ABR Dynamic Funds, LLC, et al., 58315-58317 [2018-25180]
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Federal Register / Vol. 83, No. 223 / Monday, November 19, 2018 / Notices
arguments concerning whether
Amendment Nos. 1, 2, and 3 is
consistent with the Act. Comments may
be submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2018–070 on the subject line.
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Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2018–070. This
file number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2018–070 and
should be submitted on or before
December 10, 2018.
V. Accelerated Approval of Proposed
Rule Change, as Modified by
Amendment Nos. 1, 2, and 3
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment Nos. 1, 2, and
3 prior to the thirtieth day after the date
of publication of notice of the filing of
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Jkt 247001
Amendment Nos. 1, 2, and 3 in the
Federal Register. The Commission notes
that Amendment Nos. 1, 2, and 3
provide clarifications and additional
information to the proposed rule
change. The changes and additional
information in Amendment Nos. 1, 2,
and 3 assist the Commission in finding
that the proposal is consistent with the
Act. Accordingly, the Commission finds
good cause, pursuant to Section 19(b)(2)
of the Act,107 to approve the proposed
rule change, as modified by Amendment
Nos. 1, 2, and 3, on an accelerated
basis.VI.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,108 that the
proposed rule change (SR–NASDAQ–
2018–070), as modified by Amendment
Nos. 1, 2, and 3, be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.109
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25093 Filed 11–16–18; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84576; File No. SR–
NYSEArca–2018–67]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on Proposed Rule Change To Amend
NYSE Arca Rule 5.2–E(j)(6) Relating to
Equity Index-Linked Securities Listing
Standards Set Forth in NYSE Arca Rule
5.2–E(j)(6)(B)(I)
November 13, 2018.
On September 10, 2018, NYSE Arca,
Inc. (‘‘Exchange’’) 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 to
amend listing standards set forth in
NYSE Arca Rule 5.2–E (j)(6)(B)(I)
relating to criteria applicable to
components of an index underlying an
issue of Equity Index-Linked Securities.
The proposed rule change was
published for comment in the Federal
107 15
U.S.C. 78s(b)(2).
U.S.C. 78s(b)(2).
109 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
108 15
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58315
Register on October 1, 2018.3 The
Commission has received no comment
letters on the proposed rule change.
Section 19(b)(2) of the Act 4 provides
that, within 45 days of the publication
of notice of the filing of 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. The 45th day after
publication of the notice for this
proposed rule change is November 15,
2018. The Commission is extending this
45-day time period.
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 the proposed
rule change. Accordingly, the
Commission, pursuant to Section
19(b)(2) of the Act,5 designates
December 30, 2018, as the date by
which the Commission shall either
approve or disapprove or institute
proceedings to determine whether to
disapprove the proposed rule change
(File Number SR–NYSEArca–2018–67).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25094 Filed 11–16–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33295; 812–14920]
ABR Dynamic Funds, LLC, et al.
November 14, 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
3 See Securities Exchange Act Release No. 84279
(Sept. 25, 2018), 83 FR 49437.
4 15 U.S.C. 78s(b)(2).
5 Id.
6 17 CFR 200.30–3(a)(31).
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58316
Federal Register / Vol. 83, No. 223 / Monday, November 19, 2018 / Notices
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) index-based series of certain
open-end management investment
companies (‘‘Funds’’) to issue shares
redeemable in large aggregations only
(‘‘Creation Units’’); (b) secondary market
transactions in Fund shares to occur at
negotiated market prices rather than at
net asset value (‘‘NAV’’); (c) certain
Funds to pay redemption proceeds,
under certain circumstances, more than
seven days after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; and
(e) certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘Funds of Funds’’) to acquire
shares of the Funds.
APPLICANTS: ABR Dynamic Funds, LLC
(the ‘‘Initial Adviser’’), a Delaware
limited liability company that is
registered as an investment adviser
under the Investment Advisers Act of
1940, ETF Series Solutions (the
‘‘Trust’’), a Delaware statutory trust
registered under the Act as an open-end
management investment company with
multiple series, and Foreside Fund
Services, LLC, (the ‘‘Distributor’’), a
Delaware limited liability company and
broker-dealer registered under the
Securities Exchange Act of 1934
(‘‘Exchange Act’’).
FILING DATES: The application was filed
on June 14, 2018, and amended on
October 16, 2018 and November 8, 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 December 10, 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.
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17:20 Nov 16, 2018
Jkt 247001
Secretary, Securities and
Exchange Commission, 100 F Street NE,
Washington, DC 20549–1090;
Applicants: ABR Dynamic Funds, LLC,
48 Wall Street Suite 1100, New York,
New York 10005; ETF Series Solutions,
615 East Michigan Street, Milwaukee,
Wisconsin 53202; Foreside Fund
Services, LLC, Three Canal Plaza,
Portland, Maine 04101.
FOR FURTHER INFORMATION CONTACT:
Barbara T. Heussler, Senior Counsel, at
(202) 551–6990, 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 index
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. Any order granting the
requested relief would be subject to the
terms and conditions stated in the
application.
2. Each Fund will hold investment
positions selected to correspond
generally to the performance of an
Underlying Index. In the case of SelfIndexing Funds, an affiliated person, as
defined in section 2(a)(3) of the Act
(‘‘Affiliated Person’’), or an affiliated
person of an Affiliated Person (‘‘SecondADDRESSES:
1 Applicants request that the order apply to the
ABR Dynamic Weight ETF and any additional
series of the Trust and any other open-end
management investment company or series thereof
(each, included in the term ‘‘Fund’’), each of which
will operate as an ETF and will track a specified
index comprised of domestic and/or foreign equity
securities and/or domestic and/or foreign fixed
income securities (each, an ‘‘Underlying Index’’).
Each 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, an ‘‘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 or
entities that result from a reorganization into
another jurisdiction or a change in the type of
business organization.
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
Tier Affiliate’’), of the Trust or a Fund,
of the Adviser, of any sub-adviser to or
promoter of a Fund, or of the Distributor
will compile, create, sponsor or
maintain the Underlying Index.2
3. Shares will be purchased and
redeemed in Creation Units and
generally on an in-kind basis. Except
where the purchase or redemption will
include cash under the limited
circumstances specified in the
application, purchasers will be required
to purchase Creation Units by
depositing specified instruments
(‘‘Deposit Instruments’’), and
shareholders redeeming their shares
will receive specified instruments
(‘‘Redemption Instruments’’). The
Deposit Instruments and the
Redemption Instruments will each
correspond pro rata to the positions in
the Fund’s portfolio (including cash
positions) except as specified in the
application.
4. Because shares will not be
individually redeemable, applicants
request an exemption from section
5(a)(1) and section 2(a)(32) of the Act
that would permit the Funds to register
as open-end management investment
companies and issue shares that are
redeemable in Creation Units only.
5. Applicants also request an
exemption from section 22(d) of the Act
and rule 22c–1 under the Act as
secondary market trading in shares will
take place at negotiated prices, not at a
current offering price described in a
Fund’s prospectus, and not at a price
based on NAV. Applicants state that (a)
secondary market trading in shares does
not involve a Fund as a party and will
not result in dilution of an investment
in shares, and (b) to the extent different
prices exist during a given trading day,
or from day to day, such variances occur
as a result of third-party market forces,
such as supply and demand. Therefore,
applicants assert that secondary market
transactions in shares will not lead to
discrimination or preferential treatment
among purchasers. Finally, applicants
represent that share market prices will
be disciplined by arbitrage
opportunities, which should prevent
shares from trading at a material
discount or premium from NAV.
6. With respect to Funds that effect
creations and redemptions of Creation
Units in kind and that are based on
certain Underlying Indexes that include
2 Each Self-Indexing Fund will post on its website
the identities and quantities of the investment
positions that will form the basis for the Fund’s
calculation of its NAV at the end of the day.
Applicants believe that requiring Self-Indexing
Funds to maintain full portfolio transparency will
help address, together with other protections,
conflicts of interest with respect to such Funds.
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Federal Register / Vol. 83, No. 223 / Monday, November 19, 2018 / Notices
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foreign securities, 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
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
investment positions currently held by
the Funds. Applicants also seek relief
from the prohibitions on affiliated
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from a Fund of Funds, and to
engage in the accompanying in-kind
transactions with the Fund of Funds.3
The purchase of Creation Units by a
Fund of Funds directly from a Fund will
be accomplished in accordance with the
3 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
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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17:20 Nov 16, 2018
Jkt 247001
policies of the Fund of Funds and will
be based on the NAVs of the Funds.
9. Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
Section 17(b) of the Act authorizes the
Commission to grant an order
permitting a transaction otherwise
prohibited by section 17(a) if it finds
that (a) the terms of the proposed
transaction are fair and reasonable and
do not involve overreaching on the part
of any person concerned; (b) the
proposed transaction is consistent with
the policies of each registered
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25180 Filed 11–16–18; 8:45 am]
BILLING CODE 8011–01–P
SOCIAL SECURITY ADMINISTRATION
[Docket No. SSA 2018–0029]
Privacy Act of 1974; Matching Program
AGENCY:
Social Security Administration
(SSA).
Notice of a new matching
program.
ACTION:
In accordance with the
provisions of the Privacy Act, as
amended, this notice announces new
matching program with the Centers for
Medicare & Medicaid Services (CMS).
This agreement establishes the terms,
and conditions, and safeguards under
which CMS will disclose to SSA certain
individuals’ admission and discharge
information for care received in a
nursing care facility. SSA will use this
data to administer the Supplemental
Security Income program efficiently and
to identify Special Veterans’ Benefits
beneficiaries who are no longer residing
outside of the United States.
DATES: The deadline to submit
comments on the proposed matching
SUMMARY:
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58317
program is 30 days from the date of
publication of this notice in the Federal
Register. The matching program will be
applicable on December 6, 2018 or once
a minimum of 30 days after publication
of this notice has elapsed, whichever is
later. The matching program will be in
effect for a period of 18 months.
ADDRESSES: Interested parties may
comment on this notice by either
telefaxing to (410) 966–0869, writing to
Mary Ann Zimmerman, Acting
Executive Director, Office of Privacy
and Disclosure, Office of the General
Counsel, Social Security
Administration, G–401 WHR, 6401
Security Boulevard, Baltimore, MD
21235–6401, or emailing
Mary.Ann.Zimmerman@ssa.gov. All
comments received will be available for
public inspection by contacting Ms.
Zimmerman at this street address.
FOR FURTHER INFORMATION CONTACT:
Interested parties may submit general
questions about the matching program
to Mary Ann Zimmerman, Acting
Executive Director, Office of Privacy
and Disclosure, Office of the General
Counsel, by any of the means shown
above.
SUPPLEMENTARY INFORMATION: None.
Mary Zimmerman,
Acting Executive Director, Office of Privacy
and Disclosure, Office of the General Counsel.
Participating Agencies: SSA and CMS.
Authority for Conducting the
Matching Program: The legal authority
for the Supplemental Security Income
(SSI) portion of the matching program is
sections 1611(e)(1) and 1631(f) of the
Act (42 U.S.C. 1382(e)(1) and 1383(f)),
and 20 CFR 416.211. The legal
authorities for the SVB portion of the
matching program are sections 801 and
806(a) and (b) of the Act (42 U.S.C. 1001
and 1006(a) and (b)). Legal authority for
CMS’ disclosures under this matching
program section 1631(f) of the Act (42
U.S.C. 1383(f)) and 45 CFR 164.512(a)
Standard: Uses and disclosures required
by law (Health Insurance Portability and
Accountability Act of 1996 (HIPAA)
Privacy Rule). The legal authority for
the agencies to enter into this
interagency transaction is the Economy
Act, 31 U.S.C. 1535.
Purpose(s): The purpose of this
matching program is to set forth the
terms, conditions, and safeguards under
which CMS will disclose to SSA certain
individuals’ admission and discharge
information for care received in a
nursing care facility. Nursing care
facility, for purposes of this CMA,
means certain facilities referenced in
CMS’ Long Term Care-Minimum Data
Set System Number 09–70–0528 (LTC/
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]]>Agencies
[Federal Register Volume 83, Number 223 (Monday, November 19, 2018)]
[Notices]
[Pages 58315-58317]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25180]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33295; 812-14920]
ABR Dynamic Funds, LLC, et al.
November 14, 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
[[Page 58316]]
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) index-based series of certain open-end
management investment companies (``Funds'') to issue shares redeemable
in large aggregations only (``Creation Units''); (b) secondary market
transactions in Fund shares to occur at negotiated market prices rather
than at net asset value (``NAV''); (c) certain Funds to pay redemption
proceeds, under certain circumstances, more than seven days after the
tender of shares for redemption; (d) certain affiliated persons of a
Fund to deposit securities into, and receive securities from, the Fund
in connection with the purchase and redemption of Creation Units; and
(e) certain registered management investment companies and unit
investment trusts outside of the same group of investment companies as
the Funds (``Funds of Funds'') to acquire shares of the Funds.
APPLICANTS: ABR Dynamic Funds, LLC (the ``Initial Adviser''), a
Delaware limited liability company that is registered as an investment
adviser under the Investment Advisers Act of 1940, ETF Series Solutions
(the ``Trust''), a Delaware statutory trust registered under the Act as
an open-end management investment company with multiple series, and
Foreside Fund Services, LLC, (the ``Distributor''), a Delaware limited
liability company and broker-dealer registered under the Securities
Exchange Act of 1934 (``Exchange Act'').
Filing Dates: The application was filed on June 14, 2018, and amended
on October 16, 2018 and November 8, 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 December 10, 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: ABR Dynamic Funds, LLC, 48
Wall Street Suite 1100, New York, New York 10005; ETF Series Solutions,
615 East Michigan Street, Milwaukee, Wisconsin 53202; Foreside Fund
Services, LLC, Three Canal Plaza, Portland, Maine 04101.
FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel,
at (202) 551-6990, 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
index 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. 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 ABR Dynamic
Weight ETF and any additional series of the Trust and any other
open-end management investment company or series thereof (each,
included in the term ``Fund''), each of which will operate as an ETF
and will track a specified index comprised of domestic and/or
foreign equity securities and/or domestic and/or foreign fixed
income securities (each, an ``Underlying Index''). Each 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, an ``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 or entities that result from a reorganization into
another jurisdiction or a change in the type of business
organization.
---------------------------------------------------------------------------
2. Each Fund will hold investment positions selected to correspond
generally to the performance of an Underlying Index. In the case of
Self-Indexing Funds, an affiliated person, as defined in section
2(a)(3) of the Act (``Affiliated Person''), or an affiliated person of
an Affiliated Person (``Second-Tier Affiliate''), of the Trust or a
Fund, of the Adviser, of any sub-adviser to or promoter of a Fund, or
of the Distributor will compile, create, sponsor or maintain the
Underlying Index.\2\
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\2\ Each Self-Indexing Fund will post on its website the
identities and quantities of the investment positions that will form
the basis for the Fund's calculation of its NAV at the end of the
day. Applicants believe that requiring Self-Indexing Funds to
maintain full portfolio transparency will help address, together
with other protections, conflicts of interest with respect to such
Funds.
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3. Shares will be purchased and redeemed in Creation Units and
generally on an in-kind basis. Except where the purchase or redemption
will include cash under the limited circumstances specified in the
application, purchasers will be required to purchase Creation Units by
depositing specified instruments (``Deposit Instruments''), and
shareholders redeeming their shares will receive specified instruments
(``Redemption Instruments''). The Deposit Instruments and the
Redemption Instruments will each correspond pro rata to the positions
in the Fund's portfolio (including cash positions) except as specified
in the application.
4. Because shares will not be individually redeemable, applicants
request an exemption from section 5(a)(1) and section 2(a)(32) of the
Act that would permit the Funds to register as open-end management
investment companies and issue shares that are redeemable in Creation
Units only.
5. Applicants also request an exemption from section 22(d) of the
Act and rule 22c-1 under the Act as secondary market trading in shares
will take place at negotiated prices, not at a current offering price
described in a Fund's prospectus, and not at a price based on NAV.
Applicants state that (a) secondary market trading in shares does not
involve a Fund as a party and will not result in dilution of an
investment in shares, and (b) to the extent different prices exist
during a given trading day, or from day to day, such variances occur as
a result of third-party market forces, such as supply and demand.
Therefore, applicants assert that secondary market transactions in
shares will not lead to discrimination or preferential treatment among
purchasers. Finally, applicants represent that share market prices will
be disciplined by arbitrage opportunities, which should prevent shares
from trading at a material discount or premium from NAV.
6. With respect to Funds that effect creations and redemptions of
Creation Units in kind and that are based on certain Underlying Indexes
that include
[[Page 58317]]
foreign securities, 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 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
investment positions currently held by the Funds. Applicants also seek
relief from the prohibitions on affiliated transactions in section
17(a) to permit a Fund to sell its shares to and redeem its shares from
a Fund of Funds, and to engage in the accompanying in-kind transactions
with the Fund of Funds.\3\ 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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\3\ 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 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. 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. 2018-25180 Filed 11-16-18; 8:45 am]
BILLING CODE 8011-01-P
