81 FR 78230 - Submission for OMB Review; Comment Request
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 215 (November 7, 2016)
Federal Register Volume 81, Issue 215 (November 7, 2016)
| Page Range | 78230-78231 | |
| FR Document | 2016-26785 |
[Federal Register Volume 81, Number 215 (Monday, November 7, 2016)] [Notices] [Pages 78230-78231] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-26785] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Submission for OMB Review; Comment Request Upon Written Request, Copies Available From: Securities and Exchange Commission Office of Investor Education and Advocacy Washington, DC 20549-0213. Extension: Rule 17a-6; SEC File No. 270-506, OMB Control No. 3235-0564. Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501), the Securities and Exchange Commission (``Commission'') has submitted to the Office of Management and Budget (``OMB'') a request for extension of the previously approved collection of information discussed below. Section 17(a) of the Investment Company Act of 1940 (the ``Act'') generally prohibits affiliated persons of a registered investment company (``fund'') from borrowing money or other property from, or selling or buying securities or other property to or from, the fund or any company that the fund controls.\1\ Rule 17a-6 (17 CFR 270.17a-6) permits a fund and a ``portfolio affiliate'' (a company that is an affiliated person of the fund because the fund controls the company, or holds five percent or more of the company's outstanding voting securities) to engage in principal transactions that would otherwise be prohibited under section 17(a) of the Act under certain conditions. A fund may not rely on the exemption in the rule to enter into a principal transaction with a portfolio affiliate if certain prohibited participants (e.g., directors, officers, employees, or investment advisers of the fund) have a financial interest in a party to the transaction. Rule 17a-6 specifies certain interests that are not ``financial interests,'' including any interest that the fund's board of directors (including a majority of the directors who are not interested persons of the fund) finds to be not material. A board making this finding is required to record the basis for the finding in its meeting minutes. This recordkeeping requirement is a collection of information under the Paperwork Reduction Act of 1995 (``PRA'').\2\ --------------------------------------------------------------------------- \1\ 15 U.S.C. 80a-17(a). \2\ 44 U.S.C. 3501. --------------------------------------------------------------------------- The rule is designed to permit transactions between funds and their portfolio affiliates in circumstances in which it is unlikely that the affiliate would be in a position to take advantage of the fund. In determining whether a financial interest is ``material,'' the board of the fund should consider whether the nature and extent of the interest in the transaction is sufficiently small that a reasonable person would not believe that the interest affected the determination of whether to enter into the transaction or arrangement or the terms of the transaction or arrangement. The information collection requirements in rule 17a-6 are intended to ensure that Commission staff can review, in the course of its compliance and examination functions, the basis for a board of director's finding that the financial interest of an otherwise prohibited participant in a party to a transaction with a portfolio affiliate is not material. Based on staff discussions with fund representatives, we estimate that funds currently do not rely on the exemption from the term ``financial interest'' with respect to any interest that the fund's board of directors (including a majority of the directors who are not interested persons of the fund) finds to be not material. Accordingly, we estimate that annually there will be no principal transactions under rule 17a-6 that will result in a collection of information. The Commission requests authorization to maintain an inventory of one burden hour to ease future renewals of rule 17a-6's collection of information analysis should funds rely on this exemption to the term ``financial interest'' as defined in rule 17a-6. The estimate of burden hours is made solely for the purposes of the Paperwork Reduction Act. The estimate is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules. Complying with this collection of information requirement is necessary to obtain the benefit of relying on rule 17a- 6. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. [[Page 78231]] The public may view the background documentation for this information collection at the following Web site, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: [email protected]; and (ii) Pamela Dyson, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email to: [email protected]. Comments must be submitted to OMB within 30 days of this notice. Dated: November 1, 2016. Brent J. Fields, Secretary. [FR Doc. 2016-26785 Filed 11-4-16; 8:45 am] BILLING CODE 8011-01-P
![78230 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices
ownership interests, to effectuate of any person concerned; (b) the directors (including a majority of the
purchases and redemptions in-kind. The proposed transaction is consistent with directors who are not interested persons
deposit procedures for in-kind the policies of each registered of the fund) finds to be not material. A
purchases of Creation Units and the investment company involved; and (c) board making this finding is required to
redemption procedures for in-kind the proposed transaction is consistent record the basis for the finding in its
redemptions of Creation Units will be with the general purposes of the Act. meeting minutes. This recordkeeping
the same for all purchases and For the Commission, by the Division of requirement is a collection of
redemptions and Deposit Instruments Investment Management, under delegated information under the Paperwork
and Redemption Instruments will be authority. Reduction Act of 1995 (‘‘PRA’’).2
valued in the same manner as those Brent J. Fields, The rule is designed to permit
investment positions currently held by Secretary. transactions between funds and their
the Funds. Applicants also seek relief [FR Doc. 2016–26786 Filed 11–4–16; 8:45 am]
portfolio affiliates in circumstances in
from the prohibitions on affiliated which it is unlikely that the affiliate
BILLING CODE 8011–01–P
transactions in section 17(a) to permit a would be in a position to take advantage
Fund to sell its shares to and redeem its of the fund. In determining whether a
shares from a Fund of Funds, and to SECURITIES AND EXCHANGE financial interest is ‘‘material,’’ the
engage in the accompanying in-kind COMMISSION board of the fund should consider
transactions with the Fund of Funds.3 whether the nature and extent of the
The purchase of Creation Units by a Submission for OMB Review; interest in the transaction is sufficiently
Fund of Funds directly from a Fund will Comment Request small that a reasonable person would
be accomplished in accordance with the not believe that the interest affected the
policies of the Fund of Funds and will Upon Written Request, Copies Available determination of whether to enter into
be based on the NAVs of the Funds. From: Securities and Exchange the transaction or arrangement or the
9. Applicants also request relief to Commission Office of Investor terms of the transaction or arrangement.
permit a Feeder Fund to acquire shares Education and Advocacy Washington, The information collection requirements
of another registered investment DC 20549–0213. in rule 17a–6 are intended to ensure that
company managed by the Adviser Extension: Commission staff can review, in the
having substantially the same Rule 17a–6; SEC File No. 270–506, OMB course of its compliance and
investment objectives as the Feeder Control No. 3235–0564. examination functions, the basis for a
Fund (‘‘Master Fund’’) beyond the Notice is hereby given that, pursuant board of director’s finding that the
limitations in section 12(d)(1)(A) and to the Paperwork Reduction Act of 1995 financial interest of an otherwise
permit the Master Fund, and any (44 U.S.C. 3501), the Securities and prohibited participant in a party to a
principal underwriter for the Master Exchange Commission (‘‘Commission’’) transaction with a portfolio affiliate is
Fund, to sell shares of the Master Fund has submitted to the Office of not material.
to the Feeder Fund beyond the Management and Budget (‘‘OMB’’) a Based on staff discussions with fund
limitations in section 12(d)(1)(B). request for extension of the previously representatives, we estimate that funds
10. Section 6(c) of the Act permits the approved collection of information currently do not rely on the exemption
Commission to exempt any persons or discussed below. from the term ‘‘financial interest’’ with
transactions from any provision of the Section 17(a) of the Investment respect to any interest that the fund’s
Act if such exemption is necessary or Company Act of 1940 (the ‘‘Act’’) board of directors (including a majority
appropriate in the public interest and generally prohibits affiliated persons of of the directors who are not interested
consistent with the protection of a registered investment company persons of the fund) finds to be not
investors and the purposes fairly (‘‘fund’’) from borrowing money or other material. Accordingly, we estimate that
intended by the policy and provisions of property from, or selling or buying annually there will be no principal
the Act. Section 12(d)(1)(J) of the Act securities or other property to or from, transactions under rule 17a–6 that will
provides that the Commission may the fund or any company that the fund result in a collection of information.
exempt any person, security, or controls.1 Rule 17a–6 (17 CFR 270.17a– The Commission requests
transaction, or any class or classes of 6) permits a fund and a ‘‘portfolio authorization to maintain an inventory
persons, securities, or transactions, from affiliate’’ (a company that is an affiliated of one burden hour to ease future
any provision of section 12(d)(1) if the person of the fund because the fund renewals of rule 17a–6’s collection of
exemption is consistent with the public controls the company, or holds five information analysis should funds rely
interest and the protection of investors. percent or more of the company’s on this exemption to the term ‘‘financial
Section 17(b) of the Act authorizes the outstanding voting securities) to engage interest’’ as defined in rule 17a–6.
Commission to grant an order in principal transactions that would The estimate of burden hours is made
permitting a transaction otherwise otherwise be prohibited under section solely for the purposes of the Paperwork
prohibited by section 17(a) if it finds 17(a) of the Act under certain Reduction Act. The estimate is not
that (a) the terms of the proposed conditions. A fund may not rely on the derived from a comprehensive or even
transaction are fair and reasonable and exemption in the rule to enter into a a representative survey or study of the
do not involve overreaching on the part principal transaction with a portfolio costs of Commission rules. Complying
affiliate if certain prohibited with this collection of information
3 The requested relief would apply to direct sales
participants (e.g., directors, officers, requirement is necessary to obtain the
of shares in Creation Units by a Fund to a Fund of
sradovich on DSK3GMQ082PROD with NOTICES
employees, or investment advisers of benefit of relying on rule 17a–6. An
Funds and redemptions of those shares. Applicants,
moreover, are not seeking relief from section 17(a) the fund) have a financial interest in a agency may not conduct or sponsor, and
for, and the requested relief will not apply to, party to the transaction. Rule 17a–6 a person is not required to respond to,
transactions where a Fund could be deemed an specifies certain interests that are not a collection of information unless it
Affiliated Person, or a Second-Tier Affiliate, of a ‘‘financial interests,’’ including any displays a currently valid control
Fund of Funds because an Adviser or an entity
controlling, controlled by or under common control interest that the fund’s board of number.
with an Adviser provides investment advisory
services to that Fund of Funds. 1 15 U.S.C. 80a–17(a). 2 44 U.S.C. 3501.
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![Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Notices 78231
The public may view the background rule change, or institute proceedings to municipal bond market. The Fund
documentation for this information determine whether to disapprove the would seek daily inverse investment
collection at the following Web site, proposed rule change.5 On September results of the Index but would not seek
www.reginfo.gov. Comments should be 15, 2016, the Exchange filed to achieve its stated investment
directed to: (i) Desk Officer for the Amendment No. 1 to the proposed rule objective over a period of time greater
Securities and Exchange Commission, change.6 The Commission received no than one day. Further, the Fund might
Office of Information and Regulatory comments on the proposed rule change. gain inverse exposure to only a
Affairs, Office of Management and This order institutes proceedings under representative sample of the securities
Budget, Room 10102, New Executive Section 19(b)(2)(B) of the Act 7 to in the Index that have aggregate
Office Building, Washington, DC 20503, determine whether to approve or characteristics similar to those of the
or by sending an email to: Shagufta_ disapprove the proposed rule change, as Index. The Fund would gain this
Ahmed@omb.eop.gov; and (ii) Pamela modified by Amendment No. 1. inverse exposure by investing in a
Dyson, Director/Chief Information combination of Financial Instruments
Officer, Securities and Exchange II. The Exchange’s Description of the (defined below) that provide inverse
Commission, c/o Remi Pavlik-Simon, Proposal exposure to the underlying securities of
100 F Street NE., Washington, DC 20549 The Exchange proposes to list and the Index. The Fund would not seek
or send an email to: PRA_Mailbox@ trade the Shares under NYSE Arca income that is exempt from federal,
sec.gov. Comments must be submitted to Equities Rule 5.2(j)(3), Commentary .02, state, or local income taxes.
OMB within 30 days of this notice. which governs the listing and trading of
A. The Fund’s Principal Investments
Dated: November 1, 2016. Investment Company Units based on
fixed income securities indexes. The The Fund would seek to track 100%
Brent J. Fields,
Fund is a series of the Trust.8 Rafferty of the inverse of the daily performance
Secretary. of the Index. Under normal
Asset Management, LLC would be the
[FR Doc. 2016–26785 Filed 11–4–16; 8:45 am] circumstances, the Fund would create
investment adviser to the Fund.
BILLING CODE 8011–01–P
Foreside Fund Services, LLC will be the net short positions by investing at least
distributor of the Fund’s Shares. The 80% of the Fund’s assets (plus any
Bank of New York Mellon would serve borrowings for investment purposes) in
SECURITIES AND EXCHANGE the following financial instruments
as the accounting agent, custodian, and
COMMISSION (‘‘Financial Instruments’’): Options on
transfer agent for the Fund. U.S.
[Release No. 34–79211; File No. SR– Bancorp Fund Services, LLC will serve exchange-traded funds (‘‘ETFs’’) and
NYSEArca–2016–100] as the Fund’s administrator.9 indices, traded on U.S. exchanges
The Standard & Poor’s National AMT- (based on gross notional value); swaps
Self-Regulatory Organizations; NYSE Free Municipal Bond Index (‘‘Index’’) that provide short exposure to the
Arca, Inc.; Order Instituting would be the Fund’s benchmark.10 The securities included in the Index and
Proceedings To Determine Whether To Index is a broad, comprehensive, market various ETFs (based on gross notional
Approve or Disapprove a Proposed value-weighted index designed to value); and short positions in ETFs, as
Rule Change, as Modified by measure the performance of the tax- described below in this section, that, in
Amendment No. 1, To List and Trade exempt, investment-grade U.S. combination, provide inverse exposure
Shares of the Direxion Daily Municipal to the Index.
Bond Taxable Bear 1X Fund Under 5 See Securities Exchange Act Release No. 78840, The Fund might invest in options that
NYSE Arca Equities Rule 5.2(j)(3) 81 FR 64552 (September 20, 2016). The provide short exposure to the Index or
Commission designated November 1, 2016, as the various ETFs, including iShares
November 1, 2016. date by which the Commission shall either approve National Muni Bond ETF, SPDR Nuveen
or disapprove, or institute proceedings to determine
I. Introduction whether to disapprove, the proposed rule change.
Barclays Municipal Bond ETF, iShares
On July 13, 2016, NYSE Arca, Inc. 6 In Amendment No. 1, which replaced the Short-term National Muni Bond ETF,
(‘‘Exchange’’ or ‘‘NYSE Arca’’) filed original filing in its entirety, the Exchange: (1) SPDR Nuveen Barclays Short-Term
Revised the description of the Fund’s principal Municipal Bond ETF, Market Vectors
with the Securities and Exchange investments and (2) made other technical High-Yield Municipal Index ETF, SPDR
Commission (‘‘Commission’’), pursuant amendments. Amendment No. 1 is available at
https://www.sec.gov/comments/sr-nysearca-2016- Nuveen S&P High Yield Municipal
to Section 19(b)(1) of the Securities
100/nysearca2016100-1.pdf. Bond ETF, Market Vectors AMT-Free
Exchange Act of 1934 (‘‘Exchange 7 15 U.S.C. 78s(b)(2)(B). Intermediate Municipal Index ETF,
Act’’) 1 and Rule 19b–4 thereunder,2 a 8 The Trust is registered under the Investment
PowerShares National AMT-Free
proposed rule change to list and trade Company Act of 1940 (‘‘1940 Act’’). According to Municipal Bond Portfolio, Vanguard
shares (‘‘Shares’’) of the Direxion Daily the Exchange, on February 29, 2016, the Trust filed
a registration statement on Form N–1A under the Tax-Exempt Bond ETF, and the PIMCO
Municipal Bond Taxable Bear 1X Fund
Securities Act of 1933 and the 1940 Act (File Nos.: Intermediate Municipal Bond Active
(‘‘Fund’’), a series of the Direxion Shares 811–22201 and 333–150525). Exchange-Traded Fund.
ETF Trust (‘‘Trust’’). The proposed rule 9 Additional information regarding the Trust, the
The Fund might invest in swaps that
change was published for comment in Fund, and the Shares, including investment provide short exposure to the securities
the Federal Register on August 3, 2016.3 strategies, risks, creation and redemption
included in the Index and various ETFs,
On September 14, 2016, pursuant to procedures, fees, portfolio holdings, disclosure
policies, calculation of the NAV, distributions, and including iShares National Muni Bond
Section 19(b)(2) of the Act,4 the taxes, among other things, can be found in ETF, SPDR Nuveen Barclays Municipal
Commission designated a longer period Amendment No. 1 and the Registration Statement, Bond ETF, iShares Short-Term National
sradovich on DSK3GMQ082PROD with NOTICES
within which to approve the proposed as applicable. See Amendment No. 1, supra note 6
Muni Bond ETF, SPDR Nuveen Barclays
rule change, disapprove the proposed and Registration Statement, supra note 8.
10 The S&P Dow Jones Indices is the ‘‘Index Short-Term Municipal Bond ETF,
1 15
Provider’’ with respect to the Index. The Index Market Vectors High-Yield Municipal
U.S.C. 78s(b)(1). Provider is not a broker-dealer or affiliated with a
2 17 CFR 240.19b–4.
Index ETF, SPDR Nuveen S&P High
broker-dealer and has implemented procedures
3 See Securities Exchange Act Release No. 78433
designed to prevent the use and dissemination of
Yield Municipal Bond ETF, Market
(July 28, 2016), 81 FR 51241. material, non-public information regarding the Vectors AMT-Free Intermediate
4 15 U.S.C. 78s(b)(2). Index. Municipal Index ETF, PowerShares
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Document Created: 2018-02-14 08:21:57
Document Modified: 2018-02-14 08:21:57
| 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 | |
| FR Citation | 81 FR 78230 |
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