Pacific Global ETF Trust and Cadence Capital Management LLC, 60520-60522 [2018-25594]
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60520
Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
Register on October 11, 2018.3 No
comments have been received on the
proposed rule change.
Section 19(b)(2) of the Act 4 provides
that, within 45 days of the publication
of the 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 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 25,
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 January
9, 2019, as the date by which the
Commission should approve,
disapprove, or institute proceedings to
determine whether to disapprove the
proposed rule change (File No. SR–
NYSEAMER–2018–39).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25595 Filed 11–23–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
Proposed Collection; Comment
Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Extension:
Form T–3; SEC File No. 270–123, OMB
Control No. 3235–0105.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
3 See
Securities Exchange Act Release No. 84364
(October 4, 2018), 83 FR 51535 (October 11, 2018).
4 15 U.S.C. 78s(b)(2).
5 Id.
6 17 CFR 200.30–3(a)(31).
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(‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for approval.
Form T–3 (17 CFR 269.3) is an
application for qualification of an
indenture under the Trust Indenture Act
of 1939 (15 U.S.C. 77aaa et seq.). The
information provided under Form T–3
is used by the Commission to determine
whether to qualify an indenture relating
to an offering of debt securities that is
not required to be registered under the
Securities Act of 1933 (15 U.S.C. 77a et
seq.). Form T–3 takes approximately 43
hours per response to prepare and is
filed by 16 respondents. We estimate
that 25% of the 43 burden hours (11
hours per response) is prepared by the
filer for a total reporting burden of 176
hours (11 hours per response × 16
responses).
Written comments are invited on: (a)
Whether this proposed collection of
information is necessary for the
performance of the functions of the
agency, including whether the
information will have practical utility;
(b) the accuracy of the agency’s estimate
of the burden imposed by the collection
of information; (c) ways to enhance the
quality, utility, and clarity 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
unless it displays a currently valid
control number.
Please direct your written comments
to Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
Dated: November 20, 2018.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25683 Filed 11–23–18; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33296; 812–14934]
Pacific Global ETF Trust and Cadence
Capital Management LLC
November 19, 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) 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
(‘‘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 (‘‘Funds of Funds’’) to acquire
shares of the Funds; (f) certain Funds
(‘‘Feeder Funds’’) to create and redeem
Creation Units in-kind in a masterfeeder structure; and (g) certain Funds
to issue Shares in less than Creation
Unit size to investors participating in a
distribution reinvestment program.
Applicants: Pacific Global ETF Trust
(the ‘‘Trust’’), a Delaware statutory trust,
that will be registered under the Act as
an open-end management investment
company with multiple series, and
Cadence Capital Management LLC (the
‘‘Initial Adviser’’), a Delaware limited
liability company registered as an
investment adviser under the
Investment Advisers Act of 1940.
Filing Dates: The application was
filed on July 24, 2018 and amended on
November 13, 2018.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
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Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
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 14, 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, 265 Franklin Street, 4th
Floor, Boston, MA 02110–3113.
FOR FURTHER INFORMATION CONTACT:
Deepak T. Pai, Senior Counsel, at (202)
551–6876, 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 (other
than pursuant to a distribution
reinvestment program, as described in
the application). All orders to purchase
Creation Units and all redemption
requests will be placed by or through an
1 Applicants request that the order apply to the
Initial Fund and any additional series of the Trust,
and any other existing or future open-end
management investment company or existing or
future series thereof (each, included in the term
‘‘Fund’’), each of which will operate as an ETF, and
their respective existing or future master funds, 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’’). 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 of the foregoing and any
successor thereto, an ‘‘Adviser’’) and (b) comply
with the terms and conditions of the application.
For purposes of the requested order, a ‘‘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.
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‘‘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 hold investment
positions selected to correspond closely
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
3. Shares will be purchased and
redeemed in Creation Units and
generally on an in-kind basis, or issued
in less than Creation Unit size to
investors participating in a distribution
reinvestment program. 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 (other
than pursuant to a dividend
reinvestment program).
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
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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60521
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
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
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Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
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.
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.
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,
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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For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25594 Filed 11–23–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84634; File No. SR–
NASDAQ–2018–092]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Eliminate
Expired and Obsolete Provisions in
Connection With Nasdaq’s Transition
to an All-Inclusive Annual Fee
Program, Rename Certain Existing
Annual Fees as All-Inclusive Annual
Listing Fees, and Make Other Related
Changes
November 20, 2018.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that, on
November 13, 2018, The Nasdaq Stock
Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to eliminate
expired and obsolete provisions in
connection with Nasdaq’s transition to
an all-inclusive annual fee program for
all listed companies effective January 1,
2018; clarify that Linked Securities,
SEEDS, Other Securities and Exchange
Traded Products are also subject to an
all-inclusive annual fee applicable to
such issues; and modify existing fee
waiver rules related to listing transfers
in light of differences between Nasdaq’s
all-inclusive annual fee and the listing
fees of other exchanges.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.cchwallstreet.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In 2014, Nasdaq adopted an allinclusive annual listing fee schedule to
simplify, clarify and enhance
transparency around the annual fee to
which listed companies are subject.3
The new annual fee schedule became
operative on January 1, 2015, and
applied to all companies listed after that
date. Companies already listed at that
time could voluntarily elect the new fee
schedule, but were not then required to
do so. Effective January 1, 2018,
however, all listed companies became
subject to the all-inclusive annual fee
schedule and the standard annual fee
schedule has ceased to have
applicability or effect.
Accordingly, as a result of the
completion as of January 1, 2018, of the
transition of all listed companies from
the standard annual fee schedule to the
all-inclusive annual fee schedule,
Nasdaq is proposing to revise the listing
rules to delete obsolete and out of date
references to the standard annual fee
schedule, the transition to the allinclusive annual fee schedule, and other
listing fees no longer in effect. In
addition, Nasdaq is proposing other
clarifying and conforming adjustments
necessitated by completion of the
transition, including relocating and
renumbering revised rules as applicable.
As of January 1, 2018, the allinclusive annual listing fee program
completely supersedes and replaces the
standard annual fee, which is no longer
applicable to any listed company.4
Accordingly, Nasdaq is proposing to
3 Securities Exchange Act Release No. 73647
(November 19, 2014), 79 FR 70232 (November 25,
2014) (SR–NASDAQ–2014–87).
4 Entry fees are not encompassed by the AllInclusive Annual Listings Fee. Accordingly, Nasdaq
is not proposing to revise or amend the entry fees
set forth in the Rule 5900 Series.
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Agencies
[Federal Register Volume 83, Number 227 (Monday, November 26, 2018)]
[Notices]
[Pages 60520-60522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25594]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33296; 812-14934]
Pacific Global ETF Trust and Cadence Capital Management LLC
November 19, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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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) index-
based series of certain open-end management investment companies
(``Funds'') to issue shares redeemable in large aggregations
(``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 (``Funds
of Funds'') to acquire shares of the Funds; (f) certain Funds (``Feeder
Funds'') to create and redeem Creation Units in-kind in a master-feeder
structure; and (g) certain Funds to issue Shares in less than Creation
Unit size to investors participating in a distribution reinvestment
program.
Applicants: Pacific Global ETF Trust (the ``Trust''), a Delaware
statutory trust, that will be registered under the Act as an open-end
management investment company with multiple series, and Cadence Capital
Management LLC (the ``Initial Adviser''), a Delaware limited liability
company registered as an investment adviser under the Investment
Advisers Act of 1940.
Filing Dates: The application was filed on July 24, 2018 and
amended on November 13, 2018.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders
[[Page 60521]]
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 14, 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, 265 Franklin Street, 4th
Floor, Boston, MA 02110-3113.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202) 551-6876, 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 (other than
pursuant to a distribution reinvestment program, as described in the
application). 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.
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\1\ Applicants request that the order apply to the Initial Fund
and any additional series of the Trust, and any other existing or
future open-end management investment company or existing or future
series thereof (each, included in the term ``Fund''), each of which
will operate as an ETF, and their respective existing or future
master funds, 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''). 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 of the foregoing and any successor thereto, an ``Adviser'')
and (b) comply with the terms and conditions of the application. For
purposes of the requested order, a ``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.
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2. Each Fund will hold investment positions selected to correspond
closely 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, or issued in less than Creation Unit
size to investors participating in a distribution reinvestment program.
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 (other than pursuant to a dividend reinvestment program).
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 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
[[Page 60522]]
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, 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. 2018-25594 Filed 11-23-18; 8:45 am]
BILLING CODE 8011-01-P