ETF Opportunities Trust, et al.; Notice of Application, 37695-37697 [2019-16441]
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Federal Register / Vol. 84, No. 148 / Thursday, August 1, 2019 / Notices
31,245 plan administrators under this
collection of information. PBGC further
estimates that the annual burden of this
collection of information is 13,540
hours and $21,621,540.
PBGC is soliciting public comments
to—
• Evaluate whether the proposed
collection of information is necessary
for the proper performance of the
functions of the agency, including
whether the information will have
practical utility;
• Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodologies and assumptions used;
• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submission of
responses.
Issued in Washington, DC.
Stephanie Cibinic,
Deputy Assistant General Counsel for
Regulatory Affairs, Pension Benefit Guaranty
Corporation.
[FR Doc. 2019–16351 Filed 7–31–19; 8:45 am]
BILLING CODE 7709–02–P
POSTAL SERVICE
Product Change—Priority Mail
Negotiated Service Agreement
Postal ServiceTM.
ACTION: Notice.
AGENCY:
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
DATES: Date of required notice: August
1, 2019.
FOR FURTHER INFORMATION CONTACT:
Sean Robinson, 202–268–8405.
SUPPLEMENTARY INFORMATION: The
United States Postal Service® hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on July 26, 2019,
it filed with the Postal Regulatory
Commission a USPS Request to Add
Priority Mail Contract 542 to
Competitive Product List. Documents
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SUMMARY:
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are available at www.prc.gov, Docket
Nos. MC2019–175, CP2019–197.
Sean Robinson,
Attorney, Corporate and Postal Business Law.
[FR Doc. 2019–16362 Filed 7–31–19; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33579; File No. 812–15014]
ETF Opportunities Trust, et al.; Notice
of Application
July 29, 2019.
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 Creations Units in-kind in a
master-feeder structure.
APPLICANTS: ETF Opportunities Trust
(the ‘‘Trust’’), a Delaware statutory trust
that is registered under the Act as an
open-end management investment
company with multiple series, Ridgeline
Research LLC (the ‘‘Initial Adviser’’), a
Delaware limited liability company that
will be registered as an investment
adviser under the Investment Advisers
PO 00000
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Sfmt 4703
37695
Act of 1940, and Foreside Fund
Services, LLC (the ‘‘Initial Distributor’’).
FILING DATES: The application was filed
on March 29, 2019 and amended on
June 6, 2019 and July 5, 2019.
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 August 23, 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: ETF Opportunities Trust,
8730 Stony Point Parkway, Suite 205,
Richmond, VA 23235; Ridgeline
Research LLC, 14961 Finegan Farm Dr.,
Darnestown, Maryland 20874; and
Foreside Fund Services, LLC, Three
Canal Plaza, Suite 100, Portland, Maine
04101.
FOR FURTHER INFORMATION CONTACT:
Thankam A. Varghese, Senior Counsel,
at (202) 551–6446 or Parisa Haghshenas,
Branch Chief, at (202) 551–6825
(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
1 Applicants request that the order apply to the
initial Fund, as well as to future series of the Trust
and any 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, and their
respective existing or future Master Funds. Any
Fund will (a) be advised by the Initial Adviser or
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37696
Federal Register / Vol. 84, No. 148 / Thursday, August 1, 2019 / Notices
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purchased and redeemed at their NAV
in Creation Units only (other than
pursuant to a distribution reinvestment
program 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.
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
an entity controlling, controlled by, or under
common control with the Initial Adviser (each such
entity and any successor thereto, an ‘‘Adviser’’) and
(b) comply with the terms and conditions of the
application. For purposes of the requested order, 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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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
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
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
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
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.
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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Federal Register / Vol. 84, No. 148 / Thursday, August 1, 2019 / Notices
For the Commission, by the Division of
Investment Management, under delegated
authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019–16441 Filed 7–31–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–86493; File No. SRCboeEDGX–2019–028]
Self-Regulatory Organizations; Cboe
EDGX Exchange, Inc.; Notice of Filing
of Amendment No. 1 and Order
Granting Accelerated Approval of a
Proposed Rule Change, as Modified by
Amendment No. 1, To Adopt Rule 21.22
(Complex Automated Improvement
Mechanism)
July 26, 2019.
I. Introduction
On April 26, 2019, Cboe EDGX
Exchange, Inc. (the ‘‘Exchange’’ or
‘‘EDGX Options’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt Exchange Rule 21.22, Complex
Automated Improvement Mechanism
(‘‘C–AIM’’ or ‘‘C–AIM Auction’’), to
permit the use of the Exchange’s
Automated Improvement Mechanism
(‘‘AIM’’ or ‘‘AIM Auction’’) for complex
orders. The proposed rule change was
published for comment in the Federal
Register on May 16, 2019.3 On June 14,
2019, the Exchange filed Amendment
No. 1 to the proposed rule change.4 On
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 85831
(May 10, 2019), 84 FR 22178 (the ‘‘Notice’’).
4 Amendment No. 1 revises the proposal to (1)
cap the prices of C–AIM responses based on the
Synthetic Best Bid or Offer and the prices of orders
resting on the top of the Complex Order Book at the
conclusion of the C–AIM Auction, rather than at the
beginning of the C–AIM Auction; (2) incorporate
the new defined terms ‘‘C–AIM Auction period’’
and ‘‘final auction price’’ into the proposed rule
text; (3) provide additional justification for the
proposal to allow an Options Market Maker
registered in the applicable series on the Exchange
to be solicited to participate in a C–AIM Auction
for a complex order that includes those series; (4)
provide additional justification for the proposal to
allow Agency Orders to execute only against
complex interest at the conclusion of a C–AIM
Auction; (5) make non-substantive simplifying,
clarifying, and correcting changes to the proposed
rule text; and (6) make non-substantive
clarifications and corrections to the Form 19b–4
discussion of the proposed rule change.
Amendment No. 1 is available at https://
www.sec.gov/comments/sr-cboeedgx-2019–028/
srcboeedgx2019028–5679914–185869.pdf.
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2 17
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June 26, 2019, pursuant to Section
19(b)(2) of the Act,5 the Commission
designated a longer period within which
to approve the proposed rule change,
disapprove the proposed rule change, or
institute proceedings to determine
whether to approve or disapprove the
proposed rule change.6 The Commission
has received no comments regarding the
proposal. The Commission is publishing
this notice to solicit comment on
Amendment No. 1 and is approving the
proposed rule change, as modified by
Amendment No. 1, on an accelerated
basis.
II. Description of the Proposed Rule
Change
A. Background
As described more fully in the
Notice,7 the Exchange proposes to adopt
Exchange Rule 21.22 to establish the C–
AIM Auction for complex orders. The
Exchange notes that the C–AIM Auction
will operate in a manner that is
substantially similar to the Exchange’s
AIM Auction for single leg orders, with
differences to, among other things,
ensure that execution prices in the C–
AIM Auction are consistent with
complex order priority principles.8 The
Exchange states that the proposed C–
AIM Auction is similar to the complex
order price improvement mechanisms of
Cboe Exchange, Inc. (‘‘Cboe Options’’)
and other options exchanges and will
provide market participants with an
opportunity to receive price
improvement for their complex orders.9
B. C–AIM Auction Eligibility
The proposal will allow an Options
Member (the ‘‘Initiating Member’’) to
electronically submit for execution a
complex order it represents as agent (the
‘‘Agency Order’’) against principal
interest or a solicited complex order(s),
provided the Initiating Member submits
the Agency Order for electronic
execution in a C–AIM Auction.10 The
Agency Order may be in any class of
options traded on the Exchange, and
there is no minimum size for Agency
Orders.11 The Initiating Member must
U.S.C. 78s(b)(2).
Securities Exchange Act Release No. 86202,
84 FR 31646 (July 2, 2019). The Commission
designated August 14, 2019, as the date by which
the Commission shall approve or disapprove, or
institute proceedings to determine whether to
approve or disapprove, the proposed rule change.
7 See Notice, supra note 3.
8 See Notice, 84 FR at 22184.
9 See Notice, 84 FR at 22178–79.
10 See proposed Exchange Rule 21.22.
11 See proposed Exchange Rule 21.22(a)(1) and
(3). In addition, proposed Exchange Rule 21.22(a)
provides that: the Initiating Member must mark an
Agency Order for C–AIM Auction processing; the
Initiating Order must be for the same size as the
PO 00000
5 15
6 See
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37697
stop the entire Agency Order at a stop
price that: (1) is at least $0.01 better
than the same-side Synthetic Best Bid
(‘‘SBB’’) or Synthetic Best Offer
(‘‘SBO’’) 12 if the BBO on any
component of the complex strategy
represents a Priority Customer order on
the Simple Book, or is at or better than
the same-side SBB (SBO) if each
component of the complex strategy
represents a non-Priority Customer
order or quote on the Simple Book; (2)
is at least $0.01 better than a same-side
complex order resting in the Complex
Order Book (‘‘COB’’),13 unless the
Agency Order is a Priority Customer
Order and the resting order is a nonPriority Customer order, in which case
the stop price must be at or better than
the bid (offer) of the resting complex
order; and (3) is at least $0.01 better
than the opposite side SBO (SBB) if the
BBO of any component of the complex
strategy represents a Priority Customer
quote or order on the Simple Book, or
is at or better than the opposite side
SBO (SBB) if the BBO of each
component of the complex strategy
represents a non-Priority Customer
order or quote on the Simple Book.14
The Initiating Member must specify (A)
a single price at which it seeks to
execute the Agency Order against the
Initiating Order (‘‘single-price
submission’’), including whether it
elects to have last priority in allocation;
or (B) an initial stop price and
instruction to automatically match the
price and size of all C–AIM responses
and other trading interest (‘‘automatch’’) up to a designated limit price
or at all prices that improve the stop
price.15
One or more C–AIM Auctions in the
same complex strategy for Agency
Agency Order; the price of the Agency Order and
Initiating Order must be in an increment of $0.01;
the Initiating Member may not designate an Agency
Order or Initiating Order as Post Only; and an
Initiating Member may only submit an Agency
Order to a C–AIM Auction after the Complex Order
Book opens. The System rejects or cancels both an
Agency Order and an Initiating Order submitted to
a C–AIM Auction that do not meet these conditions.
12 The Synthetic Best Bid or Offer (‘‘SBBO’’) is
calculated using the best displayed price for each
component of a complex strategy from the Simple
Book. The Simple Book is the Exchange’s regular
electronic book of orders. See Exchange Rules
21.20(a)(10) and (11). For purposes of proposed
Rule 21.22, the SBBO means the SBBO at the
particular point in time applicable to the reference.
See proposed Exchange Rule 21.22.
13 The COB is the Exchange’s electronic book of
complex orders and used for all trading sessions.
See Exchange Rule 21.20(a)(6).
14 See proposed Exchange Rule 21.22(b)(1)–(3)
and Amendment No. 1.
15 See proposed Exchange Rule 21.22(b)(4). The
System rejects or cancels both an Agency Order and
an Initiating Order submitted to a C–AIM Auction
that do not meet the conditions of proposed
Exchange Rule 21.22(b).
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]]>Agencies
[Federal Register Volume 84, Number 148 (Thursday, August 1, 2019)]
[Notices]
[Pages 37695-37697]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16441]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33579; File No. 812-15014]
ETF Opportunities Trust, et al.; Notice of Application
July 29, 2019.
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) 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 Creations Units in-kind in a
master-feeder structure.
Applicants: ETF Opportunities Trust (the ``Trust''), a Delaware
statutory trust that is registered under the Act as an open-end
management investment company with multiple series, Ridgeline Research
LLC (the ``Initial Adviser''), a Delaware limited liability company
that will be registered as an investment adviser under the Investment
Advisers Act of 1940, and Foreside Fund Services, LLC (the ``Initial
Distributor'').
Filing Dates: The application was filed on March 29, 2019 and amended
on June 6, 2019 and July 5, 2019.
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 August 23, 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: ETF Opportunities Trust,
8730 Stony Point Parkway, Suite 205, Richmond, VA 23235; Ridgeline
Research LLC, 14961 Finegan Farm Dr., Darnestown, Maryland 20874; and
Foreside Fund Services, LLC, Three Canal Plaza, Suite 100, Portland,
Maine 04101.
FOR FURTHER INFORMATION CONTACT: Thankam A. Varghese, Senior Counsel,
at (202) 551-6446 or Parisa Haghshenas, Branch Chief, at (202) 551-6825
(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
[[Page 37696]]
purchased and redeemed at their NAV in Creation Units only (other than
pursuant to a distribution reinvestment program 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,
as well as to future series of the Trust and any 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, and their respective existing or future Master
Funds. 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, 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 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 persons that are Affiliated Persons, or
Second-Tier Affiliates, of the Funds, solely by virtue of certain
ownership interests, to effectuate purchases and redemptions in-kind.
The deposit procedures for in-kind purchases of Creation Units and the
redemption procedures for in-kind redemptions of Creation Units will be
the same for all purchases and redemptions and Deposit Instruments and
Redemption Instruments will be valued in the same manner as those
Portfolio Instruments currently held by the Funds. Applicants also seek
relief from the prohibitions on affiliated transactions in section
17(a) to permit a Fund to sell its shares to and redeem its shares from
a Fund of Funds, and to engage in the accompanying in-kind transactions
with the Fund of Funds.\2\ The purchase of Creation Units by a Fund of
Funds directly from a Fund will be accomplished in accordance with the
policies of the Fund of Funds and will be based on the NAVs of the
Funds.
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\2\ The requested relief would apply to direct sales of shares
in Creation Units by a Fund to a Fund of Funds and redemptions of
those shares. Applicants, moreover, are not seeking relief from
section 17(a) for, and the requested relief will not apply to,
transactions where a Fund could be deemed an Affiliated Person, or a
Second-Tier Affiliate, of a Fund of Funds because an Adviser or an
entity controlling, controlled by or under common control with an
Adviser provides investment advisory services to that Fund of Funds.
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9. Applicants also request relief to permit a Feeder Fund to
acquire shares of another registered investment company managed by the
Adviser having substantially the same investment objectives as the
Feeder Fund (``Master Fund'') beyond the limitations in section
12(d)(1)(A) and permit the Master Fund, and any principal underwriter
for the Master Fund, to sell shares of the Master Fund to the Feeder
Fund beyond the limitations in section 12(d)(1)(B).
10. Section 6(c) of the Act permits the Commission to exempt any
persons or transactions from any provision of the Act if such exemption
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from any provision of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.
Section 17(b) of the Act authorizes the Commission to grant an order
permitting a transaction otherwise prohibited by section 17(a) if it
finds that (a) the terms of the proposed transaction are fair and
reasonable and do not involve overreaching on the part of any person
concerned; (b) the proposed transaction is consistent with the policies
of each registered investment company involved; and (c) the proposed
transaction is consistent with the general purposes of the Act.
[[Page 37697]]
For the Commission, by the Division of Investment Management,
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-16441 Filed 7-31-19; 8:45 am]
BILLING CODE 8011-01-P
