Pacific Global ETF Trust and Cadence Capital Management LLC, 64389-64391 [2018-27128]
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Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
amozie on DSK3GDR082PROD with NOTICES1
Rules 17h–1T and 17h–2T
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget
(‘‘OMB’’) a request for approval of
extension of the previously approved
collection of information provided for in
Rules 17h–1T and 17h–2T (17 CFR
240.17h–1T and 17 CFR 240.17h–2T),
under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.).
Rule 17h–1T requires a covered
broker-dealer to maintain and preserve
records and other information
concerning certain entities that are
associated with the broker-dealer. This
requirement extends to the financial and
securities activities of the holding
company, affiliates and subsidiaries of
the broker-dealer that are reasonably
likely to have a material impact on the
financial or operational condition of the
broker-dealer. Rule 17h–2T requires a
covered broker-dealer to file with the
Commission quarterly reports and a
cumulative year-end report concerning
the information required to be
maintained and preserved under Rule
17h–1T.
The collection of information required
by Rules 17h–1T and 17h–2T,
collectively referred to as the ‘‘risk
assessment rules,’’ is necessary to
enable the Commission to monitor the
activities of a broker-dealer affiliate
whose business activities are reasonably
likely to have a material impact on the
financial or operational condition of the
broker-dealer. Without this information,
the Commission would be unable to
assess the potentially damaging impact
of the affiliate’s activities on the brokerdealer.
There are currently 285 respondents
that must comply with Rules 17h–1T
and 17h–2T. Each of these 285
respondents are estimated to require 10
hours per year to maintain the records
required under Rule 17h–1T, for an
aggregate estimated annual burden of
2,850 hours (285 respondents × 10
hours). In addition, each of these 285
respondents must make five annual
responses under Rule 17h–2T. These
five responses are estimated to require
14 hours per respondent per year for an
aggregate estimated annual burden of
3,990 hours (285 respondents × 14
hours).
In addition, new respondents must
draft an organizational chart required
under Rule 17h–1T and establish a
system for complying with the risk
assessment rules. The staff estimates
that drafting the required organizational
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chart requires one hour and establishing
a system for complying with the risk
assessment rules requires three hours.
Based on the reduction in the number
of filers in recent years, the staff
estimates there will be zero new
respondents, and thus, a corresponding
estimated burden of zero hours for new
respondents. Thus, the total compliance
burden per year is approximately 6,840
burden hours (2,850 hours + 3,990
hours).
The retention period for the
recordkeeping requirement for the
information, reports and records
required under Rule 17h–1T is not less
than three years. There is no specific
retention period or recordkeeping
requirement for Rule 17h–2T. The
collection of information is mandatory.
All information obtained by the
Commission pursuant to the provisions
of Rules 17h–1T and 17h–2T from a
broker or dealer concerning a material
associated person is deemed
confidential information for the
purposes of section 24(b) of the
Exchange Act.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
The public may view background
documentation for this information
collection at the following website:
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to:
Lindsay.M.Abate@omb.eop.gov; and (ii)
Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549, or by sending an email to:
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: December 10, 2018.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018–27091 Filed 12–13–18; 8:45 am]
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64389
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33320; 812–14933]
Pacific Global ETF Trust and Cadence
Capital Management LLC
December 11, 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) actively-managed series of
certain open-end management
investment companies (‘‘Funds’’) to
issue shares redeemable in large
aggregations only (‘‘Creation Units’’); (b)
secondary market transactions in Fund
shares to occur at negotiated market
prices rather than at net asset value
(‘‘NAV’’); (c) certain Funds to pay
redemption proceeds, under certain
circumstances, more than seven days
after the tender of shares for
redemption; (d) certain affiliated
persons of a Fund to deposit securities
into, and receive securities from, the
Fund in connection with the purchase
and redemption of Creation Units; (e)
certain registered management
investment companies and unit
investment trusts outside of the same
group of investment companies as the
Funds (‘‘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: Pacific Global ETF Trust
(‘‘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
(‘‘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 21, 2018.
HEARING OR NOTIFICATION OF HEARING: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
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Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices
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 31, 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:
Christine Y. Greenlees, Senior Counsel,
at (202) 551–6879, 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.
amozie on DSK3GDR082PROD with NOTICES1
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 a broker-dealer
registered under the Securities
Exchange Act of 1934 (‘‘Exchange Act’’)
(‘‘Distributor’’). Shares will be listed and
1 Applicants request that the order apply to the
Initial Fund, as well as to future series of the Trust
and any other existing or future open-end
management investment companies or series
thereof (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 of
the foregoing and any successor thereto included in
the term ‘‘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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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.
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 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
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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
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 a person who is 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
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
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)
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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.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018–27128 Filed 12–13–18; 8:45 am]
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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 investment adviser to the
Funds is also an investment adviser to a Fund of
Funds.
16:57 Dec 13, 2018
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[Release No. 34–84775; File No. SR–NYSE–
2018–57]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Certain of Its Listing Fees
December 10, 2018.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
November 29, 2018, New York Stock
Exchange LLC (‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
certain of its listing fees. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
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SECURITIES AND EXCHANGE
COMMISSION
1. Purpose
The Exchange proposes to amend
certain of its listing fees set forth in
Chapter 9 of the Manual, in each case
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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64391
with effect from the beginning of the
calendar year commencing on January 1,
2019.
The annual fee set forth in Section
902.03 of the Manual will increase from
$0.00108 per share to $0.0011 per share
for each of the following: A primary
class of common shares (including
Equity Investment Tracking Stocks);
each additional class of common shares
(including tracking stock), a primary
class of preferred stock (if no class of
common shares is listed); each
additional class of preferred stock
(whether the primary class is common
or preferred stock); and each class of
warrants. In addition, the minimum
annual fee will be increased from
$65,000 to $68,000 for each of (i) a
primary class of common shares
(including Equity Investment Tracking
Stocks) and (ii) a primary class of
preferred stock (if no class of common
shares is listed).
The Exchange proposes to amend the
annual fee schedule for structured
products set forth in Section 902.05 of
the Manual and for short term securities
set forth in Section 902.06. In each case,
the annual fee per share will increase
from $0.00108 to $0.0011 per share. The
minimum annual fee will increase from
$25,000 to $35,000 for securities listed
under Sections 902.05 and 902.06
(except for warrants to purchase equity
securities, which will remain $5,000). In
addition, the Exchange proposes to
amend the provision in Section 902.02
relating to the $500,000 Total Maximum
Fee by including annual fees paid for all
structured products in calculating the
Total Maximum Fee. The Exchange
notes that retail debt securities are
already included in the Total Maximum
Fee calculation. Historically many listed
structured products were financial
products issued by banks and other
financial institutions so there was a
reasonable basis for excluding them
from the benefits of the Total Maximum
Fee provision. Today, however, most
structured products listed on the
Exchange are issued by listed
companies for similar financing reasons
to those for which they issue retail debt,
so it is reasonable to treat them the same
for purposes of the Total Maximum Fee
calculation.
The Exchange proposes to make an
adjustment to the Investment
Management Entity Group Fee Discount
set forth in Section 902.02 of the
Manual. The Investment Management
Entity Group Fee Discount is currently
based on all annual and listing fees paid
by the Investment Management Entity
and its Eligible Portfolio Companies in
the applicable calendar year. The
Exchange proposes to amend the
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]]>Agencies
[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64389-64391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27128]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33320; 812-14933]
Pacific Global ETF Trust and Cadence Capital Management LLC
December 11, 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) for an exemption from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act. The requested order would permit (a) actively-
managed series of certain open-end management investment companies
(``Funds'') to issue shares redeemable in large aggregations only
(``Creation Units''); (b) secondary market transactions in Fund shares
to occur at negotiated market prices rather than at net asset value
(``NAV''); (c) certain Funds to pay redemption proceeds, under certain
circumstances, more than seven days after the tender of shares for
redemption; (d) certain affiliated persons of a Fund to deposit
securities into, and receive securities from, the Fund in connection
with the purchase and redemption of Creation Units; (e) certain
registered management investment companies and unit investment trusts
outside of the same group of investment companies as the Funds (``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: Pacific Global ETF Trust (``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 (``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 21, 2018.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may
[[Page 64390]]
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
31, 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: Christine Y. Greenlees, Senior
Counsel, at (202) 551-6879, 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 a broker-dealer registered under
the Securities Exchange Act of 1934 (``Exchange Act'')
(``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 Initial Fund,
as well as to future series of the Trust and any other existing or
future open-end management investment companies or series thereof
(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 of the foregoing and any
successor thereto included in the term ``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.
---------------------------------------------------------------------------
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 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 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 a person who is 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 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\
[[Page 64391]]
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 investment
adviser to the Funds is also an investment adviser to a 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,
Deputy Secretary.
[FR Doc. 2018-27128 Filed 12-13-18; 8:45 am]
BILLING CODE 8011-01-P
