81 FR 69887 - Legg Mason Global Asset Management Trust, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 195 (October 7, 2016)

Page Range		69887-69889
FR Document		2016-24286

Federal Register, Volume 81 Issue 195 (Friday, October 7, 2016)

[Federal Register Volume 81, Number 195 (Friday, October 7, 2016)]
[Notices]
[Pages 69887-69889]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-24286]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32300; File No. 812-14583]


Legg Mason Global Asset Management Trust, et al.; Notice of 
Application

October 3, 2016.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION:  Notice of an application for an order pursuant to: (a) Section 
6(c) of the Investment Company Act of 1940 (``Act'') granting an 
exemption from sections 18(f) and 21(b) of the Act; (b) section 
12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of 
the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption 
from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) 
section 17(d) of the Act and rule 17d-1 under the Act to permit certain 
joint arrangements and transactions. Applicants request an order that 
would permit certain registered open-end management investment 
companies to participate in a joint lending and borrowing facility.

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Applicants:  Legg Mason Global Asset Management Trust, Legg Mason 
Global Asset Management Variable Trust, Legg Mason Partners Income 
Trust, Legg Mason Partners Institutional Trust, Legg Mason Partners 
Money Market Trust, Legg Mason Partners Premium Money Market Trust, 
Legg Mason Partners Variable Income Trust, Master Portfolio Trust, and 
Western Asset Funds, Inc., registered under the Act as open-end 
management investment companies with one or more series, and Legg Mason 
Partners Fund Advisor, LLC (the ``Adviser''), registered as an 
investment adviser under the Investment Advisers Act of 1940.

Filing Dates: The application was filed on November 27, 2015, and 
amended on May 5, 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,

[[Page 69888]]

personally or by mail. Hearing requests should be received by the 
Commission by 5:30 p.m. on October 28, 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, c/o: Bryan 
Chegwidden, Esq., Rope & Gray LLP, 1211 Avenue of the Americas, New 
York, NY 10036, and Robert I. Frenkel, Legg Mason & Co., LLC, 100 First 
Stamford Place, Stamford, CT 06902.

FOR FURTHER INFORMATION CONTACT:  Judy T. Lee, Senior Special Counsel, 
at (202) 551-6259 or Sara Crovitz, Assistant Chief Counsel, at (202) 
551-6720 (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 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 that would permit the applicants to 
participate in an interfund lending facility where each Fund could lend 
money directly to and borrow money directly from other Funds to cover 
unanticipated cash shortfalls, such as unanticipated redemptions or 
trade fails.\1\ The Funds will not borrow under the facility for 
leverage purposes and the loans' duration will be no more than 7 
days.\2\
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    \1\ Applicants request that the order apply to the applicants 
and to any existing or future registered open-end management 
investment company or series thereof for which the Adviser or any 
successor thereto or an investment adviser controlling, controlled 
by, or under common control with the Adviser or any successor 
thereto serves as investment adviser (each a ``Fund'' and 
collectively the ``Funds'' and each such investment adviser an 
``Adviser''). For purposes of the requested order, ``successor'' is 
limited to any entity that results from a reorganization into 
another jurisdiction or a change in the type of a business 
organization.
    \2\ Any Fund, however, will be able to call a loan on one 
business day's notice.
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    2. Applicants anticipate that the proposed facility would provide a 
borrowing Fund with a source of liquidity at a rate lower than the bank 
borrowing rate at times when the cash position of the Fund is 
insufficient to meet temporary cash requirements. In addition, Funds 
making short-term cash loans directly to other Funds would earn 
interest at a rate higher than they otherwise could obtain from 
investing their cash in repurchase agreements or certain other short 
term money market instruments. Thus, applicants assert that the 
facility would benefit both borrowing and lending Funds.
    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the Application. 
Among others, the Adviser, through a designated committee, would 
administer the facility as a disinterested fiduciary as part of its 
duties under the investment management and administrative agreements 
with the Funds and would receive no additional fee as compensation for 
its services in connection with the administration of the facility. The 
facility would be subject to oversight and certain approvals by the 
Funds' Board, including, among others, approval of the interest rate 
formula and of the method for allocating loans across Funds, as well as 
review of the process in place to evaluate the liquidity implications 
for the Funds. A Fund's aggregate outstanding interfund loans will not 
exceed 15% of its net assets, and the Fund's loan to any one Fund will 
not exceed 5% of the lending Fund's net assets.\3\
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    \3\ Under certain circumstances, a borrowing Fund will be 
required to pledge collateral to secure the loan.
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    4. Applicants assert that the facility does not raise the concerns 
underlying section 12(d)(1) of the Act given that the Funds are part of 
the same group of investment companies and there will be no duplicative 
costs or fees to the Funds.\4\ Applicants also assert that the proposed 
transactions do not raise the concerns underlying sections 17(a)(1), 
17(a)(3), 17(d) and 21(b) of the Act as the Funds would not engage in 
lending transactions that unfairly benefit insiders or are detrimental 
to the Funds. Applicants state that the facility will offer both 
reduced borrowing costs and enhanced returns on loaned funds to all 
participating Funds and each Fund would have an equal opportunity to 
borrow and lend on equal terms based on an interest rate formula that 
is objective and verifiable. With respect to the relief from section 
17(a)(2) of the Act, applicants note that any collateral pledged to 
secure an interfund loan would be subject to the same conditions 
imposed by any other lender to a Fund that imposes conditions on the 
quality of or access to collateral for a borrowing (if the lender is 
another Fund) or the same or better conditions (in any other 
circumstance).\5\
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    \4\ Applicants state that the obligation to repay an interfund 
loan could be deemed to constitute a security for the purposes of 
sections 17(a)(1) and 12(d)(1) of the Act.
    \5\ Applicants state that any pledge of securities to secure an 
interfund loan could constitute a purchase of securities for 
purposes of section 17(a)(2) of the Act.
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    5. Applicants also believe that the limited relief from section 
18(f)(1) of the Act that is necessary to implement the facility 
(because the lending Funds are not banks) is appropriate in light of 
the conditions and safeguards described in the application and because 
the Funds would remain subject to the requirement of section 18(f)(1) 
that all borrowings of a Fund, including combined interfund loans and 
bank borrowings, have at least 300% asset coverage.
    6. 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. Rule 
17d-1(b) under the Act provides that in passing upon an application 
filed under the rule, the Commission will consider whether the 
participation of the registered investment company in a joint 
enterprise, joint arrangement or profit sharing plan on the basis 
proposed is consistent with the provisions, policies and purposes of 
the Act and the extent to which such

[[Page 69889]]

participation is on a basis different from or less advantageous than 
that of the other participants.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-24286 Filed 10-6-16; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 81, No. 195 / Friday, October 7, 2016 / Notices 69887

a result, OCC believes that the proposed IV. Solicitation of Comments For the Commission, by the Division of
fee schedule provides for the equitable Trading and Markets, pursuant to delegated
allocation of reasonable fees in Interested persons are invited to authority.20
accordance with Section 17A(b)(3)(D) of submit written data, views and Robert W. Errett,
the Act.15 The proposed rule change is arguments concerning the foregoing, Deputy Secretary.
not inconsistent with the existing rules including whether the proposed rule [FR Doc. 2016–24282 Filed 10–6–16; 8:45 am]
of OCC, including any other rules change is consistent with the Act. BILLING CODE 8011–01–P
proposed to be amended. Comments may be submitted by any of
the following methods:
(B) Clearing Agency’s Statement on
SECURITIES AND EXCHANGE
Burden on Competition Electronic Comments
COMMISSION
Section 17A(b)(3)(I) of the Act 16 • Use the Commission’s Internet
requires that the rules of a clearing [Investment Company Act Release No.
comment form (http://www.sec.gov/ 32300; File No. 812–14583]
agency not impose any burden on
rules/sro.shtml); or
competition not necessary or Legg Mason Global Asset Management
appropriate in furtherance of the • Send an email to rule-
comments@sec.gov. Please include File Trust, et al.; Notice of Application
purposes of the Act. OCC does not
believe that the proposed rule change Number SR–OCC–2016–012 on the October 3, 2016.
would have any impact or impose a subject line. AGENCY: Securities and Exchange
burden on competition. Although this Commission (‘‘Commission’’).
Paper Comments
proposed rule change affects clearing ACTION: Notice of an application for an
members, their customers, and the • Send paper comments in triplicate order pursuant to: (a) Section 6(c) of the
markets that OCC serves, OCC believes to Secretary, Securities and Exchange Investment Company Act of 1940
that the proposed rule change would not Commission, 100 F Street NE., (‘‘Act’’) granting an exemption from
disadvantage or favor any particular Washington, DC 20549–1090. sections 18(f) and 21(b) of the Act; (b)
user of OCC’s services in relationship to section 12(d)(1)(J) of the Act granting an
another user because the proposed All submissions should refer to File
exemption from section 12(d)(1) of the
clearing fees apply equally to all users Number SR–OCC–2016–012. This file
Act; (c) sections 6(c) and 17(b) of the
of OCC. Accordingly, OCC does not number should be included on the
Act granting an exemption from sections
believe that the proposed rule change subject line if email is used. To help the
17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
would have any impact or impose a Commission process and review your and (d) section 17(d) of the Act and rule
burden on competition. comments more efficiently, please use 17d–1 under the Act to permit certain
only one method. The Commission will joint arrangements and transactions.
(C) Clearing Agency’s Statement on post all comments on the Commission’s
Comments on the Proposed Rule Applicants request an order that would
Internet Web site (http://www.sec.gov/ permit certain registered open-end
Change Received From Members,
rules/sro.shtml). Copies of the management investment companies to
Participants, or Others
submission, all subsequent participate in a joint lending and
Written comments on the proposed amendments, all written statements borrowing facility.
rule change were not and are not with respect to the proposed rule
intended to be solicited with respect to change that are filed with the APPLICANTS: Legg Mason Global Asset
the proposed rule change and none have Commission, and all written Management Trust, Legg Mason Global
been received. communications relating to the Asset Management Variable Trust, Legg
III. Date of Effectiveness of the proposed rule change between the Mason Partners Income Trust, Legg
Proposed Rule Change and Timing for Commission and any person, other than Mason Partners Institutional Trust, Legg
Commission Action those that may be withheld from the Mason Partners Money Market Trust,
public in accordance with the Legg Mason Partners Premium Money
Pursuant to Section 19(b)(3)(A)(ii) 17
provisions of 5 U.S.C. 552, will be Market Trust, Legg Mason Partners
of the Act, and Rule 19b–4(f)(2)
available for Web site viewing and Variable Income Trust, Master Portfolio
thereunder,18 the proposed rule change
is filed for immediate effectiveness as it printing in the Commission’s Public Trust, and Western Asset Funds, Inc.,
constitutes a change in fees charged to Reference Room, 100 F Street NE., registered under the Act as open-end
OCC clearing members. At any time Washington, DC 20549 on official management investment companies
within 60 days of the filing of the business days between the hours of with one or more series, and Legg
proposed rule change, the Commission 10:00 a.m. and 3:00 p.m. Copies of the Mason Partners Fund Advisor, LLC (the
summarily may temporarily suspend filing also will be available for ‘‘Adviser’’), registered as an investment
such rule change if it appears to the inspection and copying at the principal adviser under the Investment Advisers
Commission that such action is office of OCC and on OCC’s Web site Act of 1940.
necessary or appropriate in the public (http://www.theocc.com/components/ FILING DATES: The application was filed
interest, for the protection of investors, docs/legal/rules_and_bylaws/ on November 27, 2015, and amended on
or otherwise in furtherance of the sr_occ_16_012.pdf). All comments May 5, 2016.
purposes of the Act.19 received will be posted without change; HEARING OR NOTIFICATION OF HEARING:
the Commission does not edit personal An order granting the requested relief
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15 17 U.S.C. 78q–1(b)(3)(D). identifying information from will be issued unless the Commission
16 15 U.S.C. 78q–1(b)(3)(I). submissions. You should submit only orders a hearing. Interested persons may
17 15 U.S.C. 78s(b)(3)(A)(ii). information that you wish to make request a hearing by writing to the
18 17 CFR 240.19b–4(f)(2).
available publicly. All submissions Commission’s Secretary and serving
19 Notwithstanding its immediate effectiveness,
should refer to File Number SR–OCC– applicants with a copy of the request,
implementation of this rule change will be delayed
until this change is deemed certified under CFTC
2016–012 and should be submitted on
Regulation § 40.6. or before October 28, 2016. 20 17 CFR 200.30–3(a)(12).

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Federal Register / Vol. 81, No. 195 / Friday, October 7, 2016 / Notices 69889

participation is on a basis different from The text of this proposed rule change approved by the Commission, as
or less advantageous than that of the is available on the Exchange’s Web site modified, on May 6, 2015.12
other participants. at (www.chx.com) and in the The Plan is designed to allow the
For the Commission, by the Division of Commission’s Public Reference Room. Commission, market participants, and
Investment Management, under delegated the public to study and assess the
II. Self-Regulatory Organization’s impact of increment conventions on the
authority.
Statement of the Purpose of, and liquidity and trading of the common
Robert W. Errett,
Statutory Basis for, the Proposed Rule stocks of small-capitalization
Deputy Secretary. Change companies. Each Plan Participant is
[FR Doc. 2016–24286 Filed 10–6–16; 8:45 am]
required to comply with, and to enforce
BILLING CODE 8011–01–P In its filing with the Commission, the compliance by its member
CHX included statements concerning organizations, as applicable, with the
the purpose of and basis for the provisions of the Plan.
SECURITIES AND EXCHANGE proposed rule changes and discussed The Pilot will include stocks of
COMMISSION any comments it received on the companies with $3 billion or less in
proposed rule change. The text of these market capitalization, an average daily
[Release No. 34–79027; File No. SR–CHX– statements may be examined at the
2016–19]
trading volume of one million shares or
places specified in Item IV below. The less, and a volume weighted average
Self Regulatory Organizations; CHX has prepared summaries, set forth price of at least $2.00 for every trading
Chicago Stock Exchange, Inc.; Notice in sections A, B and C below, of the day. The Pilot will consist of a control
of Filing and Immediate Effectiveness most significant aspects of such group of approximately 1400 Pilot
of a Proposed Rule Change To Amend statements. Securities and three test groups (‘‘Test
Rules To Describe Changes Necessary Groups’’) with 400 Pilot Securities in
A. Self-Regulatory Organization’s each selected by a stratified sampling.13
To Implement the Tick Size Pilot Statement of the Purpose of, and
Program During the Pilot, Pilot Securities in the
Statutory Basis for, the Proposed Rule control group will be quoted and traded
October 3, 2016. Changes at the currently permissible increments.
Pursuant to Section 19(b)(1) of the 1. Purpose Pilot Securities in the first test group
Securities Exchange Act of 1934 (‘‘Test Group One’’) will be quoted in
(‘‘Act’’),1 and Rule 19b–4 2 thereunder, On August 25, 2014, NYSE Group, $0.05 minimum increments but will
notice is hereby given that on Inc., on behalf of the Exchange, Bats continue to trade at any price increment
September 30, 2016, the Chicago Stock BZX Exchange, Inc. f/k/a BATS Z- that is currently permitted.14 Pilot
Exchange, Inc. (‘‘CHX’’ or the Exchange, Inc., Bats BYX Exchange, Inc. Securities in the second test group
‘‘Exchange’’) filed with the Securities f/k/a BATS Y-Exchange, Inc., Bats (‘‘Test Group Two’’) will be quoted in
and Exchange Commission EDGA Exchange, Inc. f/k/a EDGA $0.05 minimum increments and will
(‘‘Commission’’) the proposed rule Exchange, Inc., Bats EDGX Exchange, trade at $0.05 minimum increments
change as described in Items I and II Inc. f/k/a EDGX Exchange, Inc., subject to a midpoint exception, a retail
below, which Items have been prepared Financial Industry Regulatory investor order exception, and a
by the Exchange. The Commission is Authority, Inc. (‘‘FINRA’’), NASDAQ negotiated trade exception.15 Pilot
publishing this notice to solicit OMX BX, Inc., NASDAQ OMX PHLX Securities in the third test group (‘‘Test
comments on the proposed rule change LLC, the Nasdaq Stock Market LLC, Group Three’’) will be subject to the
from interested persons. New York Stock Exchange LLC same restrictions as Test Group Two
(‘‘NYSE’’), NYSE MKT LLC, and NYSE and also will be subject to the ‘‘trade-at’’
I. Self-Regulatory Organization’s requirement to prevent price matching
Statement of the Terms of Substance of Arca, Inc. (collectively ‘‘Plan
Participants’’),6 filed with the by a market participant that is not
the Proposed Rule Change displaying at a price of a trading
Commission, pursuant to Section 11A of
CHX proposes to amend the Rules of the Act 7 and Rule 608 of Regulation center’s 16 best protected bid or best
the Exchange (‘‘CHX Rules’’) to describe NMS 8 thereunder, the Plan.9 The Plan protected offer (‘‘Trade-at Prohibition’’),
changes to CHX Matching System 3 Participants filed the Plan to comply unless an enumerated exception
functionality necessary to implement with an order issued by the Commission applies.17 In addition to the exceptions
the quoting and trading provisions of on June 24, 2014.10 The Plan 11 was provided under Test Group Two, an
the Regulation NMS Plan to Implement published for comment in the Federal exception for Block Size orders and
a Tick Size Pilot Program (‘‘Plan’’ or exceptions that mirror those under Rule
Register on November 7, 2014, and
‘‘Pilot’’).4
12 See Securities Exchange Act Release No. 74892
The Exchange has designated this 6A ‘‘Participant’’ is a ‘‘member’’ of the Exchange (May 6, 2015), 80 FR 27514 (May 13, 2015)
proposal as ‘‘non-controversial’’ and for purposes of the Act. See CHX Article 1, Rule (‘‘Approval Order’’).
provided the Commission with the 1(s). For clarity, the Exchange proposes to utilize 13 See Section V of the Plan for identification of

notice required by Rule 19b–4(f)(6)(iii) the term ‘‘CHX Participant’’ when referring to Pilot Securities, including criteria for selection and
members of the Exchange and the term ‘‘Plan grouping.
under the Act.5 Participant’’ when referring to Participants of the 14 See Section VI(B) of the Plan.
Plan. 15 See Section VI(C) of the Plan.
1 15 U.S.C. 78s(b)(1). 7 15 U.S.C. 78k–1.
16 The Plan incorporates the definition of ‘‘trading
mstockstill on DSK3G9T082PROD with NOTICES

2 17 CFR 240.19b–4. 8 17 CFR 242.608.
center’’ from Rule 600(b)(78) of Regulation NMS.
3 The Matching System is an automated order 9 See Letter from Brendon J. Weiss, Vice
Regulation NMS defines a ‘‘trading center’’ as ‘‘a
execution system, which is a part of the Exchange’s President, Intercontinental Exchange, Inc., to national securities exchange or national securities
‘‘Trading Facilities,’’ as defined under CHX Article Secretary, Commission, dated August 25, 2014. association that operates an SRO trading facility, an
1, Rule 1(z). 10 See Securities Exchange Act Release No. 72460 alternative trading system, an exchange market
4 See Securities Exchange Act Release No. 74892 (June 24, 2014), 79 FR 36840 (June 30, 2014). maker, an OTC market maker, or any other broker
(May 6, 2015), 80 FR 27513 (May 13, 2015) 11 Unless otherwise specified, capitalized terms or dealer that executes orders internally by trading
(‘‘Approval Order’’). used in this rule filing are defined as set forth in as principal or crossing orders as agent.’’
5 17 CFR 240.19b–4(f)(6)(iii). the Plan. 17 See Section VI(D) of the Plan.

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Document Created: 2018-02-13 16:31:32
Document Modified: 2018-02-13 16:31:32

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 pursuant to: (a) Section 6(c) of the Investment Company Act of 1940 (``Act'') granting an exemption from sections 18(f) and 21(b) of the Act; (b) section 12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) section 17(d) of the Act and rule 17d-1 under the Act to permit certain joint arrangements and transactions. Applicants request an order that would permit certain registered open-end management investment companies to participate in a joint lending and borrowing facility.
Dates		The application was filed on November 27, 2015, and amended on May 5, 2016.
Contact		Judy T. Lee, Senior Special Counsel, at (202) 551-6259 or Sara Crovitz, Assistant Chief Counsel, at (202) 551-6720 (Division of Investment Management, Chief Counsel's Office).
FR Citation		81 FR 69887