81 FR 10924 - PowerShares Exchange-Traded Fund Trust, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 41 (March 2, 2016)

Page Range		10924-10925
FR Document		2016-04509

Federal Register, Volume 81 Issue 41 (Wednesday, March 2, 2016)

[Federal Register Volume 81, Number 41 (Wednesday, March 2, 2016)]
[Notices]
[Pages 10924-10925]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-04509]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32006; File No. 812-14442]


PowerShares Exchange-Traded Fund Trust, et al.; Notice of 
Application

February 25, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 12(d)(1)(J) 
of the Investment Company Act of 1940 (the ``Act'') for an exemption 
from sections 12(d)(1)(A) and (C) of the Act and under sections 6(c) 
and 17(b) of the Act for an exemption from section 17(a) of the Act. 
The requested order would permit certain registered open-end investment 
companies to acquire shares of ``business development companies'', as 
defined in section 2(a)(48) of the Act (``BDCs''), that are within and 
outside the same group of investment companies as the acquiring 
investment companies, in excess of the limits in section 12(d)(1) of 
the Act and to exempt such transactions in BDCs from section 17(a) to 
the extent necessary to permit such purchases and redemptions. The 
requested order would amend a prior order issued to the Applicants by 
the Commission under section 12(d)(1)(J) of the Act for exemptions from 
sections 12(d)(1)(A), (B) and (C) of the Act and sections 6(c) and 
17(b) of the Act exempting certain transactions from section 17(a) of 
the Act (``Prior Order'').\1\

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    \1\ In the Matter of PowerShares Exchange-Traded Fund Trust, et 
al., Investment Company Act Release Nos. 30222 (Sept. 26, 2012) 
(notice) and 30238 (Oct. 23, 2012) (order).

Applicants:  PowerShares Exchange-Traded Fund Trust, PowerShares 
Exchange-Traded Fund Trust II, PowerShares Actively Managed Exchange-
Traded Fund Trust (each a ``Trust'', and collectively, the 
``Trusts''),\2\ each organized as a Massachusetts business trust or 
Delaware statutory trust, as applicable, and each registered as an 
open-end management investment company under the Act with multiple 
series, and Invesco PowerShares Capital Management, LLC, a Delaware 
limited liability company that is registered as an investment adviser 
under the Investment Advisers Act of 1940 (the ``Adviser'' \3\ and, 
together with the Trusts, the ``Applicants'').
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    \2\ The Trusts have received exemptive relief to operate as 
exchange-traded funds. In the Matter of PowerShares Exchange-Traded 
Fund Trust and PowerShares Capital Management LLC, Investment 
Company Act Release Nos. 25961 (Mar. 4, 2003) (notice) and 25985 
(Mar. 28, 2003) (order).
    \3\ All references herein to the term ``Adviser'' include 
successors-in-interest to the Adviser. A ``successor-in-interest'' 
is an entity that results from a reorganization into another 
jurisdiction or a change in the type of business organization.

DATES: Filing Dates: The application was filed on April 10, 2015, as 
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amended on October 20, 2015, and January 12, 2016.

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 March 21, 2016 and should be accompanied by proof of 
service on the 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, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicants: 3500 Lacey Road, 
Suite 700, Downers Grove, Illinois 60515.

FOR FURTHER INFORMATION CONTACT:  Erin C. Loomis, Senior Counsel, at 
(202) 551-6721, or Sara Crovitz, Assistant Chief Counsel, at (202) 551-
6862 (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.

Summary of the Application

    1. Applicants request an order under section 12(d)(1)(J) of the Act 
granting an exemption from section 12(d)(1)(A) and (C) of the Act. The 
order would permit a Fund \4\ (each a ``Fund of Funds'') to

[[Page 10925]]

invest in any BDC (``Underlying BDC'') that may or may not be part of 
the ``same group of investment companies'' as the Fund of Funds. The 
order would amend the Prior Order, which permits the Funds of Funds to 
acquire shares of certain registered open-end management investment 
companies, registered closed-end management investment companies, and 
registered unit investment trusts that are within or outside the same 
group of investment companies as the acquiring investment companies 
(``Prior Underlying Funds'', and together with the Underlying BDCs, the 
``Underlying Funds'') in excess of the limits in sections 12(d)(1)(A), 
(B) and (C) of the Act.\5\ Applicants also request an order of 
exemption under sections 6(c) and 17(b) of the Act from the prohibition 
on certain affiliated transactions in section 17(a) of the Act to the 
extent necessary to permit the Underlying BDCs to sell their shares to, 
and redeem their shares from, the Funds of Funds. Applicants state that 
such transactions will be consistent with the policies of each Fund of 
Funds and each Underlying Fund and with the general purposes of the Act 
and will generally be based on the net asset values of the Underlying 
Funds.\6\
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    \4\ Applicants request that the order apply to each existing and 
future series of the Trusts and to each existing and future 
registered open-end investment company or series thereof that is 
advised by the Adviser or by any entity controlling, controlled by 
or under common control with the Adviser and is part of the same 
``group of investment companies'' as the Trusts (each, a ``Fund''). 
For purposes of the requested order, the same ``group of investment 
companies'' means any two or more registered investment companies 
(including closed-end investment companies) or BDCs that hold 
themselves out to investors as related companies for purposes of 
investment and investor services.
    \5\ The Prior Order also exempts these transactions from section 
17(a) to the extent necessary to permit such purchases and 
redemptions by the Funds of Funds of shares of the Prior Underlying 
Funds and to permit sales and redemptions by the Prior Underlying 
Funds of their shares in transactions with each Fund of Funds.
    \6\ With regard to purchases of underlying closed-end investment 
companies, the only sales transaction requiring relief from section 
17(a) (a follow-on offering) generally must be priced at net asset 
value (plus the cost of any distributing commission or discount) 
unless the offering fits within a narrow range of exceptions that 
are designed to limit overreaching by the selling fund. For this 
reason, Applicants state that they do not believe that section 17(a) 
relief to permit sales of shares by underlying closed-end investment 
companies presents any different concerns or considerations than are 
presented in connection with section 17(a) relief to permit sales of 
shares by a BDC to a Fund of Funds.
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    2. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the Prior Order, 
as amended by the Application. Such terms and conditions are designed 
to, among other things, help prevent any potential (i) undue influence 
over an Underlying Fund that is not in the same ``group of investment 
companies'' as the Fund of Funds 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), 
(B), and (C) of the Act. The Applicants do not believe that investments 
in BDCs present any particular considerations or concerns that may be 
different from those presented by investments in registered closed-end 
investment companies. Moreover, Applicants believe that the terms and 
conditions of the Prior Order that were designed to address the 
concerns underlying section 12(d)(1) with regard to investments in 
closed-end investment companies are sufficient to address those same 
concerns with respect to investment in underlying BDCs.
    3. 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 reasonable and fair 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. 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
 Robert W. Errett,
 Deputy Secretary.
[FR Doc. 2016-04509 Filed 3-1-16; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 81, No. 41 / Wednesday, March 2, 2016 / Notices 10925

invest in any BDC (‘‘Underlying BDC’’) overly complex fund structures, which SECURITIES AND EXCHANGE
that may or may not be part of the are the concerns underlying the limits COMMISSION
‘‘same group of investment companies’’ in sections 12(d)(1)(A), (B), and (C) of
as the Fund of Funds. The order would the Act. The Applicants do not believe [Release No. 34–77233; File No. SR–
amend the Prior Order, which permits that investments in BDCs present any NASDAQ–2016–021]
the Funds of Funds to acquire shares of particular considerations or concerns
certain registered open-end management that may be different from those Self-Regulatory Organizations; The
investment companies, registered presented by investments in registered NASDAQ Stock Market LLC; Notice of
closed-end management investment closed-end investment companies. Filing of Proposed Rule Change
companies, and registered unit
Moreover, Applicants believe that the Relating to the Listing and Trading of
investment trusts that are within or
terms and conditions of the Prior Order the Shares of the First Trust
outside the same group of investment
companies as the acquiring investment that were designed to address the Alternative Absolute Return Strategy
companies (‘‘Prior Underlying Funds’’, concerns underlying section 12(d)(1) ETF of First Trust Exchange-Traded
and together with the Underlying BDCs, with regard to investments in closed- Fund VII
the ‘‘Underlying Funds’’) in excess of end investment companies are sufficient
February 25, 2016.
the limits in sections 12(d)(1)(A), (B) to address those same concerns with
and (C) of the Act.5 Applicants also respect to investment in underlying Pursuant to Section 19(b)(1) of the
request an order of exemption under BDCs. Securities Exchange Act of 1934
sections 6(c) and 17(b) of the Act from 3. Section 12(d)(1)(J) of the Act (‘‘Act’’),1 and Rule 19b–4 thereunder,2
the prohibition on certain affiliated provides that the Commission may notice is hereby given that on February
transactions in section 17(a) of the Act exempt any person, security, or 16, 2016, The NASDAQ Stock Market
to the extent necessary to permit the transaction, or any class or classes of LLC (‘‘Nasdaq’’ or the ‘‘Exchange’’) filed
Underlying BDCs to sell their shares to, persons, securities, or transactions, from with the Securities and Exchange
and redeem their shares from, the Funds any provision of section 12(d)(1) if the Commission (‘‘Commission’’) the
of Funds. Applicants state that such proposed rule change as described in in
exemption is consistent with the public
transactions will be consistent with the Items I and II below, which Items have
policies of each Fund of Funds and each interest and the protection of investors.
Section 17(b) of the Act authorizes the been prepared by Nasdaq. The
Underlying Fund and with the general Commission is publishing this notice to
purposes of the Act and will generally Commission to grant an order
permitting a transaction otherwise solicit comments on the proposed rule
be based on the net asset values of the change from interested persons.
Underlying Funds.6 prohibited by section 17(a) if it finds
2. Applicants agree that any order that (a) the terms of the proposed I. Self-Regulatory Organization’s
granting the requested relief will be transaction are reasonable and fair and Statement of the Terms of Substance of
subject to the terms and conditions do not involve overreaching on the part the Proposed Rule Change
stated in the Prior Order, as amended by of any person concerned; (b) the
the Application. Such terms and proposed transaction is consistent with Nasdaq proposes to list and trade the
conditions are designed to, among other the policies of each registered shares of the First Trust Alternative
things, help prevent any potential (i) investment company involved; and (c) Absolute Return Strategy ETF (the
undue influence over an Underlying the proposed transaction is consistent ‘‘Fund’’) of First Trust Exchange-Traded
Fund that is not in the same ‘‘group of with the general purposes of the Act. Fund VII (the ‘‘Trust’’) under Nasdaq
investment companies’’ as the Fund of Section 6(c) of the Act permits the Rule 5735 (‘‘Managed Fund Shares’’).3
Funds through control or voting power, Commission to exempt any persons or The shares of the Fund are collectively
or in connection with certain services, transactions from any provision of the referred to herein as the ‘‘Shares.’’
transactions, and underwritings, (ii)
Act if such exemption is necessary or The text of the proposed rule change
excessive layering of fees, and (iii)
appropriate in the public interest and is available at http://
companies’’ means any two or more registered
consistent with the protection of nasdaq.cchwallstreet.com/, at Nasdaq’s
investment companies (including closed-end investors and the purposes fairly principal office, and at the
investment companies) or BDCs that hold intended by the policy and provisions of Commission’s Public Reference Room.
themselves out to investors as related companies for
purposes of investment and investor services.
the Act.
1 15 U.S.C. 78s(b)(1).
5 The Prior Order also exempts these transactions
For the Commission, by the Division of
from section 17(a) to the extent necessary to permit Investment Management, pursuant to 2 17 CFR 240.19b–4.
such purchases and redemptions by the Funds of 3 The Commission approved Nasdaq Rule 5735 in
Funds of shares of the Prior Underlying Funds and delegated authority.
Securities Exchange Act Release No. 57962 (June
to permit sales and redemptions by the Prior Robert W. Errett, 13, 2008), 73 FR 35175 (June 20, 2008) (SR-
Underlying Funds of their shares in transactions NASDAQ–2008–039). There are already multiple
with each Fund of Funds.
Deputy Secretary.
actively-managed funds listed on the Exchange; see,
6 With regard to purchases of underlying closed- [FR Doc. 2016–04509 Filed 3–1–16; 8:45 am]
e.g., Securities Exchange Act Release Nos. 71913
end investment companies, the only sales BILLING CODE 8011–01–P (April 9, 2014), 79 FR 21333 (April 15, 2014) (SR–
transaction requiring relief from section 17(a) (a
NASDAQ–2014–019) (order approving listing and
follow-on offering) generally must be priced at net
trading of First Trust Managed Municipal ETF);
asset value (plus the cost of any distributing
69464 (April 26, 2013), 78 FR 25774 (May 2, 2013)
mstockstill on DSK4VPTVN1PROD with NOTICES

commission or discount) unless the offering fits
within a narrow range of exceptions that are (SR–NASDAQ–2013–036) (order approving listing
designed to limit overreaching by the selling fund. and trading of First Trust Senior Loan Fund); and
For this reason, Applicants state that they do not 66489 (February 29, 2012), 77 FR 13379 (March 6,
believe that section 17(a) relief to permit sales of 2012) (SR–NASDAQ–2012–004) (order approving
shares by underlying closed-end investment listing and trading of WisdomTree Emerging
companies presents any different concerns or Markets Corporate Bond Fund). The Exchange
considerations than are presented in connection believes the proposed rule change raises no
with section 17(a) relief to permit sales of shares by significant issues not previously addressed in those
a BDC to a Fund of Funds. prior Commission orders.

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Document Created: 2018-02-02 15:04:14
Document Modified: 2018-02-02 15:04:14

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 12(d)(1)(J) of the Investment Company Act of 1940 (the ``Act'') for an exemption from sections 12(d)(1)(A) and (C) of the Act and under sections 6(c) and 17(b) of the Act for an exemption from section 17(a) of the Act. The requested order would permit certain registered open-end investment companies to acquire shares of ``business development companies'', as defined in section 2(a)(48) of the Act (``BDCs''), that are within and outside the same group of investment companies as the acquiring investment companies, in excess of the limits in section 12(d)(1) of the Act and to exempt such transactions in BDCs from section 17(a) to the extent necessary to permit such purchases and redemptions. The requested order would amend a prior order issued to the Applicants by the Commission under section 12(d)(1)(J) of the Act for exemptions from sections 12(d)(1)(A), (B) and (C) of the Act and sections 6(c) and 17(b) of the Act exempting certain transactions from section 17(a) of the Act (``Prior Order'').\1\
Dates		Filing Dates: The application was filed on April 10, 2015, as
Contact		Erin C. Loomis, Senior Counsel, at (202) 551-6721, or Sara Crovitz, Assistant Chief Counsel, at (202) 551- 6862 (Division of Investment Management, Chief Counsel's Office).
FR Citation		81 FR 10924