Aptus Capital Advisors, LLC and ETF Series Solutions, 28016-28018 [2018-12902]
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Federal Register / Vol. 83, No. 116 / Friday, June 15, 2018 / Notices
Kenneth R. Moeller; Comments Due:
June 18, 2018.
5. Docket No(s).: MC2018–165 and
CP2018–236; Filing Title: USPS Request
to Add Priority Mail Express & Priority
Mail Contract 66 to Competitive Product
List and Notice of Filing Materials
Under Seal; Filing Acceptance Date:
June 8, 2018; Filing Authority: 39 U.S.C.
3642 and 39 CFR 3020.30 et seq.; Public
Representative: Gregory Stanton;
Comments Due: June 18, 2018.
6. Docket No(s).: CP2018–237; Filing
Title: Notice of United States Postal
Service of Filing a Functionally
Equivalent Global Expedited Package
Services 7 Negotiated Service
Agreement and Application for NonPublic Treatment of Materials Filed
Under Seal; Filing Acceptance Date:
June 8, 2018; Filing Authority: 39 CFR
3015.5; Public Representative: Gregory
Stanton; Comments Due: June 19, 2018.
7. Docket No(s).: MC2018–166 and
CP2018–238; Filing Title: USPS Request
to Add Priority Mail Contract 442 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: June 8, 2018; Filing
Authority: 39 U.S.C. 3642 and 39 CFR
3020.30 et seq.; Public Representative:
Lawrence Fenster; Comments Due: June
19, 2018.
This notice will be published in the
Federal Register.
Stacy L. Ruble,
Secretary.
[FR Doc. 2018–12828 Filed 6–14–18; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL REGULATORY COMMISSION
[Docket No. CP2018–232; Order No. 4640]
Inbound Parcel Post (at UPU Rates)
Postal Regulatory Commission.
ACTION: Notice.
AGENCY:
The Commission is noticing a
recently filed Postal Service notice of
intention to change prices not of general
applicability to be effective July 1, 2018.
This notice informs the public of the
filing, invites public comment, and
takes other administrative steps.
DATES: Comments are due: June 18,
2018.
SUMMARY:
Submit comments
electronically via the Commission’s
Filing Online system at https://
www.prc.gov. Those who cannot submit
comments electronically should contact
the person identified in the FOR FURTHER
INFORMATION CONTACT section by
telephone for advice on filing
alternatives.
sradovich on DSK3GMQ082PROD with NOTICES
ADDRESSES:
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FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at
202–789–6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Contents of Filing
III. Commission Action
IV. Ordering Paragraphs
I. Introduction
On June 8, 2018, the Postal Service
filed notice announcing its intention to
change prices not of general
applicability for Inbound Parcel Post (at
Universal Postal Union (UPU) Rates)
effective July 1, 2018.1
II. Contents of Filing
To accompany its Notice, the Postal
Service filed: A redacted copy of the
UPU International Bureau (IB) Circular
that contains the new prices; a copy of
the certification required under 39 CFR
3015.5(c)(2); redacted Postal Service
data used to justify any bonus
payments; and redacted copies of
Governors’ Decisions 14–04 and 11–6.
Id. at 2–3; see id. Attachments 2–6. The
Postal Service also filed redacted
financial workpapers. Notice at 4.
Additionally, the Postal Service filed
unredacted copies of Governors’
Decisions 14–04 and 11–6, an
unredacted copy of the new prices, and
related financial information under seal.
See Notice at 4. The Postal Service filed
an application for non-public treatment
of materials filed under seal. Id.
Attachment 1.
The Postal Service states that it has
provided supporting documentation as
required by Order Nos. 2102 and 2310.2
In addition, the Postal Service states
that it provided citations and copies of
relevant UPU IB Circulars and updates
to inflation-linked adjustments as
required by Order No. 3716.3
III. Commission Action
The Commission establishes Docket
No. CP2018–232 for consideration of
matters raised by the Notice.
The Commission invites comments on
whether the Postal Service’s filing is
1 Notice of the United States Postal Service of
Filing Changes in Rates Not of General
Applicability for Inbound Parcel Post (at UPU
Rates), and Application for Non-Public Treatment,
June 8, 2018, at 1–2 (Notice).
2 Notice at 4–5. See Docket No. CP2014–52, Order
Accepting Price Changes for Inbound Air Parcel
Post (at UPU Rates), June 26, 2014, at 6 (Order No.
2102); Docket No. CP2015–24, Order Accepting
Changes in Rates for Inbound Parcel Post (at UPU
Rates), December 29, 2014, at 4 (Order No. 2310).
3 Notice at 5–6. See Docket Nos. MC2017–58 and
CP2017–86, Order Acknowledging Changes in Rates
for Inbound Parcel Post (at UPU Rates), December
30, 2016, at 5 (Order No. 3716).
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consistent with 39 U.S.C. 3632, 3633,
and 39 CFR part 3015. Comments are
due no later than June 18, 2018. The
public portions of the filing can be
accessed via the Commission’s website
(https://www.prc.gov).
The Commission appoints Katalin K.
Clendenin to serve as Public
Representative in this docket.
IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket
No. CP2018–232 for consideration of the
matters raised by the Postal Service’s
Notice.
2. Pursuant to 39 U.S.C. 505, Katalin
K. Clendenin is appointed to serve as an
officer of the Commission to represent
the interests of the general public in this
proceeding (Public Representative).
3. Comments are due no later than
June 18, 2018.
4. The Secretary shall arrange for
publication of this order in the Federal
Register.
By the Commission.
Stacy L. Ruble,
Secretary.
[FR Doc. 2018–12844 Filed 6–14–18; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33120; 812–14880]
Aptus Capital Advisors, LLC and ETF
Series Solutions
June 12, 2018.
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) of the Act for an exemption
from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act. The requested
order would permit (a) activelymanaged 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,
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Federal Register / Vol. 83, No. 116 / Friday, June 15, 2018 / Notices
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 (‘‘Funds of 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: Aptus Capital Advisors,
LLC (the ‘‘Initial Adviser’’), an Alabama
limited liability company registered as
an investment adviser under the
Investment Advisers Act of 1940, and
ETF Series Solutions (the ‘‘Trust’’), a
Delaware statutory trust registered
under the Act as an open-end
management investment company with
multiple series.
Filing Dates: The application was
filed on February 26, 2018.
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 July 9, 2018, 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: Aptus Capital Advisors,
LLC, 407 Johnson Ave., Fairhope,
Alabama 36532 and ETF Series
Solutions, 615 East Michigan Street, 4th
Floor, Milwaukee, Wisconsin 53202.
FOR FURTHER INFORMATION CONTACT: Jill
Ehrlich, Senior Counsel, at (202) 551–
6819, or Andrea Ottomanelli Magovern,
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
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17:11 Jun 14, 2018
Jkt 244001
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as
actively-managed exchange traded
funds (‘‘ETFs’’).1 Fund shares will be
purchased and redeemed at their NAV
in Creation Units only. All orders to
purchase Creation Units and all
redemption requests will be placed by
or through an ‘‘Authorized Participant’’
which will have signed a participant
agreement with the Distributor. Shares
will be listed and traded individually on
a national securities exchange, where
share prices will be based on the current
bid/offer market. Certain Funds may
operate as Feeder Funds in a masterfeeder structure. Any order granting the
requested relief would be subject to the
terms and conditions stated in the
application.
2. Each Fund will consist of a
portfolio of securities and other assets
and investment positions (‘‘Portfolio
Instruments’’). Each Fund will disclose
on its website the identities and
quantities of the Portfolio Instruments
that will form the basis for the Fund’s
calculation of NAV at the end of the
day.
3. Shares will be purchased and
redeemed in Creation Units only and
generally on an in-kind basis. Except
where the purchase or redemption will
include cash under the limited
circumstances specified in the
application, purchasers will be required
to purchase Creation Units by
depositing specified instruments
(‘‘Deposit Instruments’’), and
shareholders redeeming their shares
will receive specified instruments
(‘‘Redemption Instruments’’). The
Deposit Instruments and the
Redemption Instruments will each
correspond pro rata to the positions in
the Fund’s portfolio (including cash
1 Applicants request that the order apply to the
new series of the Trust as well as to additional
series of the Trust and any other open-end
management investment company or series thereof
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 and any successor thereto is included in the
term ‘‘Adviser’’) and (b) comply with the terms and
conditions of the application. For purposes of the
requested order, the term ‘‘successor’’ is limited to
an entity that results from a reorganization into
another jurisdiction or a change in the type of
business organization.
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28017
positions) except as specified in the
application.
4. Because shares will not be
individually redeemable, applicants
request an exemption from section
5(a)(1) and section 2(a)(32) of the Act
that would permit the Funds to register
as open-end management investment
companies and issue shares that are
redeemable in Creation Units only.
5. Applicants also request an
exemption from section 22(d) of the Act
and rule 22c–1 under the Act as
secondary market trading in shares will
take place at negotiated prices, not at a
current offering price described in a
Fund’s prospectus, and not at a price
based on NAV. Applicants state that (a)
secondary market trading in shares does
not involve a Fund as a party and will
not result in dilution of an investment
in shares, and (b) to the extent different
prices exist during a given trading day,
or from day to day, such variances occur
as a result of third-party market forces,
such as supply and demand. Therefore,
applicants assert that secondary market
transactions in shares will not lead to
discrimination or preferential treatment
among purchasers. Finally, applicants
represent that share market prices will
be disciplined by arbitrage
opportunities, which should prevent
shares from trading at a material
discount or premium from NAV.
6. With respect to Funds that hold
non-U.S. Portfolio Instruments and that
effect creations and redemptions of
Creation Units in kind, applicants
request relief from the requirement
imposed by section 22(e) in order to
allow such Funds to pay redemption
proceeds within fifteen calendar days
following the tender of Creation Units
for redemption. Applicants assert that
the requested relief would not be
inconsistent with the spirit and intent of
section 22(e) to prevent unreasonable,
undisclosed or unforeseen delays in the
actual payment of redemption proceeds.
7. Applicants request an exemption to
permit Funds of Funds to acquire Fund
shares beyond the limits of section
12(d)(1)(A) of the Act; and the Funds,
and any principal underwriter for the
Funds, and/or any broker or dealer
registered under the Exchange Act, to
sell shares to Funds of Funds beyond
the limits of section 12(d)(1)(B) of the
Act. The application’s terms and
conditions are designed to, among other
things, help prevent any potential (i)
undue influence over a Fund through
control or voting power, or in
connection with certain services,
transactions, and underwritings, (ii)
excessive layering of fees, and (iii)
overly complex fund structures, which
are the concerns underlying the limits
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28018
Federal Register / Vol. 83, No. 116 / Friday, June 15, 2018 / Notices
sradovich on DSK3GMQ082PROD with NOTICES
in sections 12(d)(1)(A) and (B) of the
Act.
8. Applicants request an exemption
from sections 17(a)(1) and 17(a)(2) of the
Act to permit persons that are affiliated
persons, or second-tier affiliates, of the
Funds, solely by virtue of certain
ownership interests, to effectuate
purchases and redemptions in-kind. The
deposit procedures for in-kind
purchases of Creation Units and the
redemption procedures for in-kind
redemptions of Creation Units will be
the same for all purchases and
redemptions and Deposit Instruments
and Redemption Instruments will be
valued in the same manner as those
Portfolio Instruments currently held by
the Funds. Applicants also seek relief
from the prohibitions on affiliated
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from a Fund of Funds, and to
engage in the accompanying in-kind
transactions with the Fund of Funds.2
The purchase of Creation Units by a
Fund of Funds directly from a Fund will
be accomplished in accordance with the
policies of the Fund of Funds and will
be based on the NAVs of the Funds.
9. Applicants also request relief to
permit a Feeder Fund to acquire shares
of another registered investment
company managed by the Adviser
having substantially the same
investment objectives as the Feeder
Fund (‘‘Master Fund’’) beyond the
limitations in section 12(d)(1)(A) and
permit the Master Fund, and any
principal underwriter for the Master
Fund, to sell shares of the Master Fund
to the Feeder Fund beyond the
limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
2 The requested relief would apply to direct sales
of shares in Creation Units by a Fund to a Fund of
Funds and redemptions of those shares. Applicants,
moreover, are not seeking relief from section 17(a)
for, and the requested relief will not apply to,
transactions where a Fund could be deemed an
Affiliated Person, or a Second-Tier Affiliate, of a
Fund of Funds because an Adviser or an entity
controlling, controlled by or under common control
with an Adviser provides investment advisory
services to that Fund of Funds.
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17:11 Jun 14, 2018
Jkt 244001
Section 17(b) of the Act authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–12902 Filed 6–14–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–83406; File No. SR–OCC–
2018–008]
Self-Regulatory Organizations; The
Options Clearing Corporation; Notice
of Filing of Proposed Rule Change, as
Modified by Amendment No. 1, Related
to The Options Clearing Corporation’s
Stress Testing and Clearing Fund
Methodology
June 11, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’ or ‘‘Act’’),1 and Rule
19b–4 thereunder,2 notice is hereby
given that on May 30, 2018, The
Options Clearing Corporation (‘‘OCC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by OCC. On June 7,
2018, OCC filed Amendment No. 1 to
the proposed rule change.3 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change by OCC
concerns proposed changes to OCC’s
By-Laws and Rules, the formalization of
a substantially new Clearing Fund
Methodology Policy (‘‘Policy’’), and the
adoption of a document describing
OCC’s new Clearing Fund and stress
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 In Amendment No. 1, OCC corrected formatting
errors in Exhibits 5A and 5B without changing the
substance of the proposed rule change.
2 17
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testing methodology (‘‘Methodology
Description’’). The proposed changes
are primarily designed to enhance
OCC’s overall resiliency, particularly
with respect to the level of OCC’s prefunded financial resources. Specifically,
the proposed changes would:
(1) Reorganize, restate, and
consolidate the provisions of OCC’s ByLaws and Rules relating to the Clearing
Fund into a newly revised Chapter X of
OCC’s Rules;
(2) modify the coverage level of OCC’s
Clearing Fund sizing requirement to
protect OCC against losses stemming
from the default of the two Clearing
Member Groups that would potentially
cause the largest aggregate credit
exposure for OCC in extreme but
plausible market conditions (i.e., adopt
a ‘‘Cover 2 Standard’’ for sizing the
Clearing Fund);
(3) adopt a new risk tolerance for OCC
to cover a 1-in-50 year hypothetical
market event at a 99.5% confidence
level over a two-year look-back period;
(4) adopt a new Clearing Fund and
stress testing methodology, which
would be underpinned by a new
scenario-based one-factor risk model
stress testing approach, as detailed in
the newly proposed Policy and
Methodology Description;
(5) document governance, monitoring,
and review processes related to Clearing
Fund and stress testing;
(6) provide for certain anti-procyclical
limitations on the reduction in Clearing
Fund size from month to month;
(7) increase the minimum Clearing
Fund contribution requirement for
Clearing Members to $500,000;
(8) modify OCC’s allocation weighting
methodology for Clearing Fund
contributions;
(9) reduce from five to two business
days the timeframe within which
Clearing Members are required to fund
Clearing Fund deficits due to monthly
or intra-month resizing or due to Rule
amendments;
(10) provide additional clarity in
OCC’s Rules regarding certain antiprocyclicality measures in OCC’s
margin model; and
(11) make a number of other nonsubstantive clarifying, conforming, and
organizational changes to OCC’s ByLaws, Rules, Collateral Risk
Management Policy, Default
Management Policy, and filed
procedures, including retiring OCC’s
existing Clearing Fund Intra-Month Resizing Procedure, Financial Resources
Monitoring and Call Procedure (‘‘FRMC
Procedure’’), and Monthly Clearing
Fund Sizing Procedure, as these
procedures would no longer be relevant
to OCC’s proposed Clearing Fund and
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]]>Agencies
[Federal Register Volume 83, Number 116 (Friday, June 15, 2018)]
[Notices]
[Pages 28016-28018]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12902]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33120; 812-14880]
Aptus Capital Advisors, LLC and ETF Series Solutions
June 12, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1
under the Act, under sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under
section 12(d)(1)(J) of the Act 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,
[[Page 28017]]
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
(``Funds of 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: Aptus Capital Advisors, LLC (the ``Initial Adviser''),
an Alabama limited liability company registered as an investment
adviser under the Investment Advisers Act of 1940, and ETF Series
Solutions (the ``Trust''), a Delaware statutory trust registered under
the Act as an open-end management investment company with multiple
series.
Filing Dates: The application was filed on February 26, 2018.
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 July 9, 2018, 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: Aptus Capital Advisors, LLC,
407 Johnson Ave., Fairhope, Alabama 36532 and ETF Series Solutions, 615
East Michigan Street, 4th Floor, Milwaukee, Wisconsin 53202.
FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202)
551-6819, or Andrea Ottomanelli Magovern, 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 website by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Summary of the Application
1. Applicants request an order that would allow Funds to operate as
actively-managed exchange traded funds (``ETFs'').\1\ Fund shares will
be purchased and redeemed at their NAV in Creation Units only. All
orders to purchase Creation Units and all redemption requests will be
placed by or through an ``Authorized Participant'' which will have
signed a participant agreement with the Distributor. Shares will be
listed and traded individually on a national securities exchange, where
share prices will be based on the current bid/offer market. Certain
Funds may operate as Feeder Funds in a master-feeder structure. Any
order granting the requested relief would be subject to the terms and
conditions stated in the application.
---------------------------------------------------------------------------
\1\ Applicants request that the order apply to the new series of
the Trust as well as to additional series of the Trust and any other
open-end management investment company or series thereof 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 and any successor thereto is
included in the term ``Adviser'') and (b) comply with the terms and
conditions of the application. For purposes of the requested order,
the term ``successor'' is limited to an entity that results from a
reorganization into another jurisdiction or a change in the type of
business organization.
---------------------------------------------------------------------------
2. Each Fund will consist of a portfolio of securities and other
assets and investment positions (``Portfolio Instruments''). Each Fund
will disclose on its website the identities and quantities of the
Portfolio Instruments that will form the basis for the Fund's
calculation of NAV at the end of the day.
3. Shares will be purchased and redeemed in Creation Units only and
generally on an in-kind basis. Except where the purchase or redemption
will include cash under the limited circumstances specified in the
application, purchasers will be required to purchase Creation Units by
depositing specified instruments (``Deposit Instruments''), and
shareholders redeeming their shares will receive specified instruments
(``Redemption Instruments''). The Deposit Instruments and the
Redemption Instruments will each correspond pro rata to the positions
in the Fund's portfolio (including cash positions) except as specified
in the application.
4. Because shares will not be individually redeemable, applicants
request an exemption from section 5(a)(1) and section 2(a)(32) of the
Act that would permit the Funds to register as open-end management
investment companies and issue shares that are redeemable in Creation
Units only.
5. Applicants also request an exemption from section 22(d) of the
Act and rule 22c-1 under the Act as secondary market trading in shares
will take place at negotiated prices, not at a current offering price
described in a Fund's prospectus, and not at a price based on NAV.
Applicants state that (a) secondary market trading in shares does not
involve a Fund as a party and will not result in dilution of an
investment in shares, and (b) to the extent different prices exist
during a given trading day, or from day to day, such variances occur as
a result of third-party market forces, such as supply and demand.
Therefore, applicants assert that secondary market transactions in
shares will not lead to discrimination or preferential treatment among
purchasers. Finally, applicants represent that share market prices will
be disciplined by arbitrage opportunities, which should prevent shares
from trading at a material discount or premium from NAV.
6. With respect to Funds that hold non-U.S. Portfolio Instruments
and that effect creations and redemptions of Creation Units in kind,
applicants request relief from the requirement imposed by section 22(e)
in order to allow such Funds to pay redemption proceeds within fifteen
calendar days following the tender of Creation Units for redemption.
Applicants assert that the requested relief would not be inconsistent
with the spirit and intent of section 22(e) to prevent unreasonable,
undisclosed or unforeseen delays in the actual payment of redemption
proceeds.
7. Applicants request an exemption to permit Funds of Funds to
acquire Fund shares beyond the limits of section 12(d)(1)(A) of the
Act; and the Funds, and any principal underwriter for the Funds, and/or
any broker or dealer registered under the Exchange Act, to sell shares
to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act.
The application's terms and conditions are designed to, among other
things, help prevent any potential (i) undue influence over a Fund
through control or voting power, or in connection with certain
services, transactions, and underwritings, (ii) excessive layering of
fees, and (iii) overly complex fund structures, which are the concerns
underlying the limits
[[Page 28018]]
in sections 12(d)(1)(A) and (B) of the Act.
8. Applicants request an exemption from sections 17(a)(1) and
17(a)(2) of the Act to permit persons that are affiliated persons, or
second-tier affiliates, of the Funds, solely by virtue of certain
ownership interests, to effectuate purchases and redemptions in-kind.
The deposit procedures for in-kind purchases of Creation Units and the
redemption procedures for in-kind redemptions of Creation Units will be
the same for all purchases and redemptions and Deposit Instruments and
Redemption Instruments will be valued in the same manner as those
Portfolio Instruments currently held by the Funds. Applicants also seek
relief from the prohibitions on affiliated transactions in section
17(a) to permit a Fund to sell its shares to and redeem its shares from
a Fund of Funds, and to engage in the accompanying in-kind transactions
with the Fund of Funds.\2\ The purchase of Creation Units by a Fund of
Funds directly from a Fund will be accomplished in accordance with the
policies of the Fund of Funds and will be based on the NAVs of the
Funds.
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\2\ The requested relief would apply to direct sales of shares
in Creation Units by a Fund to a Fund of Funds and redemptions of
those shares. Applicants, moreover, are not seeking relief from
section 17(a) for, and the requested relief will not apply to,
transactions where a Fund could be deemed an Affiliated Person, or a
Second-Tier Affiliate, of a Fund of Funds because an Adviser or an
entity controlling, controlled by or under common control with an
Adviser provides investment advisory services to that Fund of Funds.
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9. Applicants also request relief to permit a Feeder Fund to
acquire shares of another registered investment company managed by the
Adviser having substantially the same investment objectives as the
Feeder Fund (``Master Fund'') beyond the limitations in section
12(d)(1)(A) and permit the Master Fund, and any principal underwriter
for the Master Fund, to sell shares of the Master Fund to the Feeder
Fund beyond the limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the Commission to exempt any
persons or transactions from any provision of the Act if such exemption
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from any provision of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.
Section 17(b) of the Act authorizes the Commission to grant an order
permitting a transaction otherwise prohibited by section 17(a) if it
finds that (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company involved; and (c) the proposed
transaction is consistent with the general purposes of the Act.
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-12902 Filed 6-14-18; 8:45 am]
BILLING CODE 8011-01-P
