RYZZ Capital Management, LLC, et al., 66783-66785 [2018-27985]
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Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices
addition, the PCAOB must allocate the
annual accounting support fee among
issuers and among brokers and dealers.
Section 109(b) of the Sarbanes-Oxley
Act directs the PCAOB to establish a
budget for each fiscal year in accordance
with the PCAOB’s internal procedures,
subject to approval by the Commission.
Rule 190 of Regulation P governs the
Commission’s review and approval of
PCAOB budgets and annual accounting
support fees.3 This budget rule
provides, among other things, a
timetable for the preparation and
submission of the PCAOB budget and
for Commission actions related to each
budget, a description of the information
that should be included in each budget
submission, limits on the PCAOB’s
ability to incur expenses and obligations
except as provided in the approved
budget, procedures relating to
supplemental budget requests,
requirements for the PCAOB to furnish
on a quarterly basis certain budgetrelated information, and a list of
definitions that apply to the rule and to
general discussions of PCAOB budget
matters.
In accordance with the budget rule, in
March 2018 the PCAOB provided the
Commission with a narrative
description of its program issues and
outlook for the 2019 budget year. In
response, the Commission provided the
PCAOB with economic assumptions and
general budgetary guidance for the 2019
budget year. The PCAOB subsequently
delivered a preliminary budget and
budget justification to the Commission.
Staff from the Commission’s Office of
the Chief Accountant and Office of
Financial Management dedicated a
substantial amount of time to the review
and analysis of the PCAOB’s programs,
projects, and budget estimates; reviewed
the PCAOB’s estimates of 2018 actual
spending; and attended several meetings
with management and staff of the
PCAOB to further develop their
understanding of the PCAOB’s budget
and operations. During the course of
this review, Commission staff relied
upon representations and supporting
documentation from the PCAOB. Based
on this review, the Commission issued
a ‘‘passback’’ letter to the PCAOB on
November 1, 2018. On November 15,
2018, the PCAOB adopted its 2019
budget and accounting support fee
during an open meeting, and
subsequently submitted that budget to
the Commission for approval.
After considering the above, the
Commission did not identify any
proposed disbursements in the 2019
budget adopted by the PCAOB that are
3 17
CFR 202.190.
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not properly recoverable through the
annual accounting support fee, and the
Commission believes that the aggregate
proposed 2019 annual accounting
support fee does not exceed the
PCAOB’s aggregate recoverable budget
expenses for 2019.
The Commission also acknowledges
the PCAOB’s updated strategic plan,
which involved extensive outreach, and
encourages the PCAOB to continue
keeping the Commission and its staff
apprised of significant new
developments during its
implementation. In addition, the
PCAOB should submit its 2018 annual
report to the Commission by April 1,
2019.
The Commission directs the PCAOB
during 2019 to schedule monthly
meetings with the Commission’s staff
about the transformation initiatives that
are expected to have a significant
impact on the 2020 PCAOB budget. In
addition, the Commission directs the
Board during 2019 to continue
providing quarterly updates to the
Commission that describe (i) the
activities and progress towards the
stated goals of the PCAOB’s Office of
Economic and Risk Analysis (‘‘ERA’’);
(ii) detailed information about the state
of the PCAOB’s information technology
program as administered by the
PCAOB’s Office of Information
Technology (‘‘OIT); and (iii) information
about the PCAOB’s inspections program
as administered by the PCAOB’s
Division of Registration and Inspections
(‘‘DRI’’), consistent with the quarterly
updates reflected in the Commission’s
Order approving the PCAOB’s annual
budget and accounting support fee for
calendar year 2018 dated January 10,
2018. In addition, the quarterly updates
should include updates on the
transformation projects for ERA, OIT,
and DRI.
The Commission understands that the
Office of Management and Budget
(‘‘OMB’’) has determined that the 2019
budget of the PCAOB is subject to
sequestration under the Budget Control
Act of 2011.4 For 2018, the PCAOB
sequestered $17.2 million. That amount
will become available in 2019. For 2019,
the sequestration amount will be 6.2%
or $17.0 million. Consequently, we
expect the PCAOB will have
approximately $0.2 million in excess
funds available from the 2018
sequestration for spending in 2019.
Accordingly, the PCAOB has reduced its
4 See ‘‘OMB Report to the Congress on the Joint
Committee Reductions for Fiscal Year 2019’’,
Appendix page 16 of 17 available at https://
www.whitehouse.gov/wp-content/uploads/2018/02/
Sequestration_Report_February_2018.pdf .
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66783
accounting support fee for 2019 by
approximately $0.2 million.
The Commission has determined that
the PCAOB’s 2019 budget and annual
accounting support fee are consistent
with Section 109 of the Sarbanes-Oxley
Act. Accordingly,
It is ordered, pursuant to Section 109
of the Sarbanes-Oxley Act, that the
PCAOB budget and annual accounting
support fee for calendar year 2019 are
approved.
By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2018–27978 Filed 12–26–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33332; 812–14961]
RYZZ Capital Management, LLC, et al.
December 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) of the Act for an exemption
from sections 12(d)(1)(A) and
12(d)(1)(B) of the Act. The requested
order would permit (a) activelymanaged series of certain open-end
management investment companies
(‘‘Funds’’) to issue shares redeemable in
large aggregations only (‘‘Creation
Units’’); (b) secondary market
transactions in Fund shares to occur at
negotiated market prices rather than at
net asset value (‘‘NAV’’); (c) certain
Funds to pay redemption proceeds,
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
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66784
Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices
FOR FURTHER INFORMATION CONTACT:
Summary of the Application
1. Applicants request an order that
would allow Funds to operate as
actively-managed exchange traded
funds (‘‘ETFs’’).1 Fund shares will be
purchased and redeemed at their NAV
in Creation Units only. All orders to
purchase Creation Units and all
redemption requests will be placed by
or through an ‘‘Authorized Participant’’
which will have signed a participant
agreement with the Distributor. Shares
will be listed and traded individually on
a national securities exchange, where
share prices will be based on the current
bid/offer market. Certain Funds may
operate as Feeder Funds in a masterfeeder structure. Any order granting the
requested relief would be subject to the
terms and conditions stated in the
application.
2. Each Fund will consist of a
portfolio of securities and other assets
and investment positions (‘‘Portfolio
Instruments’’). Each Fund will disclose
on its website the identities and
quantities of the Portfolio Instruments
that will form the basis for the Fund’s
calculation of NAV at the end of the
day.
3. Shares will be purchased and
redeemed in Creation Units only and
generally on an in-kind basis. Except
where the purchase or redemption will
include cash under the limited
circumstances specified in the
application, purchasers will be required
to purchase Creation Units by
depositing specified instruments
(‘‘Deposit Instruments’’), and
shareholders redeeming their shares
will receive specified instruments
(‘‘Redemption Instruments’’). The
Deposit Instruments and the
Redemption Instruments will each
correspond pro rata to the positions in
the Fund’s portfolio (including cash
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
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.
1 Applicants request that the order apply to the
new series of the Trust as well as to additional
series of the Trust and any other open-end
management investment company or series thereof
that currently exist or that may be created in the
future (each, included in the term ‘‘Fund’’), each of
which will operate as an actively-managed ETF.
Any Fund will (a) be advised by the Initial Adviser
or an entity controlling, controlled by, or under
common control with the Initial Adviser (each such
entity and any successor thereto is included in the
term ‘‘Adviser’’) and (b) comply with the terms and
conditions of the application. For purposes of the
requested order, the term ‘‘successor’’ is limited to
an entity that results from a reorganization into
another jurisdiction or a change in the type of
business organization.
redeem Creation Units in-kind in a
master-feeder structure.
Applicants: RYZZ Capital
Management, LLC (the ‘‘Initial
Adviser’’), a Delaware limited liability
company 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 Quasar Distributors,
LLC (the ‘‘Initial Distributor’’), a
Delaware limited liability company
registered as a broker under the
Securities Exchange Act of 1934.
Filing Dates: The application was
filed on October 4, 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 January 14, 2019, 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.
Secretary, Securities and
Exchange Commission, 100 F Street NE,
Washington, DC 20549–1090;
Applicants: RYZZ Capital Management,
LLC, 9260 East Raintree Drive, Suite
100, Scottsdale, Arizona 85260, ETF
Series Solutions, 615 East Michigan
Street, 4th Floor, Milwaukee, Wisconsin
53202, and Quasar Distributors, LLC,
777 East Wisconsin Avenue, 6th Floor,
Milwaukee, Wisconsin 53202.
ADDRESSES:
Jill
Corrigan, Senior Counsel, at (202) 551–
8929, or Parisa Haghshenas, Branch
Chief, at (202) 551–6723 (Division of
Investment Management, Chief
Counsel’s Office).
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SUPPLEMENTARY INFORMATION:
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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 persons that are affiliated
persons, or second-tier affiliates, of the
Funds, solely by virtue of certain
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Federal Register / Vol. 83, No. 247 / Thursday, December 27, 2018 / Notices
ownership interests, to effectuate
purchases and redemptions in-kind. The
deposit procedures for in-kind
purchases of Creation Units and the
redemption procedures for in-kind
redemptions of Creation Units will be
the same for all purchases and
redemptions and Deposit Instruments
and Redemption Instruments will be
valued in the same manner as those
Portfolio Instruments currently held by
the Funds. Applicants also seek relief
from the prohibitions on affiliated
transactions in section 17(a) to permit a
Fund to sell its shares to and redeem its
shares from a Fund of Funds, and to
engage in the accompanying in-kind
transactions with the Fund of Funds.2
The purchase of Creation Units by a
Fund of Funds directly from a Fund will
be accomplished in accordance with the
policies of the Fund of Funds and will
be based on the NAVs of the Funds.
9. Applicants also request relief to
permit a Feeder Fund to acquire shares
of another registered investment
company managed by the Adviser
having substantially the same
investment objectives as the Feeder
Fund (‘‘Master Fund’’) beyond the
limitations in section 12(d)(1)(A) and
permit the Master Fund, and any
principal underwriter for the Master
Fund, to sell shares of the Master Fund
to the Feeder Fund beyond the
limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the
Commission to exempt any persons or
transactions from any provision of the
Act if such exemption is necessary or
appropriate in the public interest and
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities, or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
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
khammond on DSK30JT082PROD with NOTICES
2 The
requested relief would apply to direct sales
of shares in Creation Units by a Fund to a Fund of
Funds and redemptions of those shares. Applicants,
moreover, are not seeking relief from section 17(a)
for, and the requested relief will not apply to,
transactions where a Fund could be deemed an
Affiliated Person, or a Second-Tier Affiliate, of a
Fund of Funds because an Adviser or an entity
controlling, controlled by or under common control
with an Adviser provides investment advisory
services to that Fund of Funds.
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17:14 Dec 26, 2018
Jkt 247001
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.
Brent J. Fields,
Secretary.
[FR Doc. 2018–27985 Filed 12–26–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84682; File No. SR–ISE–
2018–95]
Self-Regulatory Organizations; Nasdaq
ISE, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Amend
Supplementary Material .07 to ISE Rule
722
November 29, 2018.
Correction
In notice document 2018–26405
beginning on page 62938 in the issue of
Thursday, December 6, 2018, make the
following correction:
On page 62939, in the third column,
the last line of the first full paragraph
‘‘December 26, 2018’’ should read
‘‘December 27, 2018’’.
[FR Doc. C1–2018–26405 Filed 12–26–18; 8:45 am]
BILLING CODE 1301–00–D
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84685; File No. SR–Phlx–
2018–76]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the Pilot
Period for the Listing of P.M.-Settled
Nasdaq-100 Index Options Expiring on
the Third Friday of the Month
November 29, 2018.
Correction
In notice document 2018–26396
beginning on page 62942 in the issue of
Thursday, December 6, 2018, make the
following correction:
On page 62943, in the third column,
the last line of the first full paragraph
‘‘December 26, 2018’’ should read
‘‘December 27, 2018’’.
[FR Doc. C1–2018–26396 Filed 12–26–18; 8:45 am]
BILLING CODE 1301–00–D
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66785
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33330; 812–14960]
OSI ETF Trust, et al.
December 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) 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: OSI ETF Trust (the
‘‘Trust’’), a Delaware statutory trust that
is registered under the Act as an openend management investment company
with multiple series, O’Shares
Investment Advisers, LLC (‘‘Initial
Adviser’’), a Delaware limited liability
company registered as an investment
adviser under the Investment Advisers
Act of 1940, 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 October 3, 2018.
Hearing or Notification of Hearing: An
order granting the requested relief will
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]]>Agencies
[Federal Register Volume 83, Number 247 (Thursday, December 27, 2018)]
[Notices]
[Pages 66783-66785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27985]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33332; 812-14961]
RYZZ Capital Management, LLC, et al.
December 19, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1
under the Act, under sections 6(c) and 17(b) of the Act for an
exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under
section 12(d)(1)(J) of the Act for an exemption from sections
12(d)(1)(A) and 12(d)(1)(B) of the Act. The requested order would
permit (a) actively-managed series of certain open-end management
investment companies (``Funds'') to issue shares redeemable in large
aggregations only (``Creation Units''); (b) secondary market
transactions in Fund shares to occur at negotiated market prices rather
than at net asset value (``NAV''); (c) certain Funds to pay redemption
proceeds, 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
[[Page 66784]]
redeem Creation Units in-kind in a master-feeder structure.
Applicants: RYZZ Capital Management, LLC (the ``Initial Adviser''),
a Delaware limited liability company 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
Quasar Distributors, LLC (the ``Initial Distributor''), a Delaware
limited liability company registered as a broker under the Securities
Exchange Act of 1934.
Filing Dates: The application was filed on October 4, 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 January 14, 2019, 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: RYZZ Capital Management,
LLC, 9260 East Raintree Drive, Suite 100, Scottsdale, Arizona 85260,
ETF Series Solutions, 615 East Michigan Street, 4th Floor, Milwaukee,
Wisconsin 53202, and Quasar Distributors, LLC, 777 East Wisconsin
Avenue, 6th Floor, Milwaukee, Wisconsin 53202.
FOR FURTHER INFORMATION CONTACT: Jill Corrigan, Senior Counsel, at
(202) 551-8929, or Parisa Haghshenas, Branch Chief, at (202) 551-6723
(Division of Investment Management, Chief Counsel's Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Summary of the Application
1. Applicants request an order that would allow Funds to operate as
actively-managed exchange traded funds (``ETFs'').\1\ Fund shares will
be purchased and redeemed at their NAV in Creation Units only. All
orders to purchase Creation Units and all redemption requests will be
placed by or through an ``Authorized Participant'' which will have
signed a participant agreement with the Distributor. Shares will be
listed and traded individually on a national securities exchange, where
share prices will be based on the current bid/offer market. Certain
Funds may operate as Feeder Funds in a master-feeder structure. Any
order granting the requested relief would be subject to the terms and
conditions stated in the application.
---------------------------------------------------------------------------
\1\ Applicants request that the order apply to the new series of
the Trust as well as to additional series of the Trust and any other
open-end management investment company or series thereof that
currently exist or that may be created in the future (each, included
in the term ``Fund''), each of which will operate as an actively-
managed ETF. Any Fund will (a) be advised by the Initial Adviser or
an entity controlling, controlled by, or under common control with
the Initial Adviser (each such entity and any successor thereto is
included in the term ``Adviser'') and (b) comply with the terms and
conditions of the application. For purposes of the requested order,
the term ``successor'' is limited to an entity that results from a
reorganization into another jurisdiction or a change in the type of
business organization.
---------------------------------------------------------------------------
2. Each Fund will consist of a portfolio of securities and other
assets and investment positions (``Portfolio Instruments''). Each Fund
will disclose on its website the identities and quantities of the
Portfolio Instruments that will form the basis for the Fund's
calculation of NAV at the end of the day.
3. Shares will be purchased and redeemed in Creation Units only and
generally on an in-kind basis. Except where the purchase or redemption
will include cash under the limited circumstances specified in the
application, purchasers will be required to purchase Creation Units by
depositing specified instruments (``Deposit Instruments''), and
shareholders redeeming their shares will receive specified instruments
(``Redemption Instruments''). The Deposit Instruments and the
Redemption Instruments will each correspond pro rata to the positions
in the Fund's portfolio (including cash positions) except as specified
in the application.
4. Because shares will not be individually redeemable, applicants
request an exemption from section 5(a)(1) and section 2(a)(32) of the
Act that would permit the Funds to register as open-end management
investment companies and issue shares that are redeemable in Creation
Units only.
5. Applicants also request an exemption from section 22(d) of the
Act and rule 22c-1 under the Act as secondary market trading in shares
will take place at negotiated prices, not at a current offering price
described in a Fund's prospectus, and not at a price based on NAV.
Applicants state that (a) secondary market trading in shares does not
involve a Fund as a party and will not result in dilution of an
investment in shares, and (b) to the extent different prices exist
during a given trading day, or from day to day, such variances occur as
a result of third-party market forces, such as supply and demand.
Therefore, applicants assert that secondary market transactions in
shares will not lead to discrimination or preferential treatment among
purchasers. Finally, applicants represent that share market prices will
be disciplined by arbitrage opportunities, which should prevent shares
from trading at a material discount or premium from NAV.
6. With respect to Funds that hold non-U.S. Portfolio Instruments
and that effect creations and redemptions of Creation Units in kind,
applicants request relief from the requirement imposed by section 22(e)
in order to allow such Funds to pay redemption proceeds within fifteen
calendar days following the tender of Creation Units for redemption.
Applicants assert that the requested relief would not be inconsistent
with the spirit and intent of section 22(e) to prevent unreasonable,
undisclosed or unforeseen delays in the actual payment of redemption
proceeds.
7. Applicants request an exemption to permit Funds of Funds to
acquire Fund shares beyond the limits of section 12(d)(1)(A) of the
Act; and the Funds, and any principal underwriter for the Funds, and/or
any broker or dealer registered under the Exchange Act, to sell shares
to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act.
The application's terms and conditions are designed to, among other
things, help prevent any potential (i) undue influence over a Fund
through control or voting power, or in connection with certain
services, transactions, and underwritings, (ii) excessive layering of
fees, and (iii) overly complex fund structures, which are the concerns
underlying the limits 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
[[Page 66785]]
ownership interests, to effectuate purchases and redemptions in-kind.
The deposit procedures for in-kind purchases of Creation Units and the
redemption procedures for in-kind redemptions of Creation Units will be
the same for all purchases and redemptions and Deposit Instruments and
Redemption Instruments will be valued in the same manner as those
Portfolio Instruments currently held by the Funds. Applicants also seek
relief from the prohibitions on affiliated transactions in section
17(a) to permit a Fund to sell its shares to and redeem its shares from
a Fund of Funds, and to engage in the accompanying in-kind transactions
with the Fund of Funds.\2\ The purchase of Creation Units by a Fund of
Funds directly from a Fund will be accomplished in accordance with the
policies of the Fund of Funds and will be based on the NAVs of the
Funds.
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\2\ The requested relief would apply to direct sales of shares
in Creation Units by a Fund to a Fund of Funds and redemptions of
those shares. Applicants, moreover, are not seeking relief from
section 17(a) for, and the requested relief will not apply to,
transactions where a Fund could be deemed an Affiliated Person, or a
Second-Tier Affiliate, of a Fund of Funds because an Adviser or an
entity controlling, controlled by or under common control with an
Adviser provides investment advisory services to that Fund of Funds.
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9. Applicants also request relief to permit a Feeder Fund to
acquire shares of another registered investment company managed by the
Adviser having substantially the same investment objectives as the
Feeder Fund (``Master Fund'') beyond the limitations in section
12(d)(1)(A) and permit the Master Fund, and any principal underwriter
for the Master Fund, to sell shares of the Master Fund to the Feeder
Fund beyond the limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the Commission to exempt any
persons or transactions from any provision of the Act if such exemption
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from any provision of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.
Section 17(b) of the Act authorizes the Commission to grant an order
permitting a transaction otherwise prohibited by section 17(a) if it
finds that (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company involved; and (c) the proposed
transaction is consistent with the general purposes of the Act.
For the Commission, by the Division of Investment Management,
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2018-27985 Filed 12-26-18; 8:45 am]
BILLING CODE 8011-01-P
