80 FR 68369 - U.S. Bank National Association; Notice of Application
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 213 (November 4, 2015)
Federal Register Volume 80, Issue 213 (November 4, 2015)
| Page Range | 68369-68371 | |
| FR Document | 2015-28069 |
[Federal Register Volume 80, Number 213 (Wednesday, November 4, 2015)] [Notices] [Pages 68369-68371] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-28069] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 31886; File No. 812-14404] U.S. Bank National Association; Notice of Application October 29, 2015. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice of an application under Section 6(c) of the Investment Company Act of 1940 (``Act'') for an exemption from certain requirements of Rule 3a-7(a)(4)(i) under the Act. ----------------------------------------------------------------------- Summary of Application: Applicant requests an order that would permit an issuer of asset-backed securities (``ABS'') that is not registered as an investment company under the Act in reliance on Rule 3a-7 under the Act (an ``Issuer'') to appoint the applicant as a trustee in connection with the Issuer's ABS when the applicant is affiliated with an underwriter for the Issuer's ABS. Applicant: U.S. Bank National Association. Filing Dates: The application was filed on December 19, 2014 and amended on June 4, 2015, and September 29, 2015. Hearing or Notification of Hearing: An order granting the application will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicant with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on November 23, 2015 and should be accompanied by proof of service on the applicant, 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: The Commission: Brent J. Fields, Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. Applicant: U.S. Bank National Association, 101 East 5th Street, Saint Paul, MN 55101. For Further Information Contact: Jean E. Minarick, Senior Counsel, at (202) 551-6811, or Daniele Marchesani 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 Web site by searching for the file number, or for an applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090. Applicant's Representations: 1. The applicant is a subsidiary of U.S. Bancorp.\1\ The applicant is frequently selected to act as trustee in connection with ABS issued by Issuers. --------------------------------------------------------------------------- \1\ The applicant also requests that the order apply to an Issuer's future appointment of any other entity controlling, controlled by, or under common control (as defined in Section 2(a)(9) of the Act) with the applicant as a trustee in connection with an Issuer's ABS. The applicant represents that any other entity intending to rely on this relief will comply with the terms and conditions of the application. Any existing entity currently intending to rely on the requested order has been named as an applicant. --------------------------------------------------------------------------- 2. An ABS transaction typically involves the transfer of assets by a seller, usually by a ``sponsor,'' to a bankruptcy remote special purpose corporate or trust entity that is established for the sole purpose of holding the assets and issuing ABS to investors (an ``ABS Transaction''). Payments of interest and principal on the ABS depend primarily on the cash flow generated by the pool of assets owned by the Issuer. 3. The parties to an ABS Transaction enter into several transaction agreements that provide for the holding of the assets by the Issuer and define the rights and responsibilities of the parties to the transaction (``Transaction Documents''). The operative Transaction Document governing the trustee is referred to herein as the ``Agreement.'' 4. The sponsor of an ABS Transaction assembles the pool of assets by purchasing or funding them, describes them in the offering materials, and retains the underwriter to sell interests in the assets to investors. The sponsor determines the structure of the ABS Transaction and drafts the Transaction Documents. The sponsor selects the other parties to the ABS Transaction, including the underwriter, the servicer, and the trustee. 5. The servicer, either directly or through subservicers, manages the assets held by the Issuer. The servicer typically collects the income from the assets and remits the income to the trustee. The trustee uses the income, as instructed by the servicer and as provided by the Agreement, to pay interest and principal on the ABS, to fund reserve accounts and purchases of additional assets, and to make other payments including fees owed to the [[Page 68370]] trustee and other parties to the ABS Transaction. 6. The sponsor of an ABS Transaction selects the trustee and other participants in the transaction. In selecting a trustee, the sponsor generally seeks to obtain customary trust administrative and related services for the Issuer at minimal cost. In some instances, other parties to an ABS Transaction may provide recommendations to a sponsor about potential trustees. An underwriter for an ABS Transaction also may provide advice to the sponsor about trustee selection based on the underwriter's knowledge of the pricing and expertise offered by a particular trustee in light of the contemplated transaction. 7. If an underwriter affiliated with the applicant recommends a trustee to a sponsor, both the underwriter's recommendation and any selection of the applicant by the sponsor will be based upon customary market considerations of pricing and expertise, among other things, and the selection will result from an arms-length negotiation between the sponsor and the applicant. The applicant will not price its services as trustee in a manner designed to facilitate its affiliate being named underwriter. 8. The trustee's role in an ABS Transaction is specifically defined by the Agreement, and under the Agreement the trustee is not expected or required to perform discretionary functions. The responsibilities of the trustee as set forth in the Agreement are narrowly circumscribed and limited to those expressly accepted by the trustee. The trustee negotiates the provisions applicable to it directly with the sponsor and is then appointed by, and enters into the Agreement with, the Issuer. 9. The trustee usually becomes involved in an ABS Transaction after the substantive economic terms have been negotiated between the sponsor and the underwriters. The trustee does not monitor any service performed by, or obligation of, an underwriter, whether or not the underwriter is affiliated with the trustee. In the unlikely event that the applicant, in acting as trustee to an Issuer for which an affiliate acts as underwriter, becomes obligated to enforce any of the affiliated underwriter's obligations to the Issuer, the applicant will resign as trustee for the Issuer consistent with the requirements of Rule 3a- 7(a)(4)(i). In such an event, the applicant will incur the costs associated with the Issuer's procurement of a successor trustee. 10. The sponsor selects one or more underwriters to purchase the Issuer's ABS and resell them or to privately place them with buyers obtained by the underwriter. The sponsor, the Issuer and/or one of their affiliates enters into an underwriting agreement with the underwriter that sets forth the responsibilities of the underwriter with respect to the distribution of the ABS and includes representations and warranties regarding, among other things, the underwriter and the quality of the Issuer's assets. The obligations of the underwriter under the underwriting agreement are enforceable against the underwriter only by the sponsor, the Issuer and/or one of their affiliates. 11. The underwriter may assist the sponsor in the organization of an Issuer by providing advice, based on its expertise in ABS Transactions, on the structuring and marketing of the ABS. This advice may relate to the risk tolerance of investors, the type of collateral, the predictability of the payment stream, the process by which payments are allocated and down-streamed to investors, the way that credit losses may affect the trust and the return to investors, whether the collateral represents a fixed set of specific assets or accounts, and the use of forms of credit enhancements to transform the risk-return profile of the underlying collateral. Any involvement of an underwriter in the organization of an Issuer that occurs is limited to helping determine the assets to be pooled, helping establish the terms of the ABS to be underwritten, and providing the sponsor with a line of credit for the assets to be transferred to the Issuer in connection with, and prior to, the related securitization. 12. An underwriter may provide advice to a sponsor regarding the sponsor's selection of a trustee for the Issuer. However, an underwriter's role in structuring a transaction would not extend to determining the obligations of a trustee, and the underwriter is not a party to the Agreement or to any of the Transaction Documents. Except for arrangements involving credit or credit enhancement for an Issuer or remarketing agent activities, the underwriter typically has no role in the operation of the Issuer after its issuance of securities. The applicant represents that although an underwriter typically may provide credit or credit enhancement for an Issuer or engage in remarketing agent activities, an underwriter affiliated with the applicant will not provide or engage in such activities. Applicant's Legal Analysis: 1. Rule 3a-7 excludes from the definition of investment company under Section 3(a) of the Act an Issuer that meets the conditions of the rule. One of Rule 3a-7's conditions, set forth in paragraph (a)(4)(i), requires that the Issuer appoint a trustee that is not affiliated with the Issuer or with any person involved in the organization or operation of the Issuer (the ``Independent Trustee Requirement''). Rule 3a-7(a)(4)(i) therefore prohibits an Issuer from appointing a trustee that is affiliated with an underwriter. 2. Section 6(c) 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 the Act, or from any rule thereunder, if and to the extent 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. 3. Applicant requests exemptive relief under Section 6(c) of the Act from Rule 3a-7(a)(4)(i) under the Act to the extent necessary to permit an Issuer to appoint the applicant as a trustee to the Issuer when the applicant is affiliated with an underwriter involved in the organization of the Issuer. Applicant submits that the requested exemptive relief from the Independent Trustee Requirement is necessary and appropriate in the public interest and is consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act due to changes in the banking industry, due to the timing and nature of the roles of the trustee and the underwriter in ABS Transactions, and because the requested relief is consistent with the policies and purposes underlying the Independent Trustee Requirement and Rule 3a-7 in general. 4. Applicant states that when Rule 3a-7 was proposed in 1992, virtually all trustees were unaffiliated with the other parties involved in an ABS Transaction. Applicant states that consolidation within the banking industry, as well as economic and other business factors, has resulted in a significant decrease in the number of bank trustees providing services to Issuers. Applicant also states that bank consolidation has been accompanied by the expansion of banks into investment banking, including the underwriting of ABS Transactions. Applicant further states that due to these banking industry changes, most trustees that provide services to Issuers, including the applicant, have affiliations with underwriters to Issuers. Applicant states that, as a result, when an affiliate of the applicant is selected to underwrite ABS in an ABS Transaction, Rule 3a-7(a)(4)(i)'s [[Page 68371]] Independent Trustee Requirement generally prevents applicant from serving as trustee for the Issuer. Applicant states that the Independent Trustee Requirement imposes an unnecessary regulatory limitation on trustee selection and causes market distortions by leading to the selection of trustees for reasons other than customary market considerations of pricing and expertise. This result is disadvantageous to the ABS market and to ABS investors. 5. Applicant submits that due to the nature and timing of the roles of the trustee and the underwriter, applicant's affiliation with an underwriter would not result in a conflict of interest or possibility of overreaching that could harm investors. Applicant states that the trustee's role begins with the Issuer's issuance of its securities, and the trustee performs its role over the life of the Issuer. Applicant states that, in contrast, the underwriter is chosen early in the ABS Transaction process, may help to structure the ABS Transaction, distributes the Issuer's securities to investors, and generally has no role subsequent to the distribution of the Issuer's securities. Applicant further states that an ABS trustee does not monitor the distribution of securities or any other activity performed by underwriters and there is no opportunity for a trustee and an affiliated underwriter to act in concert to benefit themselves at the expense of holders of the ABS either prior to or after the closing of the ABS Transaction. 6. Applicant states that the trustee's role is narrowly defined, and that the trustee is neither expected nor required to exercise discretion or judgment except after a default in the ABS transaction, which rarely occurs. Applicant states that the duties of a trustee after a default are limited to enforcing the terms of the Agreement for the benefit of debt holders as a ``prudent person'' would enforce such interests for his own benefit. Applicant further states that the trustee of the Issuer has virtually no discretion to pursue anyone in any regard other than preserving and realizing on the assets. In any event, Applicant states that any role taken by the Trustee in the event of a default would occur after the underwriter has terminated its role in the transaction. 7. Applicant submits that the concerns underlying the Independent Trustee Requirement are not implicated if the trustee for an Issuer is independent of the sponsor, servicer, and credit enhancer for the Issuer, but is affiliated with an underwriter for the Issuer, because in that situation no single entity would act in all capacities in the issuance of the ABS and the operation of an Issuer. Applicant states that applicant would continue to act as an independent party safeguarding the assets of any Issuer regardless of an affiliation with an underwriter of the ABS. Applicant submits that the concern that affiliation could lead to a trustee monitoring the activities of an affiliate also is not implicated by a trustee's affiliation with an underwriter, because, in practice, a trustee for an Issuer does not monitor the distribution of securities or any other activity performed by underwriters. Applicant further states that the requested relief would be consistent with the broader purpose of Rule 3a-7 of not hampering the growth and development of the ABS market, to the extent consistent with investor protection. 8. Applicant states that the conditions set forth below provide additional protections against conflicts and overreaching. For example, the conditions ensure that the Applicant will continue to act as an independent party safeguarding the assets of an Issuer regardless of an affiliation with the underwriter of the ABS and would not allow the underwriter any greater access to the assets, or cash flows derived from the assets, of the Issuer than if there were no affiliation. Applicant's Conditions: The applicant agrees that any order granting the requested relief will be subject to the following conditions: 1. The applicant will not be affiliated with any person involved in the organization or operation of the Issuer in an ABS Transaction other than the underwriter. 2. The applicant's relationship to an affiliated underwriter will be disclosed in writing to all parties involved in an ABS Transaction, including the rating agencies and the ABS holders. 3. An underwriter affiliated with the applicant will not be involved in the operation of an Issuer, and its involvement in the organization of an Issuer will extend only to determining the assets to be pooled, assisting in establishing the terms of the ABS to be underwritten, and/or providing the sponsor with a line of credit for the assets to be transferred to the Issuer in connection with, and prior to, the related securitization. 4. An affiliated person of the applicant, including an affiliated underwriter, will not provide credit or credit enhancement to an Issuer if the applicant serves as trustee to the Issuer. 5. An underwriter affiliated with the applicant will not engage in any remarketing agent activities, including involvement in any auction process in which ABS interest rates, yields, or dividends are reset at designated intervals in any ABS Transaction for which the applicant serves as trustee to the Issuer. 6. All of an affiliated underwriter's contractual obligations pursuant to the underwriting agreement will be enforceable by the sponsor, the Issuer and/or one of their affiliates. 7. Consistent with the requirements of Rule 3a-7(a)(4)(i), the applicant will resign as trustee for the Issuer if applicant becomes obligated to enforce any of an affiliated underwriter's obligations to the Issuer. 8. The applicant will not price its services as trustee in a manner designed to facilitate its affiliate being named underwriter. For the Commission, by the Division of Investment Management, under delegated authority. Jill M. Peterson, Assistant Secretary. [FR Doc. 2015-28069 Filed 11-3-15; 8:45 am] BILLING CODE 8011-01-P
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arguments concerning the foregoing, SECURITIES AND EXCHANGE SUPPLEMENTARY INFORMATION: The
including whether the proposed rule COMMISSION following is a summary of the
change is consistent with the Act. application. The complete application
[Investment Company Act Release No.
Comments may be submitted by any of may be obtained via the Commission’s
31886; File No. 812–14404]
the following methods: Web site by searching for the file
Electronic Comments U.S. Bank National Association; Notice number, or for an applicant using the
of Application Company name box, at http://
• Use the Commission’s Internet www.sec.gov/search/search.htm or by
comment form (http://www.sec.gov/ October 29, 2015. calling (202) 551–8090.
rules/sro.shtml); or AGENCY: Securities and Exchange Applicant’s Representations:
• Send an email to rule-comments@ Commission (‘‘Commission’’). 1. The applicant is a subsidiary of
sec.gov. Please include File Number SR– ACTION: Notice of an application under U.S. Bancorp.1 The applicant is
NYSE–2015–47 on the subject line. Section 6(c) of the Investment Company frequently selected to act as trustee in
Act of 1940 (‘‘Act’’) for an exemption connection with ABS issued by Issuers.
Paper Comments 2. An ABS transaction typically
from certain requirements of Rule 3a–
• Send paper comments in triplicate involves the transfer of assets by a
7(a)(4)(i) under the Act.
to Brent J. Fields, Secretary, Securities seller, usually by a ‘‘sponsor,’’ to a
and Exchange Commission, 100 F Street Summary of Application: Applicant bankruptcy remote special purpose
NE., Washington, DC 20549–1090. requests an order that would permit an corporate or trust entity that is
All submissions should refer to File issuer of asset-backed securities established for the sole purpose of
Number SR–NYSE–2015–47. This file (‘‘ABS’’) that is not registered as an holding the assets and issuing ABS to
number should be included on the investment company under the Act in investors (an ‘‘ABS Transaction’’).
subject line if email is used. To help the reliance on Rule 3a–7 under the Act (an Payments of interest and principal on
Commission process and review your ‘‘Issuer’’) to appoint the applicant as a the ABS depend primarily on the cash
comments more efficiently, please use trustee in connection with the Issuer’s flow generated by the pool of assets
only one method. The Commission will ABS when the applicant is affiliated owned by the Issuer.
post all comments on the Commission’s with an underwriter for the Issuer’s 3. The parties to an ABS Transaction
Internet Web site (http://www.sec.gov/ ABS. enter into several transaction
rules/sro.shtml). Copies of the Applicant: U.S. Bank National agreements that provide for the holding
submission, all subsequent Association. of the assets by the Issuer and define the
amendments, all written statements Filing Dates: The application was rights and responsibilities of the parties
with respect to the proposed rule filed on December 19, 2014 and to the transaction (‘‘Transaction
change that are filed with the amended on June 4, 2015, and Documents’’). The operative Transaction
Commission, and all written September 29, 2015. Document governing the trustee is
communications relating to the Hearing or Notification of Hearing: An referred to herein as the ‘‘Agreement.’’
proposed rule change between the 4. The sponsor of an ABS Transaction
order granting the application will be
Commission and any person, other than assembles the pool of assets by
issued unless the Commission orders a
those that may be withheld from the purchasing or funding them, describes
hearing. Interested persons may request
public in accordance with the them in the offering materials, and
a hearing by writing to the
provisions of 5 U.S.C. 552, will be retains the underwriter to sell interests
Commission’s Secretary and serving
available for Web site viewing and in the assets to investors. The sponsor
applicant with a copy of the request,
printing in the Commission’s Public determines the structure of the ABS
personally or by mail. Hearing requests
Reference Room, 100 F Street NE., Transaction and drafts the Transaction
should be received by the Commission
Washington, DC 20549, on official Documents. The sponsor selects the
by 5:30 p.m. on November 23, 2015 and
business days between the hours of other parties to the ABS Transaction,
should be accompanied by proof of
10:00 a.m. and 3:00 p.m. Copies of the including the underwriter, the servicer,
service on the applicant, in the form of
filing will also be available for and the trustee.
an affidavit or, for lawyers, a certificate 5. The servicer, either directly or
inspection and copying at the NYSE’s of service. Pursuant to Rule 0–5 under through subservicers, manages the
principal office and on its Internet Web the Act, hearing requests should state assets held by the Issuer. The servicer
site at www.nyse.com. All comments the nature of the writer’s interest, any typically collects the income from the
received will be posted without change; facts bearing upon the desirability of a assets and remits the income to the
the Commission does not edit personal hearing on the matter, the reason for the trustee. The trustee uses the income, as
identifying information from request, and the issues contested. instructed by the servicer and as
submissions. You should submit only Persons who wish to be notified of a provided by the Agreement, to pay
information that you wish to make hearing may request notification by interest and principal on the ABS, to
available publicly. All submissions writing to the Commission’s Secretary. fund reserve accounts and purchases of
should refer to File Number SR–NYSE– ADDRESSES: The Commission: Brent J. additional assets, and to make other
2015–47 and should be submitted on or Fields, Secretary, U.S. Securities and payments including fees owed to the
before November 25, 2015. Exchange Commission, 100 F Street NE.,
For the Commission, by the Division of Washington, DC 20549–1090.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
1 The applicant also requests that the order apply
Trading and Markets, pursuant to delegated Applicant: U.S. Bank National to an Issuer’s future appointment of any other entity
authority.17 Association, 101 East 5th Street, Saint controlling, controlled by, or under common
control (as defined in Section 2(a)(9) of the Act)
Robert W. Errett, Paul, MN 55101. with the applicant as a trustee in connection with
Deputy Secretary. FOR FURTHER INFORMATION CONTACT: Jean an Issuer’s ABS. The applicant represents that any
[FR Doc. 2015–28033 Filed 11–3–15; 8:45 am] E. Minarick, Senior Counsel, at (202) other entity intending to rely on this relief will
comply with the terms and conditions of the
BILLING CODE 8011–01–P 551–6811, or Daniele Marchesani at application. Any existing entity currently intending
(202) 551–6821 (Division of Investment to rely on the requested order has been named as
17 17 CFR 200.30–3(a)(12). Management, Chief Counsel’s Office). an applicant.
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![Federal Register / Vol. 80, No. 213 / Wednesday, November 4, 2015 / Notices 68371
Independent Trustee Requirement in the issuance of the ABS and the which ABS interest rates, yields, or
generally prevents applicant from operation of an Issuer. Applicant states dividends are reset at designated
serving as trustee for the Issuer. that applicant would continue to act as intervals in any ABS Transaction for
Applicant states that the Independent an independent party safeguarding the which the applicant serves as trustee to
Trustee Requirement imposes an assets of any Issuer regardless of an the Issuer.
unnecessary regulatory limitation on affiliation with an underwriter of the 6. All of an affiliated underwriter’s
trustee selection and causes market ABS. Applicant submits that the contractual obligations pursuant to the
distortions by leading to the selection of concern that affiliation could lead to a underwriting agreement will be
trustees for reasons other than trustee monitoring the activities of an enforceable by the sponsor, the Issuer
customary market considerations of affiliate also is not implicated by a and/or one of their affiliates.
pricing and expertise. This result is trustee’s affiliation with an underwriter,
disadvantageous to the ABS market and because, in practice, a trustee for an 7. Consistent with the requirements of
to ABS investors. Issuer does not monitor the distribution Rule 3a–7(a)(4)(i), the applicant will
5. Applicant submits that due to the of securities or any other activity resign as trustee for the Issuer if
nature and timing of the roles of the performed by underwriters. Applicant applicant becomes obligated to enforce
trustee and the underwriter, applicant’s further states that the requested relief any of an affiliated underwriter’s
affiliation with an underwriter would would be consistent with the broader obligations to the Issuer.
not result in a conflict of interest or purpose of Rule 3a–7 of not hampering 8. The applicant will not price its
possibility of overreaching that could the growth and development of the ABS services as trustee in a manner designed
harm investors. Applicant states that the market, to the extent consistent with to facilitate its affiliate being named
trustee’s role begins with the Issuer’s investor protection. underwriter.
issuance of its securities, and the trustee 8. Applicant states that the conditions
For the Commission, by the Division of
performs its role over the life of the set forth below provide additional Investment Management, under delegated
Issuer. Applicant states that, in contrast, protections against conflicts and authority.
the underwriter is chosen early in the overreaching. For example, the
Jill M. Peterson,
ABS Transaction process, may help to conditions ensure that the Applicant
structure the ABS Transaction, will continue to act as an independent Assistant Secretary.
distributes the Issuer’s securities to party safeguarding the assets of an [FR Doc. 2015–28069 Filed 11–3–15; 8:45 am]
investors, and generally has no role Issuer regardless of an affiliation with BILLING CODE 8011–01–P
subsequent to the distribution of the the underwriter of the ABS and would
Issuer’s securities. Applicant further not allow the underwriter any greater
states that an ABS trustee does not access to the assets, or cash flows SECURITIES AND EXCHANGE
monitor the distribution of securities or derived from the assets, of the Issuer COMMISSION
any other activity performed by than if there were no affiliation.
underwriters and there is no Applicant’s Conditions: [Release No. 34–76302 ; File No. SR–EDGX–
opportunity for a trustee and an The applicant agrees that any order 2015–52]
affiliated underwriter to act in concert granting the requested relief will be
to benefit themselves at the expense of subject to the following conditions: Self-Regulatory Organizations; EDGX
holders of the ABS either prior to or 1. The applicant will not be affiliated Exchange, Inc.; Notice of Filing and
after the closing of the ABS Transaction. with any person involved in the Immediate Effectiveness of a Proposed
6. Applicant states that the trustee’s organization or operation of the Issuer Rule Change to Rule 21.8, Order
role is narrowly defined, and that the in an ABS Transaction other than the Display and Book Processing
trustee is neither expected nor required underwriter.
October 29, 2015.
to exercise discretion or judgment 2. The applicant’s relationship to an
except after a default in the ABS affiliated underwriter will be disclosed Pursuant to Section 19(b)(1) of the
transaction, which rarely occurs. in writing to all parties involved in an Securities Exchange Act of 1934 (the
Applicant states that the duties of a ABS Transaction, including the rating ‘‘Act’’),1 and Rule 19b–4 thereunder,2
trustee after a default are limited to agencies and the ABS holders. notice is hereby given that on October
enforcing the terms of the Agreement for 3. An underwriter affiliated with the 28, 2015, EDGX Exchange, Inc. (the
the benefit of debt holders as a ‘‘prudent applicant will not be involved in the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the
person’’ would enforce such interests operation of an Issuer, and its Securities and Exchange Commission
for his own benefit. Applicant further involvement in the organization of an (‘‘Commission’’) the proposed rule
states that the trustee of the Issuer has Issuer will extend only to determining change as described in Items I and II
virtually no discretion to pursue anyone the assets to be pooled, assisting in below, which Items have been prepared
in any regard other than preserving and establishing the terms of the ABS to be by the Exchange. The Exchange has
realizing on the assets. In any event, underwritten, and/or providing the designated this proposal as a ‘‘non-
Applicant states that any role taken by sponsor with a line of credit for the controversial’’ proposed rule change
the Trustee in the event of a default assets to be transferred to the Issuer in pursuant to Section 19(b)(3)(A) of the
would occur after the underwriter has connection with, and prior to, the Act 3 and Rule 19b–4(f)(6) thereunder,4
terminated its role in the transaction. related securitization. which renders it effective upon filing
7. Applicant submits that the 4. An affiliated person of the
asabaliauskas on DSK5VPTVN1PROD with NOTICES
with the Commission. The Commission
concerns underlying the Independent applicant, including an affiliated is publishing this notice to solicit
Trustee Requirement are not implicated underwriter, will not provide credit or comments on the proposed rule change
if the trustee for an Issuer is credit enhancement to an Issuer if the from interested persons.
independent of the sponsor, servicer, applicant serves as trustee to the Issuer.
and credit enhancer for the Issuer, but 5. An underwriter affiliated with the 1 15 U.S.C. 78s(b)(1).
is affiliated with an underwriter for the applicant will not engage in any 2 17 CFR 240.19b–4.
Issuer, because in that situation no remarketing agent activities, including 3 15 U.S.C. 78s(b)(3)(A).
single entity would act in all capacities involvement in any auction process in 4 17 CFR 240.19b–4(f)(6).
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Document Created: 2018-03-01 11:27:34
Document Modified: 2018-03-01 11:27:34
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice of an application under Section 6(c) of the Investment Company Act of 1940 (``Act'') for an exemption from certain requirements of Rule 3a-7(a)(4)(i) under the Act. | |
| Dates | The application was filed on December 19, 2014 and amended on June 4, 2015, and September 29, 2015. | |
| Contact | Jean E. Minarick, Senior Counsel, at (202) 551-6811, or Daniele Marchesani at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office). | |
| FR Citation | 80 FR 68369 |
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