An OFI Global China Fund Series
in which a Fund invests will not borrow
or engage in leverage.
11 See
supra, footnote 1.
VerDate Sep<11>2014
17:58 Oct 10, 2017
Jkt 244001
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–21775 Filed 10–10–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32851; 812–14340]
USCF Fund Advisors, LLC, et al.
October 4, 2017.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application for an order
under section 6(c) of the Investment
Company Act of 1940 (the ‘‘Act’’) for an
exemption from sections 2(a)(32),
5(a)(1), 22(d), and 22(e) of the Act and
rule 22c–1 under the Act, under
sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and
17(a)(2) of the Act, and under section
12(d)(1)(J) for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of
the Act. The requested order would
permit (a) actively-managed series of
certain open-end management
investment companies (‘‘Funds’’) to
issue shares redeemable in large
aggregations only (‘‘Creation Units’’); (b)
secondary market transactions in Fund
shares to occur at negotiated market
prices rather than at net asset value
(‘‘NAV’’); (c) certain Funds to pay
redemption proceeds, under certain
circumstances, more than seven days
after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; (e)
certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Acquiring Funds’’) to acquire
shares of the Funds; and (f) certain
Funds (‘‘Feeder Funds’’) to create and
redeem Creation Units in-kind in a
master-feeder structure.
APPLICANTS: USCF Fund Advisors, LLC
(the ‘‘Initial Adviser’’), a Delaware
limited liability company registered as
an investment adviser under the
Investment Advisers Act of 1940, USCF
ETF Trust (the ‘‘Trust’’), a Delaware
statutory trust registered under the Act
as an open-end management investment
company with multiple series, and
ALPS Distributors, Inc. (‘‘Distributor’’),
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
a Colorado Corporation and brokerdealer registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’).
FILING DATES: The application was filed
on July 31, 2014 and amended on
November 11, 2014, February 13, 2015,
August 24, 2016, February 23, 2017 and
July 7, 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 30, 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: Applicants, James M. Cain
and Cynthia R. Beyea, Eversheds
Sutherland (US) LLP, 700 Sixth Street
NW., Suite 700, Washington, DC 20001.
FOR FURTHER INFORMATION CONTACT:
Jeremy Heckerling, Senior Counsel, at
(202) 551–7259, 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
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 is
included in the term ‘‘Adviser’’) and (b) comply
with the terms and conditions of the application.
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]]>Agencies
[Federal Register Volume 82, Number 195 (Wednesday, October 11, 2017)]
[Notices]
[Pages 47257-47262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21775]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32849; 812-14248]
OppenheimerFunds, Inc., et al.
October 4, 2017.
AGENCY: Securities and Exchange Commission (``Commission'')
ACTION: Notice.
-----------------------------------------------------------------------
Notice of application for an order under sections 6(c) and 17(b) of
the
[[Page 47258]]
Investment Company Act of 1940 (``Act'') for exemptions from section
17(a) of the Act, and under section 17(d) of the Act and rule 17d-1
thereunder to permit certain joint transactions.
Summary of Application: Applicants requests an order to permit certain
registered open-end management investment companies or series thereof
to invest in a private investment vehicle established by their
investment advisers for the purpose of investing in China A Shares and
certain other Chinese securities.
Applicants: OppenheimerFunds, Inc. (``OFI''), OFI Global Asset
Management, Inc. (``OFI Global''), and OFI Global Institutional, Inc.
(``OFI Global Institutional,'' and together with OFI and OFI Global,
the ``Initial Advisers''); OFI Global China Fund, LLC (the ``OFI Global
China Fund''); and Oppenheimer Developing Markets Fund, Oppenheimer
Global Fund, Oppenheimer Global Opportunities Fund, Oppenheimer Global
Value Fund, Oppenheimer International Growth Fund, Oppenheimer
International Small-Mid Company Fund and Oppenheimer International
Equity Fund (together, the ``Trusts'').
Filing Dates: The application was filed on December 12, 2013, and
amended on June 6, 2014, November 21, 2014, May 1, 2015, October 16,
2015, April 7, 2016, August 9, 2016, May 12, 2017, August 29, 2017, and
September 26, 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 30, 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, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicants: 225 Liberty Street,
New York, NY 10281.
FOR FURTHER INFORMATION CONTACT: Kieran G. Brown, Senior Counsel, at
(202) 551-6773, 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 an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations
1. Each Trust is a Delaware statutory trust and is registered under
Act as an open-end management investment company. One Trust, the
Oppenheimer Developing Markets Fund (the ``Initial Fund''), currently
invests in the OFI Global China Fund, LLC (the ``OFI Global China
Fund''), which relies on the exemptions from registration under the Act
provided by section 3(c)(1) and/or 3(c)(7) of the Act.\1\
---------------------------------------------------------------------------
\1\ Each entity that currently intends to rely on the requested
relief has been named as an applicant. Any Trusts and their existing
or future series and any other existing or future registered open-
end management investment company or series thereof for which an
Initial Adviser, or an Initial Adviser's successor, or any person
controlling, controlled by, or under common control with an Initial
Adviser (an ``OFI Affiliate'') acts as investment adviser (such
Initial Adviser or OFI Affiliate acting as investment adviser, an
``Adviser'') that may rely on the requested relief in the future is
a ``Future Fund'' (together with the Initial Fund, the ``Funds'').
For purposes of the requested order, ``successor'' is limited to an
entity that results from a reorganization into another jurisdiction
or a change in the type of business organization. Each Fund or other
entity that may rely on the requested relief in the future will do
so only in accordance with the terms and conditions of the requested
order.
---------------------------------------------------------------------------
2. Each Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (``Advisers Act''), and OFI Global and
OFI Global Institutional are each a wholly-owned subsidiary of OFI. OFI
Global serves as investment adviser to the Initial Fund pursuant to an
investment advisory agreement between OFI Global and the Initial Fund
(the ``Advisory Agreement''). OFI serves as sub-adviser to the Initial
Fund pursuant to a subadvisory agreement between OFI Global and OFI. As
the Initial Fund's investment adviser and sub-adviser, OFI Global and
OFI are responsible for making investment decisions for the Initial
Fund and for administering the business and affairs of the Initial
Fund. OFI Global is entitled, under the terms of the Advisory
Agreement, to receive management fees from the Initial Fund at a
specified rate. OFI Global also serves as the investment adviser to the
other Trusts and their series and has entered into subadvisory
agreements with OFI whereby OFI also provides investment advisory
services to the other Trusts and their series. As investment adviser
and sub-adviser, OFI Global and OFI's activities are subject to the
oversight of the Boards of Trustees (the ``Board'' or ``Boards,'' as
applicable) of the Trusts, at least a majority of whose members are not
considered ``interested persons'' of the Trusts (as defined in section
2(a)(19) of the Act) (the ``Independent Trustees'').
3. OFI and the other Advisers also manage or may manage collective
investment trusts, private pooled investment vehicles and investment
companies registered in other jurisdictions (together, ``Other
Vehicles''), as well as separately managed accounts (together with the
Other Vehicles, ``Other Accounts'').\2\ Applicants state that these
Other Accounts may have similar investment objectives and strategies as
the Funds and will invest in OFI Global China Fund Series (defined
below) along with one or more Funds.
---------------------------------------------------------------------------
\2\ The Applicants acknowledge that they are not seeking nor
receiving relief with respect to the separately managed accounts.
---------------------------------------------------------------------------
4. The Funds desire to purchase and redeem limited liability
company interests (``Interests'') of separately identified series of
the OFI Global China Fund (each separate series of the OFI Global China
Fund, an ``OFI Global China Fund Series''). The OFI Global China Fund
Series invests in class A Shares listed on People's Republic of China
(``PRC'') stock exchanges, rights to invest in such class A Shares,
corporate or government bonds listed on PRC stock exchanges or traded
in the over-the-counter markets of the PRC and warrants listed on PRC
stock exchanges (together, ``Chinese Securities'').\3\ Notwithstanding
the foregoing, a security will only be a ``Chinese Security'' if it is
subject to the quota systems described in the application (as such
quota systems may be amended or altered from time to time). Interests
in the OFI Global China Fund will be sold only to the Funds and the
Other Accounts.
---------------------------------------------------------------------------
\3\ Applicants represent that the OFI Global China Fund will not
invest in derivatives or in other pooled investment vehicles.
---------------------------------------------------------------------------
5. Applicants assert that, for a variety of reasons, it is not
practical or economical for the Funds to invest a significant amount of
assets directly in Chinese Securities. Applicants state that, until
2002, the Chinese government restricted investment in China A Shares
and other Chinese Securities to domestic (i.e., Chinese)
[[Page 47259]]
investors.\4\ According to Applicants, since 2002, the Chinese
Government has permitted certain non-Chinese investors to invest in
China A Shares and gradually has liberalized applicable rules to permit
non-Chinese investors to invest in other types of Chinese Securities.
However, subject to limited exceptions described in the application, to
do so, a foreign investor must receive a license from PRC regulators
and be allotted a quota, representing the amount in renminbi of Chinese
Securities that the investor may purchase. As described more fully in
the application, individual applications on behalf of each Fund or
Other Account would generally not be practical or feasible.
Accordingly, OFI has obtained a license under the Qualified Foreign
Institutional Investor (``QFII'') quota program, naming OFI Global
China Fund as the investing vehicle in its application, and was granted
a quota of US$200 million in late 2014, and has since obtained an
additional $1.3 billion of quota, so that it can invest in Chinese
Securities on behalf of the Funds and Other Accounts.
---------------------------------------------------------------------------
\4\ Applicants assert that, for a variety of reasons, China A
Shares are a more attractive means to invest in Chinese companies
than are other categories of stock that are available on the
Shanghai, Shenzhen and Hong Kong Stock Exchanges (which is where a
significant majority of publicly traded Chinese companies list their
shares).
---------------------------------------------------------------------------
6. Applicants state that the OFI Global China Fund would allow the
Funds, and Other Accounts, to gain dedicated exposure to Chinese
Securities and provide numerous additional investment opportunities for
the Funds that are consistent with their investment objectives and
policies. Applicants state that each OFI Global China Fund Series will
invest only in Chinese securities, cash and cash equivalents.
7. The OFI Global China Fund is organized as a Delaware limited
liability company. OFI serves as, and in the future an OFI Affiliate
may serve as, the managing member of the OFI Global China Fund. The OFI
Global China Fund does not have a board of directors or trustees. A
Fund or Other Account may invest in some or all of the different OFI
Global China Fund Series.\5\ Each OFI Global China Fund Series will
have its own portfolio manager or portfolio management team at OFI who
will be responsible for selecting particular Chinese Securities for
investment by that OFI Global China Fund Series. Each Fund or Other
Account investing in an OFI Global China Fund Series will hold
Interests which will represent a proportionate share of the OFI Global
China Fund Series' net assets and a proportionate claim on the OFI
Global China Fund Series' net income. Interests in an OFI Global China
Fund Series used by the Funds will be valued daily in accordance with
the Funds' valuation procedures as approved by the Funds' Boards and in
accordance with section 2(a)(41) of the Act. Each Interest would have
the same rights as any other Interest, and the OFI Global China Fund
Series would not issue preferred interests.
---------------------------------------------------------------------------
\5\ Applicants state that one OFI Global China Fund Series is
contemplated, but in the future additional OFI Global China Fund
Series may be established to invest in different issuers, or types,
of Chinese Securities based generally on the particular
characteristics of those issuers, or types, of Chinese Securities.
---------------------------------------------------------------------------
8. OFI will not charge advisory fees to OFI Global China Fund
Series used by the Funds. OFI Global and the other Advisers will,
however, be entitled to receive applicable advisory fees from the Funds
or Other Accounts. Expenses of the OFI Global China Fund Series will be
charged to the OFI Global China Fund Series as a whole and accrue on a
daily basis.\6\ The OFI Global China Fund's books and those of the OFI
Global China Fund Series will be accounted for under standard
accounting principles and in accordance with U.S. Generally Accepted
Accounting Principles (``GAAP''), and they will be audited annually by
a nationally recognized and PCAOB-registered audit firm in accordance
with U.S. Generally Accepted Auditing Standards (``GAAS'').\7\ The OFI
Global China Fund Series in which a Fund invests will not borrow or
engage in leverage.
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\6\ Expenses of the OFI Global China Fund Series will include
basic fees and expenses of service providers, such as the
administrator, transfer agent, accountant, local custodian and legal
counsel. OFI will engage an OFI Affiliate as its transfer agent. No
fees will be paid by the OFI Global China Fund to a transfer agent
that is an OFI Affiliate except in accordance with condition 3.
\7\ Applicants state that the GAAS standards applicable to the
audit of the OFI Global China Fund would be the same standards as
those applicable to a registered investment company. Further,
applicants state that GAAP would apply to both the OFI Global China
Fund audit and a registered investment company audit. Thus,
applicants assert that critical accounting policies governing
security valuation, accounting for investment transactions,
recognition of investment income and of expenses, and accrual of
expenses, which are often the critical policies applicable to
investment companies, would apply in substantially the same manner
for the audit of the OFI Global China Fund.
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9. A Fund's decision to invest in an OFI Global China Fund Series
will be made by a Fund's portfolio manager(s). Because the PRC
restricts repatriation of the proceeds from sales of Chinese
Securities, each Fund will treat its entire investment in the OFI
Global China Fund as an investment that is not liquid for purposes of
any applicable rules or guidance of the Commission or its staff
regarding the management of liquidity and will otherwise be subject to
the limits described in condition 4. Applicants state that access by
the Funds and Other Accounts to the quota (i.e., to Chinese Securities)
through the OFI Global China Fund Series is a limited opportunity and
will be allocated in accordance with the Advisers' trade order
aggregation and trade allocation policies and procedures (the
``Advisers' Trade Allocation Policy''). Under the Advisers' Trade
Allocation Policy, if fewer Interests are available than requested by
the portfolio managers of the Funds and Other Accounts, Interests will
generally be allocated across participating accounts on a pro rata
basis according to requested order size. Similarly, if more than one
Fund or Other Account seeks to repatriate proceeds at or about the same
time, and Chinese regulations limit the aggregate amount of proceeds
that may be repatriated at any given time to a level below the
aggregate amount sought to be repatriated, the requests by the
applicable portfolio manager(s) will be aggregated, if received at or
about the same time, and proceeds available for repatriation will be
allocated pro rata among requesting Funds and Other Accounts.\8\ The
Advisers will not consider the potential impact on the quota when
making investment decisions for the Funds or Other Accounts.\9\
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\8\ Applicants are not seeking comfort nor is the Commission
providing any opinion on whether the Advisers' Trade Allocation
Policy meets the standards applicable under the Act or the Advisers
Act.
\9\ Applicants state that the Chinese authorities may reduce or
revoke a QFII's quota if the QFII does not invest the full amount of
its quota over a phase-in period, or if it repatriates its
investments below the quota amount.
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10. Applicants state that OFI contemplates making a nominal (i.e.,
not to exceed $1,000) investment in the OFI Global China Fund. OFI will
acquire Interests in the OFI Global China Fund (or series thereof)
having rights, duties and obligations that are identical in all
respects to Interests purchased by other investors in the OFI Global
China Fund (or series thereof). The sole purpose of the proposed
investment is to permit OFI to serve as the tax matters partner of the
OFI Global China Fund, which intends to be treated as a partnership for
U.S. federal tax purposes. Applicants state that in the absence of
OFI's investment, it is likely that the U.S. Internal Revenue Service
would appoint a non-managing member
[[Page 47260]]
partner of the OFI Global China Fund to serve as tax matters partner in
an audit proceeding. In addition, absent such an investment by the OFI
Global China Fund's managing member, the tax matters partner could
change from year-to-year, which may disrupt preparation of the OFI
Global China Fund's annual tax return.
Applicants' Legal Analysis
Section 17(a)--Purchase and Sale of Interests
1. Section 17(a) generally provides, in part, that it is unlawful
for any affiliated person of a registered investment company (``first-
tier affiliate''), or any affiliated person of such person (``second
tier affiliate''), acting as principal, to sell or purchase any
security or other property to or from such investment company. Section
2(a)(3) of the Act defines an ``affiliated person'' of another person
to include (a) any person directly or indirectly owning, controlling,
or holding with power to vote, 5% or more of the outstanding voting
securities of the other person; (b) any person 5% or more of whose
outstanding voting securities are directly or indirectly owned,
controlled, or held with the power to vote by the other person; and (c)
any person directly or indirectly controlling, controlled by, or under
common control with the other person. Section 2(a)(9) defines
``control'' to mean ``the power to exercise a controlling influence
over the management or policies of a company, unless such power is
solely the result of an official position with such company.''
2. Applicants state that the Funds and the OFI Global China Fund
are expected to be affiliated persons under section 2(a)(3) of the Act,
because it is expected that one or more Funds and Other Vehicles will
own at least 5%, and potentially, more than 25% of the Interests of the
OFI Global China Fund or an OFI Global China Fund Series. While
Interests of the OFI Global China Fund (and OFI Global China Fund
Series) will be non-voting interests, a Fund or Other Vehicle could
have power to exercise a controlling influence over the management or
policies of the OFI Global China Fund or Series and be deemed an
affiliated person of the OFI Global China Fund or OFI Global China Fund
Series under section 2(a)(3)(C). In addition, OFI Global is the
investment adviser to the Initial Fund, OFI serves as the initial sub-
adviser to the Initial Fund, and the Advisers will be investment
advisers and sub-advisers to any Future Funds. An Adviser or OFI
Affiliate will also be the managing member of the OFI Global China
Fund. As a result, the OFI Global China Fund or OFI Global China Fund
Series may be deemed to be under the Adviser's control under section
2(a)(3)(C), such that the OFI Global China Fund may be deemed an
affiliated person of an affiliated person of the Funds.
3. If a Fund and the OFI Global China Fund are deemed affiliates of
each other, or even second-tier affiliates, the sale of Interests of
the OFI Global China Fund to the Fund, and the redemption of such
Interests by the Fund, would be prohibited under section 17(a) of the
Act.
4. Section 17(b) of the Act authorizes the Commission to grant an
order permitting a transaction otherwise prohibited by section 17(a) if
the terms of the proposed transaction, including the consideration to
be paid or received, are fair and reasonable and do not involve
overreaching on the part of any person concerned, and the proposed
transaction is consistent with the policies of each registered
investment company involved and with the general purposes of the Act.
Section 6(c) of the Act permits the Commission to exempt any person or
transactions from any provisions 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.
5. Applicants submit that the proposed arrangement satisfies the
standards for relief under sections 17(b) and 6(c) of the Act. For the
reasons discussed below, Applicants submit that the terms of the
arrangement, including the consideration to be paid, are fair and
reasonable and do not involve overreaching on the part of any person
concerned, and that the proposed transactions are consistent with the
policy of each registered investment company concerned and with the
general purposes of the Act. Applicants further submit that the Funds'
participation in the OFI Global China Fund Series will be necessary or
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policies and
provisions of the Act.
6. Applicants state that each Fund and Other Account will be
treated identically as a holder of Interest in the OFI Global China
Fund Series, and each Fund and Other Account will purchase and sell
Interests of an OFI Global China Fund Series on the same terms and on
the same basis as each other Fund and Other Account that invests in
that OFI Global China Fund Series. Applicants note that no Adviser or
OFI Affiliate will receive a fee for advising any OFI Global China Fund
Series used by a Fund. The Funds, as holders of Interests of the OFI
Global China Fund, will not be subject to any sales load, redemption
fee, distribution fee or service fee, except that the OFI Global China
Fund will have the discretion to impose a redemption fee in accordance
with applicable law or regulation for the purpose of offsetting
brokerage, tax or other costs. If a redemption fee is charged, it will
be charged only to the extent that such a fee may be charged by an
open-end fund registered under the Act. Each series of the OFI Global
China Fund will be audited. Moreover, administrative fees and transfer
agent fees will be paid by the OFI Global China Fund Series used by the
Funds to an Adviser or OFI Affiliate only upon the determination by
each Fund's Board, including a majority of Independent Trustees, that
the fees are (i) for services in addition to, rather than duplicative
of, services rendered to the Funds directly and (ii) fair and
reasonable in light of the usual and customary charges imposed by
others for services of the same nature and quality. Applicants argue
that the fees payable to the OFI Global China Fund's service providers
will be for distinct services, and the costs of such fees will be
outweighed by opportunity to invest in Chinese Securities.
Section 17(d)
7. Section 17(d) of the Act and rule 17d-1 under the Act generally
prohibit joint transactions involving registered investment companies
and their affiliates unless the Commission has approved the
transaction. In considering whether to approve a joint transaction
under rule 17d-1, the Commission considers whether the proposed
transaction is consistent with the provisions, policies, and purposes
of the Act, and the extent to which the participation of the investment
companies is on a basis different from or less advantageous than that
of the other participants.
8. Applicants state that the Funds (by purchasing Interests of the
OFI Global China Fund), OFI (by managing the portfolio securities of
the OFI Global China Fund and the Funds at the same time that the Funds
are invested in Interests of the OFI Global China Fund and/or by
providing a nominal tax matters partner investment in the OFI Global
China Fund), and the OFI Global China Fund (by selling its Interests
to, and redeeming its Interests from, the Funds), could be deemed to be
[[Page 47261]]
participants in a joint enterprise or arrangement within the meaning of
section 17(d) and rule 17d-1.
9. Applicants request an order pursuant to section 17(d) and rule
17d-1 to permit the proposed transactions with the OFI Global China
Fund. Applicants submit that the investment by the Funds in the OFI
Global China Fund on the basis proposed is consistent with the
provisions, policies and purposes of the Act, and that each Fund will
invest in Interests of the OFI Global China Fund on the same basis as
any other shareholder (i.e., the other Funds and Other Accounts).
Applicants further state that the Advisers will take reasonable steps
to make sure that allocations among the Funds and Other Accounts are
fair and equitable. Allocations of Chinese Securities to different OFI
Global China Fund Series, and allocations of opportunities to invest in
the OFI Global China Fund Series, by Funds and Other Accounts, will be
subject to the Advisers' Trade Allocation Policy, under the supervision
of the Advisers' and the Funds' CCO, and compliance with the Advisers'
Trade Allocation Policy will be overseen by the Funds' Boards.
10. Applicants do not believe that OFI's nominal investment as tax
matters partner in the OFI Global China Fund poses any potential
conflict of interest not addressed by the conditions contained in the
application. OFI will acquire Interests having rights, duties and
obligations that are identical in all respects to Interests purchased
by other investors in the OFI Global China Fund.
Section 17(a)--Cross Transactions
11. Applicants propose that the Funds be permitted to continue to
engage in certain purchase and sale cross transactions in securities
(``Cross Transactions'') between a Fund seeking to implement a
portfolio strategy and an Other Vehicle seeking to raise or invest
cash. The Funds currently rely on rule 17a-7 to engage in such Cross
Transactions; however, if a Fund and an Other Vehicle were deemed to be
second-tier affiliates of each other by virtue of their ownership or
control affiliations with the OFI Global China Fund or an OFI Global
China Fund Series, the Funds may not be entitled to rely on rule 17a-7
because they would no longer be affiliated solely for the reasons
permitted by the rule.
12. Applicants assert that the potential affiliations created by
the OFI Global China Fund Series structure do not affect the other
protections provided by the rule, including the integrity of the
pricing mechanism employed, and oversight by each Fund's Board.
Applicants represent that the Funds and Other Vehicles will comply with
the requirements set forth in rule 17a-(7)(a) through (g). Applicants
thus believe that Cross Transactions will be reasonable and fair, and
will not involve overreaching, and will be consistent with the purposes
of the Act and the investment policy of each Fund.
Applicants' Conditions
Applicants agree that any order granting the requested relief shall
be subject to the following conditions:
1. The Funds' investments in Interests of the OFI Global China Fund
will be undertaken only in accordance with the Funds' stated investment
restrictions and will be consistent with their stated investment
policies.
2. The Advisers and their affiliated persons will receive no
advisory fee from the OFI Global China Fund in connection with the
Funds' investment in the OFI Global China Fund. The Advisers and their
affiliated persons will receive no commissions, fees, or other
compensation (except for transfer agent fees that are paid in
accordance with condition 3 as described in the application) from a
Fund or the OFI Global China Fund in connection with the purchase or
redemption by the Funds of Interests in the OFI Global China Fund.
Interests of the OFI Global China Fund will not be subject to a sales
load, redemption fee, distribution fee or service fee, except that the
OFI Global China Fund will have the discretion to impose a redemption
fee in accordance with applicable law or regulation for the purpose of
offsetting brokerage, tax or other costs. If a redemption fee is
charged, it will be charged only to the extent that such a fee may be
charged by an open-end fund registered under the Act.
3. Administrative fees and transfer agent fees will be paid by the
OFI Global China Fund Series used by the Funds to an Adviser, or OFI
Affiliate, only upon a determination by each Fund's Board, including a
majority of its Independent Trustees, that the fees are (i) for
services in addition to, rather than duplicative of, services rendered
to the Funds directly and (ii) fair and reasonable in light of the
usual and customary charges imposed by others for services of the same
nature and quality. If such determination is not made by a Fund's
Board, the Fund's Adviser will reimburse to that Fund the amount of any
administrative fee and transfer agent fee borne by that Fund as an
investor in the OFI Global China Fund.
4. Each Fund will treat its entire investment in the OFI Global
China Fund as an investment that is not liquid for purposes of any
applicable rules or guidance of the Commission or its staff regarding
the management of liquidity. For example, under current guidelines,
each Fund must limit its aggregate holdings of illiquid assets, which
for purposes of the requested relief include any investments in the OFI
Global China Fund, to 15% of its net assets. In addition, each Fund
will, at all times, limit its holdings in the OFI Global China Fund to
no more than 15% of its net assets.
5. Each Fund's Board, including a majority of the Independent
Trustees, will determine initially and no less frequently than annually
that the Fund's investment in the OFI Global China Fund is, and
continues to be, in the best interests of the Fund and the Fund's
shareholders. As part of this determination, the Fund's Board will
consider the custody arrangements for the OFI Global China Fund's
foreign securities (under rule 17f-5) and the bonding arrangements in
place for certain of the OFI Global China Fund's officers and employees
(under rule 17g-1).
6. The Advisers will make the accounts, books and other records of
the OFI Global China Fund available for inspection by the Commission
staff and, if requested, will furnish copies of those records to the
Commission staff.
7. The OFI Global China Fund will comply with the following
sections of the Act as if the OFI Global China Fund were an open-end
management investment company registered under the Act, except as
noted: Section 9; section 12; section 13 (the Interests issued by OFI
Global China Fund will be regarded as voting securities under section
2(a) (42) of the Act for purposes of applying this condition and the
offering memorandum utilized by the OFI Global China Fund to offer and
sell Interests will be regarded as a registration statement for
purposes of applying this condition); section 17(a) (except as
described in the application); section 17(d) (except as described in
the application); section 17(e); section 17(f); section 17(h), section
18 (the Interests issued by the OFI Global China Fund will be regarded
as voting securities under section 2(a)(42) of the Act for purposes of
applying this condition); section 21; section 36; and sections 37-53.
In addition, the OFI Global China Fund will comply with the rules under
section 17(f) \10\ and section 17(g) of the
[[Page 47262]]
Act, and rule 22c-1 under the Act as if the OFI Global China Fund were
an open-end management investment company registered under the Act.
This condition 7 will apply only to OFI Global China Fund Series in
which a Fund has invested; this condition 7 will not apply to OFI
Global China Fund Series invested in exclusively by Other Accounts
except insofar as necessary for the OFI Global China Fund Series
invested in by a Fund to comply with this condition.
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\10\ Applicants note that they will operate the OFI Global China
Fund such that rule 17f-1, rule 17f-2, and rule 17f-3 will not be
applicable to it.
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OFI will adopt procedures designed to ensure that the OFI Global
China Fund complies with the aforementioned sections of the Act and
rules under the Act. OFI will periodically review and periodically
update as appropriate such procedures and will maintain books and
records describing such procedures, and maintain the records required
by rules 31a-1(b)(1), 31a-1(b)(2)(ii) and 31a-1(b)(9) under the Act.
All books and records required to be made pursuant to this condition
will be maintained and preserved for a period of not less than six
years from the end of the fiscal year in which any transaction
occurred, the first two years in an easily accessible place, and will
be subject to examination by the Commission and its staff.
For purpose of implementing condition 7, any action that the above-
referenced statutory and regulatory provisions require to be taken by
the directors, officers and/or employees of a registered investment
company will be performed by OFI (or its successor) \11\ as the
managing member of the OFI Global China Fund, except to the extent that
the order requires the Funds' Boards to exercise oversight or take
action with respect to the OFI Global China Fund as an extension of
such Board's duties to the Funds.
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\11\ See supra, footnote 1.
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8. To engage in Cross Transactions, the Funds will comply with rule
17a-7 under the Act in all respects other than the requirement that the
parties to the transaction be affiliated persons (or affiliated persons
of affiliated persons) of each other solely by reason of having a
common investment adviser or investment advisers which are affiliated
persons of each other, common officers, and/or common directors, solely
because a Fund and Other Vehicle might become affiliated persons within
the meaning of section 2(a)(3)(A), (B) or (C) of the Act because of
their investments in the OFI Global China Fund.
9. An OFI Global China Fund Series in which a Fund invests will not
borrow or engage in leverage.
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21775 Filed 10-10-17; 8:45 am]
BILLING CODE 8011-01-P
