80 FR 70002 - Good Hill Partners LP and Good Hill ETF Trust; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 218 (November 12, 2015)

Page Range		70002-70006
FR Document		2015-28796

Federal Register, Volume 80 Issue 218 (Thursday, November 12, 2015)

[Federal Register Volume 80, Number 218 (Thursday, November 12, 2015)]
[Notices]
[Pages 70002-70006]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2015-28796]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31897; 812-14507]

Good Hill Partners LP and Good Hill ETF Trust; Notice of
Application

November 6, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (``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 (a)(2) of the Act.

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Applicants: Good Hill Partners LP (``Good Hill Partners'') and Good
Hill ETF Trust (the ``Trust'').

Summary of Application: Applicants request an order that permits: (a)
Series of certain open-end management investment companies to issue
shares (``Shares'') redeemable in large aggregations only (``Creation
Units''); (b) secondary market transactions in Shares to occur at
negotiated market prices; (c) certain series to pay redemption
proceeds, under certain circumstances, more than seven days from the
tender of Shares for redemption; and (d) certain affiliated persons of
the series to deposit securities into, and receive securities from, the
series in connection with the purchase and redemption of Creation
Units.

Filing Dates: The application was filed on June 30, 2015 and amended
on October 16, 2015.

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 December 1, 2015, 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: Brent J. Fields, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants,
1599 Post Road East, Westport, CT 06880.

FOR FURTHER INFORMATION CONTACT: Kay-Mario Vobis, Senior Counsel, at
(202) 551-6728, or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's 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.

Applicants' Representations

1. The Trust, a business trust organized under the laws of
Massachusetts, intends to register with the Commission as an open-end
management investment company. The applicants are requesting relief not
only for the Trust and its initial series, Good Hill Short Duration
Actively Managed ETF (``Initial Fund''), but also with respect to
future series of the Trust, and to any registered open-end management
investment companies or series thereof that may be created in the
future and that utilizes active management investment strategies
(``Future Funds'' and collectively with the Initial Fund, the
``Funds'').\1\ Funds may invest in equity securities or fixed income
securities traded in the U.S. or non-U.S. markets or a combination of
equity and

[[Page 70003]]

fixed income securities, including ``to-be-announced transactions''
(``TBA Transactions'') \2\ and depositary receipts (``Depositary
Receipts'').\3\ The securities, other assets, and other positions in
which a Fund invests are its ``Portfolio Positions.'' \4\ The Trust
currently expects that the Initial Fund's investment objective will be
to seek total return by investing, under normal market conditions, at
least 80% of its net assets in a portfolio of short duration fixed
income securities.
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\1\ All entities that currently intend to rely on the requested
order are named as applicants and any Fund that currently intends to
rely on the requested order is identified in the application. Any
other entity that relies on the requested order in the future will
comply with the terms and conditions of the application.
\2\ A TBA Transaction is a method of trading mortgage-backed
securities. In a TBA Transaction, the buyer and seller agree on
general trade parameters such as agency, settlement date, par amount
and price. The actual pools delivered generally are determined two
days prior to the settlement date.
\3\ Depositary Receipts include American Depositary Receipts
(``ADRs'') and Global Depositary Receipts (``GDRs''). With respect
to ADRs, the depositary is typically a U.S. financial institution
and the underlying securities are issued by a foreign issuer. The
ADR is registered under the Securities Act of 1933 (``Securities
Act'') on Form F-6. ADR trades occur either on a national securities
exchange as defined in section 2(a)(26) of the Act (``Listing
Exchange'') or off-exchange. Financial Industry Regulatory Authority
Rule 6620 requires all off-exchange transactions in ADRs to be
reported within 90 seconds and ADR trade reports to be disseminated
on a real-time basis. With respect to GDRs, the depositary may be a
foreign or a U.S. entity, and the underlying securities may have a
foreign or a U.S. issuer. All GDRs are sponsored and trade on a
foreign exchange. No affiliated persons of applicants, any Adviser
(as defined below), Fund Sub-Adviser (as defined below), or Fund
will serve as the depositary for any Depositary Receipts held by a
Fund. A Fund will not invest in any Depositary Receipts that the
Adviser (or, if applicable, the Fund Sub-Adviser) deems to be
illiquid or for which pricing information is not readily available.
\4\ If a Fund invests in derivatives: (a) The Fund's board of
trustees periodically will review and approve (i) the Fund's use of
derivatives and (ii) how the Fund's investment adviser assesses and
manages risk with respect to the Fund's use of derivatives; and (b)
the Fund's disclosure of its use of derivatives in its offering
documents and periodic reports will be consistent with relevant
Commission and staff guidance.
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2. Each Fund will (a) be advised by Good Hill Partners or an entity
controlling, controlled by or under common control with Good Hill
Partners (each such entity and any successor thereto, an ``Adviser'')
\5\ and (b) comply with the terms and conditions stated in the
application. Good Hill Partners is a Delaware limited partnership and
is registered as an investment adviser under the Investment Advisers
Act of 1940 (the ``Advisers Act''). Any other Adviser to a Fund will be
registered under the Advisers Act. The Adviser may retain sub-advisers
(each, a ``Fund Sub-Adviser'') in connection with the Funds; each Fund
Sub-Adviser will be registered under the Advisers Act or not subject to
such registration.
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\5\ For the 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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3. The Trust will enter into a distribution agreement with one or
more distributors (``Distributor''). Each Distributor will be
registered under the Securities Exchange Act of 1934, as amended (the
``Exchange Act''), and will act as Distributor and principal
underwriter of the Funds. No Distributor will be affiliated with the
Listing Exchange. The Distributor of any Fund may be an ``affiliated
person'' or an affiliated person of an affiliated person of the Fund's
Adviser or Fund Sub-Adviser.
4. Shares of each Fund will be purchased from the Trust only in
large aggregations of a specified number referred to as ``Creation
Units.'' Creation Units may be purchased through orders placed with the
Distributor by or through an ``Authorized Participant'' which is either
(a) a broker-dealer or other participant in the Continuous Net
Settlement (``CNS'') System of the National Securities Clearing
Corporation (``NSCC''), a clearing agency that is registered with the
Commission, or (b) a participant (``DTC Participant'') in the
Depository Trust Company (``DTC''), and which in either case has
executed a participant agreement with the Distributor with respect to
the creation and redemption of Creation Units. Purchases and
redemptions of the Funds' Creation Units will be processed either
through an enhanced clearing process available to DTC Participants that
are also participants in the CNS system of the NSCC (the ``NSCC
Process'') or through a manual clearing process that is available to
all DTC Participants (the ``DTC Process'').
5. In order to keep costs low and permit each Fund to be as fully
invested as possible, Shares will be purchased and redeemed in Creation
Units and generally on an in-kind basis. Accordingly, except where the
purchase or redemption will include cash under the limited
circumstances specified below, purchasers will be required to purchase
Creation Units by making an in-kind deposit of specified instruments
(``Deposit Instruments''), and shareholders redeeming their Shares will
receive an in-kind transfer of specified instruments (``Redemption
Instruments'').\6\ On any given Business Day,\7\ the names and
quantities of the instruments that constitute the Deposit Instruments
and the names and quantities of the instruments that constitute the
Redemption Instruments will be identical, and these instruments may be
referred to, in the case of either a purchase or redemption, as the
``Creation Basket.'' In addition, the Creation Basket will correspond
pro rata to the positions in a Fund's portfolio (including cash
positions),\8\ except: (a) In the case of bonds, for minor differences
when it is impossible to break up bonds beyond certain minimum sizes
needed for transfer and settlement; (b) for minor differences when
rounding is necessary to eliminate fractional shares or lots that are
not tradeable round lots; \9\ or (c) TBA Transactions, short positions,
and other positions that cannot be transferred in kind \10\ will be
excluded from the Creation Basket.\11\ If there is a difference between
the net asset value (``NAV'') attributable to a Creation Unit and the
aggregate market value of the Creation Basket exchanged for the
Creation Unit, the party conveying instruments with the lower value
will also pay to the other an amount in cash equal to that difference
(the ``Balancing Amount'').
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\6\ The Funds must comply with the federal securities laws in
accepting Deposit Instruments and satisfying redemptions with
Redemption Instruments, including that the Deposit Instruments and
Redemption Instruments are sold in transactions that would be exempt
from registration under the Securities Act. In accepting Deposit
Instruments and satisfying redemptions with Redemption Instruments
that are restricted securities eligible for resale pursuant to Rule
144A under the Securities Act, the Funds will comply with the
conditions of Rule 144A.
\7\ Each Fund will sell and redeem Creation Units on any day the
Fund is open, including as required by section 22(e) of the Act
(each, a ``Business Day'').
\8\ The portfolio used for this purpose will be the same
portfolio used to calculate the Fund's NAV for that Business Day.
\9\ A tradeable round lot for a security will be the standard
unit of trading in that particular type of security in its primary
market.
\10\ This includes instruments that can be transferred in kind
only with the consent of the original counterparty to the extent the
Fund does not intend to seek such consents.
\11\ Because these instruments will be excluded from the
Creation Basket, their value will be reflected in the determination
of the Balancing Amount (defined below).
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6. Purchases and redemptions of Creation Units may be made in whole
or in part on a cash basis, rather than in kind, solely under the
following circumstances: (a) To the extent there is a Balancing Amount,
as described above; (b) if, on a given Business Day, a Fund announces
before the open of trading that all purchases, all redemptions or all
purchases and redemptions on that day will be made entirely in cash;
(c) if, upon receiving a purchase or redemption order from an
Authorized Participant, a Fund determines to require the purchase or
redemption, as applicable, to be made

[[Page 70004]]

entirely in cash; \12\ (d) if, on a given Business Day, a Fund requires
all Authorized Participants purchasing or redeeming Shares on that day
to deposit or receive (as applicable) cash in lieu of some or all of
the Deposit Instruments or Redemption Instruments, respectively, solely
because: (i) Such instruments are not eligible for transfer through
either the NSCC Process or DTC Process; or (ii) in the case of Funds
holding non-U.S. investments (``Global Funds''), such instruments are
not eligible for trading due to local trading restrictions, local
restrictions on securities transfers or other similar circumstances; or
(e) if a Fund permits an Authorized Participant to deposit or receive
(as applicable) cash in lieu of some or all of the Deposit Instruments
or Redemption Instruments, respectively, solely because: (i) Such
instruments are, in the case of the purchase of a Creation Unit, not
available in sufficient quantity; (ii) such instruments are not
eligible for trading by an Authorized Participant or the investor on
whose behalf the Authorized Participant is acting; or (iii) a holder of
Shares of a Fund holding non-U.S. investments would be subject to
unfavorable income tax treatment if the holder receives redemption
proceeds in kind.\13\
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\12\ In determining whether a particular Fund will sell or
redeem Creation Units entirely on a cash or in-kind basis (whether
for a given day or a given order), the key consideration will be the
benefit that would accrue to the Fund and its investors. For
instance, in bond transactions, the Adviser may be able to obtain
better execution than Share purchasers because of the Adviser's
size, experience and potentially stronger relationships in the fixed
income markets. Purchases of Creation Units either on an all cash
basis or in kind are expected to be neutral to the Funds from a tax
perspective. In contrast, cash redemptions typically require selling
portfolio holdings, which may result in adverse tax consequences for
the remaining Fund shareholders that would not occur with an in-kind
redemption. As a result, tax considerations may warrant in-kind
redemptions.
\13\ A ``custom order'' is any purchase or redemption of Shares
made in whole or in part on a cash basis in reliance on clause
(e)(i) or (e)(ii).
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7. Each Business Day, before the open of trading on the Listing
Exchange, each Fund will cause to be published through the NSCC the
names and quantities of the instruments comprising the Creation Basket,
as well as the estimated Balancing Amount (if any), for that day. The
published Creation Basket will apply until a new Creation Basket is
announced on the following Business Day, and there will be no intra-day
changes to the Creation Basket except to correct errors in the
published Creation Basket. The Listing Exchange or a major market data
vendor will disseminate every 15 seconds throughout the trading day an
amount representing the Fund's estimated NAV, which will be the value
of the Fund's Portfolio Positions, on a per Share basis.
8. An investor purchasing or redeeming a Creation Unit will be
charged a fee (``Transaction Fee'') to protect continuing shareholders
of the Funds from the dilutive costs associated with the purchase and
redemption of Creation Units.\14\ The Distributor will deliver a
confirmation and Fund prospectus (``Prospectus'') to the purchaser. In
addition, the Distributor will maintain records of both the orders
placed with it and the confirmations of acceptance furnished by it.
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\14\ Where a Fund permits an in-kind purchaser to deposit cash
in lieu of depositing one or more Deposit Instruments, the purchaser
may be assessed a higher Transaction Fee to offset the cost to the
Fund of buying those particular Deposit Instruments. In all cases,
such Transaction Fees will be limited in accordance with
requirements of the Commission applicable to open-end management
investment companies offering redeemable securities.
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9. Beneficial owners of Shares may sell their Shares in the
secondary market. Shares will be listed on a Listing Exchange and
traded in the secondary market in the same manner as other equity
securities. Applicants state that it is expected that one or more
specialists or market makers (collectively, ``Exchange Market Makers'')
will be assigned for the Shares of each Fund. The price of Shares
trading on the Listing Exchange will be based on a current bid/offer
market. Transactions involving the sale of Shares on the Listing
Exchange will be subject to customary brokerage commissions and
charges.
10. Applicants expect that purchasers of Creation Units will
include arbitrageurs and that Exchange Market Makers, acting in their
unique role to provide a fair and orderly secondary market for Shares,
also may purchase Creation Units for use in their own market making
activities.\15\ Applicants expect that secondary market purchasers of
Shares will include both institutional investors and retail
investors.\16\ Applicants state that because the market price of
Creation Units will be disciplined by arbitrage opportunities,
investors should be able to sell Shares in the secondary market at
prices that do not vary materially from their NAV.
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\15\ If Shares are listed on The NASDAQ Stock Market LLC
(``Nasdaq'') or a similar electronic Listing Exchange (including
NYSE Arca), one or more member firms of that Listing Exchange will
act as Exchange Market Maker and maintain a market for Shares
trading on that Listing Exchange. On Nasdaq, no particular Exchange
Market Maker would be contractually obligated to make a market in
Shares. However, the listing requirements on Nasdaq, for example,
stipulate that at least two Exchange Market Makers must be
registered in Shares to maintain a listing. In addition, on Nasdaq
and NYSE Arca, registered Exchange Market Makers are required to
make a continuous two-sided market or subject themselves to
regulatory sanctions. No Exchange Market Maker will be an affiliated
person or an affiliated person of an affiliated person, of the
Funds, except within the meaning of section 2(a)(3)(A) or (C) of the
Act due solely to ownership of Shares as discussed below.
\16\ Shares will be registered in book-entry form only. DTC or
its nominee will be the record or registered owner of all
outstanding Shares. DTC or DTC Participants will maintain records of
beneficial ownership of Shares.
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11. Neither the Trust nor any Fund will be advertised or marketed
as a conventional open-end investment company or mutual fund. Instead,
each Fund will be marketed as an ``actively-managed exchange-traded
fund.'' Any advertising material that describes the features of
obtaining, buying or selling Creation Units, or buying or selling
Shares on the Listing Exchange, or where there is reference to
redeemability, will prominently disclose that Shares are not
individually redeemable and that owners of Shares may acquire Shares
from a Fund and tender those Shares for redemption to a Fund in
Creation Units only.
12. The Funds' Web site, which will be publicly available prior to
the public offering of Shares, will include, or will include links to,
each Fund's current Prospectus which may be downloaded. That Web site,
which will be publicly available at no charge, will also contain, on a
per Share basis for each Fund, the prior Business Day's NAV and the
market closing price or the mid-point of the bid/ask spread at the time
of calculation of such NAV (the ``Bid/Ask Price''), and a calculation
of the premium or discount of the market closing price or Bid/Ask Price
against such NAV. On each Business Day, before commencement of trading
in Shares on the Listing Exchange, each Fund will also disclose on its
Web site the identities and quantities of its Portfolio Positions held
by the Fund that will form the basis for the Fund's calculation of NAV
at the end of the Business Day.\17\
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\17\ Under accounting procedures followed by the Funds, trades
made on the prior Business Day (``T'') will be booked and reflected
in NAV on the current Business Day (``T+1''). Accordingly, the Funds
will be able to disclose at the beginning of the Business Day the
portfolio that will form the basis for the NAV calculation at the
end of the Business Day.
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Applicants' Legal Analysis

1. Applicants request an order under section 6(c) of 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, and under sections 6(c) and 17(b) of the
Act for an exemption from sections 17(a)(1) and (a)(2) of the Act.

[[Page 70005]]

2. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction, or any class of persons,
securities or transactions, from any provision of the Act, if and to
the extent that 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 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) of the Act if evidence establishes that
the terms of the proposed transaction, including the consideration to
be paid or received, are reasonable and fair and do not involve
overreaching on the part of any person concerned, and the proposed
transaction is consistent with the policies of the registered
investment company and the general provisions of the Act.

Sections 5(a)(1) and 2(a)(32) of the Act

3. Section 5(a)(1) of the Act defines an ``open-end company'' as a
management investment company that is offering for sale or has
outstanding any redeemable security of which it is the issuer. Section
2(a)(32) of the Act defines a redeemable security as any security,
other than short-term paper, under the terms of which the holder, upon
its presentation to the issuer, is entitled to receive approximately a
proportionate share of the issuer's current net assets, or the cash
equivalent. Applicants request an order to permit the Trust to register
as an open-end management investment company and redeem Shares in
Creation Units only. Applicants state that each investor is entitled to
purchase or redeem Creation Units rather than trade the individual
Shares in the secondary market. Applicants further state that because
of the arbitrage possibilities created by the redeemability of Creation
Units, it is expected that the market price of an individual Share will
not vary materially from its NAV.

Section 22(d) of the Act and Rule 22c-1 under the Act

4. Section 22(d) of the Act, among other things, prohibits a dealer
from selling a redeemable security, which is currently being offered to
the public by or through a principal underwriter, except at a current
public offering price described in the prospectus. Rule 22c-1 under the
Act generally requires that a dealer selling, redeeming, or
repurchasing a redeemable security do so only at a price based on its
NAV. Applicants state that secondary market trading in Shares will take
place at negotiated prices, rather than at the current offering price
described in the Fund's Prospectus. Thus, purchases and sales of Shares
in the secondary market will not comply with section 22(d) of the Act
and rule 22c-1 under the Act. Applicants request an exemption under
section 6(c) from these provisions.
5. Applicants assert that the concerns sought to be addressed by
section 22(d) of the Act and rule 22c-1 under the Act with respect to
pricing are equally satisfied by the proposed method of pricing Shares.
Applicants maintain that while there is little legislative history
regarding section 22(d), its provisions, as well as those of rule 22c-
1, appear to have been intended (a) to prevent dilution caused by
certain riskless-trading schemes by principal underwriters and contract
dealers, (b) to prevent unjust discrimination or preferential treatment
among buyers, and (c) to ensure an orderly distribution of shares by
eliminating price competition from brokers offering shares at less than
the published sales price and repurchasing shares at more than the
published redemption price.
6. Applicants state that (a) secondary market transactions in
Shares would not cause dilution for owners of such Shares because such
transactions do not involve the Trust or Funds as parties, 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 contend
that the proposed distribution system will be orderly because arbitrage
activity will ensure that the difference between the market price of
Shares and their NAV remains immaterial.

Section 22(e)

7. Section 22(e) of the Act generally prohibits a registered
investment company from suspending the right of redemption or
postponing the date of payment of redemption proceeds for more than
seven days after the tender of a security for redemption. Applicants
observe that the settlement of redemptions of Creation Units of Global
Funds will be contingent not only on the settlement cycle of the U.S.
securities markets but also on the delivery cycles in foreign markets
in which those Funds invest. Applicants assert that, under certain
circumstances, the delivery cycles for transferring Portfolio Positions
to redeeming investors, coupled with local market holiday schedules,
may require a delivery process of up to 15 calendar days. Applicants
therefore request relief from section 22(e) in order for each Global
Fund to provide payment or satisfaction of redemptions within the
maximum number of calendar days required for such payment or
satisfaction in the principal local market(s) where transactions in its
Portfolio Positions customarily clear and settle, but in any event,
within a period not to exceed fifteen calendar days.\18\
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\18\ Applicants acknowledge that no relief obtained from the
requirements of section 22(e) will affect any obligations that they
may otherwise have under rule 15c6-1 under the Exchange Act, which
requires that most securities transactions be settled within three
business days of the trade date.
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8. Applicants submit that Congress adopted section 22(e) to prevent
unreasonable, undisclosed or unforeseen delays in the actual payment of
redemption proceeds. Applicants state that allowing redemption payments
for Creation Units of a Global Fund to be made within 15 calendar days
would not be inconsistent with the spirit and intent of section
22(e).\19\ Applicants state that each Global Fund's statement of
additional information (``SAI'') will disclose those local holidays
(over the period of at least one year following the date of the SAI),
if any, that are expected to prevent the delivery of redemption
proceeds in seven calendar days and the maximum number of days, up to
15 calendar days, needed to deliver the proceeds for that Global Fund.
Applicants are not seeking relief from section 22(e) with respect to
Global Funds that do not effect redemptions of Creation Units in kind.
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\19\ Certain countries in which a Global Fund may invest have
historically had settlement periods of up to 15 calendar days.
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Sections 17(a)(1) and (2) of the Act

9. Section 17(a)(1) and (2) of the Act generally prohibit an
affiliated person of a registered investment company, or an affiliated
person of such a person (``second tier affiliate''), from selling any
security to or purchasing any security from the company. Section
2(a)(3) of the Act defines ``affiliated person'' to include any person
directly or indirectly owning, controlling, or holding with power to
vote 5% or more of the outstanding voting securities of the other
person and any person directly or indirectly controlling, controlled
by, or under common control with, the other person. Section 2(a)(9) of
the Act defines ``control'' of a fund as ``the power to exercise a
controlling influence over the management or policies'' of the fund and
provides that a control relationship will be presumed

[[Page 70006]]

where one person owns more than 25% of another person's voting
securities. The Funds may be deemed to be controlled by an Adviser and
hence affiliated persons of each other. In addition, the Funds may be
deemed to be under common control with any other registered investment
company (or series thereof) advised by an Adviser (an ``Affiliated
Fund'').
10. Applicants request an exemption from section 17(a) under
sections 6(c) and 17(b) to permit in-kind purchases and redemptions of
Creation Units from the Funds by persons that are affiliated persons or
second tier affiliates of the Funds solely by virtue of one or more of
the following: (a) Holding 5% or more, or more than 25%, of the
outstanding Shares of one or more Funds; (b) an affiliation with a
person with an ownership interest described in (a); or (c) holding 5%
or more, or more than 25%, of the shares of one or more Affiliated
Funds.
11. Applicants assert that no useful purpose would be served by
prohibiting the affiliated persons described above from making in-kind
purchases or in-kind redemptions of Shares of a Fund in Creation Units.
Both the deposit procedures for in-kind purchases of Creation Units and
the redemption procedures for in-kind redemptions will be effected in
exactly the same manner for all purchases and redemptions. The
valuation of the Deposit Instruments and Redemption Instruments will be
made in the same manner, and in the same manner as the Fund's Portfolio
Positions, regardless of the identity of the purchaser or redeemer.
Except with respect to cash determined in accordance with the
procedures described in section I.G.1. of the application, Deposit
Instruments and Redemption Instruments will be the same for all
purchasers and redeemers. Therefore, applicants state that the in-kind
purchases and redemptions will afford no opportunity for the specified
affiliated persons of a Fund to effect a transaction detrimental to
other holders of Shares of that Fund. Applicants do not believe that
in-kind purchases and redemptions will result in abusive self-dealing
or overreaching of the Fund.

Applicant's Conditions

Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:
1. As long as the Funds operate in reliance on the requested order,
the Shares of the Funds will be listed on a Listing Exchange.
2. Neither the Trust nor any Fund will be advertised or marketed as
an open-end investment company or a mutual fund. Any advertising
material that describes the purchase or sale of Creation Units or
refers to redeemability will prominently disclose that the Shares are
not individually redeemable and that owners of the Shares may acquire
those Shares from the Fund and tender those Shares for redemption to
the Fund in Creation Units only.
3. The Web site for the Funds, which is and will be publicly
accessible at no charge, will contain on a per Share basis, for each
Fund, the prior Business Day's NAV and the market closing price or Bid/
Ask Price, and a calculation of the premium or discount of the market
closing price or Bid/Ask Price against such NAV.
4. On each Business Day, before commencement of trading in Shares
on the Listing Exchange, the Fund will disclose on its Web site the
identities and quantities of the Portfolio Positions held by the Fund
that will form the basis for the Fund's calculation of NAV at the end
of the Business Day.
5. The Adviser or any Fund Sub-Adviser, directly or indirectly,
will not cause any Authorized Participant (or any investor on whose
behalf an Authorized Participant may transact with the Fund) to acquire
any Deposit Instrument for the Fund through a transaction in which the
Fund could not engage directly.
6. The requested relief to permit ETF operations will expire on the
effective date of any Commission rule under the Act that provides
relief permitting the operation of actively managed exchange-traded
funds.

For the Commission, by the Division of Investment Management,
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-28796 Filed 11-10-15; 8:45 am]
BILLING CODE 8011-01-P

Document Created: 2015-12-14 14:53:38
Document Modified: 2015-12-14 14:53:38

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 for an order under section 6(c) of the Investment Company Act of 1940 (``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 (a)(2) of the Act.
Dates		The application was filed on June 30, 2015 and amended on October 16, 2015.
Contact		Kay-Mario Vobis, Senior Counsel, at (202) 551-6728, or Mary Kay Frech, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		80 FR 70002