82 FR 11490 - Blackstone Alternative Investment Funds and Blackstone Alternative Investment Advisors LLC; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 35 (February 23, 2017)

Page Range		11490-11491
FR Document		2017-03476

Federal Register, Volume 82 Issue 35 (Thursday, February 23, 2017)

[Federal Register Volume 82, Number 35 (Thursday, February 23, 2017)]
[Notices]
[Pages 11490-11491]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-03476]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32481; 812-14590]


Blackstone Alternative Investment Funds and Blackstone 
Alternative Investment Advisors LLC; Notice of Application

February 16, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements in rule 20a-1 under the Act, Item 19(a)(3) of 
Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of 
Schedule 14A under the Securities Exchange Act of 1934, and Sections 6-
07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements''). 
The requested exemption would permit an investment adviser to hire and 
replace certain sub-advisers without shareholder approval and grant 
relief from the Disclosure Requirements as they relate to fees paid to 
the sub-advisers.

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Applicants:  Blackstone Alternative Investment Funds (the ``Trust''), a 
Massachusetts business trust registered under the Act as an open-end 
management investment company with multiple series, and Blackstone 
Alternative Investment Advisors LLC a Delaware limited liability 
company registered as an investment adviser under the Investment 
Advisers Act of 1940 (``BAIA'' or the ``Advisor,'' and, collectively 
with the Trust, the ``Applicants'').

Filing Dates: The application was filed December 14, 2015, and amended 
on May 26, 2016 and February 8, 2017.

Hearing or Notification of Hearing:  An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving 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 13, 2017, 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: 345 Park Avenue, 28th Floor, New York, NY 10154.

FOR FURTHER INFORMATION CONTACT: Rachel Loko, Senior Counsel, at (202) 
551-6883, or Holly Hunter-Ceci, Acting Assistant Chief Counsel, at 
(202) 551-6825 (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. The Advisor will serve as the investment adviser to the 
Subadvised Series pursuant to an investment advisory agreement with the 
Trust (each an ``Investment Management Agreement'').\1\ The Advisor 
will provide the Subadvised Series with continuous and comprehensive 
investment management services subject to the supervision of, and 
policies established by, each board of trustees of the Trust 
(``Board''). The Investment Management Agreement permits the Advisor, 
subject to the approval of the Board, to delegate to one or more sub-
advisers (each, a ``Sub-Advisor'' and collectively, the ``Sub-
Advisors'') the responsibility to provide the day-to-day portfolio 
investment management of each Subadvised Series, subject to the 
supervision and direction of the Advisor. The primary responsibility 
for managing the Subadvised Series will remain vested in the Advisor. 
The Advisor will hire, evaluate, allocate assets to and oversee the 
Sub-Advisors, including determining whether a Sub-Advisor should be 
terminated, at all times subject to the authority of the Board.
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    \1\ Applicants request relief with respect to any existing and 
any future series of the Trust and any other existing or future 
registered open-end management company or series thereof that 
intends to rely on the requested order in the future and that: (a) 
Is advised by BAIA or its successor or by any entity controlling, 
controlled by, or under common control with BAIA or its successor 
(each, also an ``Advisor''); (b) uses the multi-managers structure 
described in the application; and (c) complies with the terms and 
conditions of the application (any such series, a ``Subadvised 
Series''). For purposes of the requested order, ``successor'' is 
limited to an entity that results from a reorganization into another 
jurisdiction or a change in the type of business organization.
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    2. Applicants request an exemption to permit the Advisor, subject 
to Board approval, to hire certain Sub-Advisors pursuant to Sub-
Advisory Agreements and materially amend existing Sub-Advisory 
Agreements without obtaining the shareholder approval required under 
section 15(a) of the Act and rule 18f-2 under the Act.\2\ Applicants 
also seek an exemption from the Disclosure Requirements to permit a 
Subadvised Series to disclose (as both a dollar amount and a percentage 
of the Subadvised Series's net assets): (a) The aggregate fees paid to 
the Advisor and any Wholly-Owned Sub-Advisors; (b) the aggregate fees 
paid to Sub-Advisors other than Affiliated Sub-Advisors and (c) the 
aggregate fees paid to any Affiliated Sub-Advisor (collectively, 
``Aggregate Fee Disclosure'').
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    \2\ The requested relief will not extend to any Sub-Advisor, 
other than a Wholly-Owned Sub-Advisor, that is an affiliated person, 
as defined in section 2(a)(3) of the Act, of a Subadvised Series or 
the Advisor, other than by reason of serving as a sub-adviser to one 
or more of the Subadvised Series (``Affiliated Sub-Advisor'').
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    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the Application. 
Such terms and conditions provide for, among other safeguards, 
appropriate disclosure to Subadvised Series shareholders and 
notification about sub-advisory changes and enhanced Board oversight to 
protect the interests of the Subadvised Series' shareholders.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
any rule thereunder, if such relief is necessary or appropriate in the 
public interest and consistent with the protection of investors and 
purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard 
because, as further explained in the Application, the Investment 
Management Agreements will remain subject to shareholder approval, 
while the role of the Sub-Advisors is substantially similar to that

[[Page 11491]]

of individual portfolio managers, so that requiring shareholder 
approval of Sub-Advisory Agreements would impose unnecessary delays and 
expenses on the Subadvised Series. Applicants believe that the 
requested relief from the Disclosure Requirements meets this standard 
because it will improve the Advisor's ability to negotiate fees paid to 
the Sub-Advisors that are more advantageous for the Funds.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03476 Filed 2-22-17; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 82, No. 35 / Thursday, February 23, 2017 / Notices 11491

of individual portfolio managers, so that Members 5 and non-Members of the ORF should continue to balance the
requiring shareholder approval of Sub- Exchange pursuant to BZX Rules 15.1(a) Exchange’s regulatory expenses against
Advisory Agreements would impose and (c) to amend its Options Regulatory the anticipated revenue.
unnecessary delays and expenses on the Fee (‘‘ORF’’). The per-contract ORF is assessed by
Subadvised Series. Applicants believe The text of the proposed rule change the Exchange on each Member for all
that the requested relief from the is available at the Exchange’s Web site
options transactions executed and
Disclosure Requirements meets this at www.bats.com, at the principal office
cleared, or simply cleared, by the
standard because it will improve the of the Exchange, and at the
Advisor’s ability to negotiate fees paid Commission’s Public Reference Room. Member, that are cleared by OCC in the
to the Sub-Advisors that are more ‘‘customer’’ range, regardless of the
II. Self-Regulatory Organization’s exchange on which the transaction
advantageous for the Funds.
Statement of the Purpose of, and occurs. The ORF is collected indirectly
For the Commission, by the Division of Statutory Basis for, the Proposed Rule from Members through their clearing
Investment Management, under delegated Change
authority.
firms by OCC on behalf of the Exchange.
In its filing with the Commission, the The ORF is also charged for transactions
Eduardo A. Aleman,
Exchange included statements that are not executed by a Member but
Assistant Secretary.
concerning the purpose of and basis for are ultimately cleared by a Member.
[FR Doc. 2017–03476 Filed 2–22–17; 8:45 am]
the proposed rule change and discussed Thus, in the case where a non-Member
BILLING CODE 8011–01–P
any comments it received on the executes a transaction and a Member
proposed rule change. The text of these clears the transaction, the ORF is
SECURITIES AND EXCHANGE statements may be examined at the assessed to the Member who clears the
COMMISSION places specified in Item IV below. The transaction. Similarly, in the case where
Exchange has prepared summaries, set a Member executes a transaction and
forth in Sections A, B, and C below, of another Member clears the transaction,
[Release No. 34–80050; File No. SR– the most significant parts of such
BatsBZX–2017–13]
the ORF is assessed to the Member who
statements. clears the transaction.
Self-Regulatory Organizations; Bats A. Self-Regulatory Organization’s The ORF is designed to recover a
BZX Exchange, Inc.; Notice of Filing Statement of the Purpose of, and the material portion of the costs to the
and Immediate Effectiveness of a Statutory Basis for, the Proposed Rule Exchange of the supervision and
Proposed Rule Change To Amend Its Change regulation of Members’ customer
Option Regulatory Fees as They Relate options business, including performing
to the Equity Options Platform 1. Purpose
routine surveillances and investigations,
The Exchange proposes to modify the as well as policy, rulemaking,
February 16, 2017.
fee schedule applicable to the interpretive and enforcement activities.
Pursuant to Section 19(b)(1) of the Exchange’s options platform (‘‘BZX The Exchange believes that revenue
Securities Exchange Act of 1934 (the Options’’) to amend the rate of its ORF.6 generated from the ORF, when
‘‘Act’’),1 and Rule 19b–4 thereunder,2 Currently, the Exchange charges an ORF combined with all of the Exchange’s
notice is hereby given that on February in the amount of $0.0010 per contract other regulatory fees and fines, will
8, 2017, Bats BZX Exchange, Inc. (the side. The Exchange proposes to decrease continue to cover a material portion, but
‘‘Exchange’’ or ‘‘BZX’’) filed with the the amount of ORF to $0.0009 per
not all, of the Exchange’s regulatory
Securities and Exchange Commission contract side.7 The proposed change to
(the ‘‘Commission’’) the proposed rule costs.8
change as described in Items I, II, and 5 The term ‘‘Member’’ is defined as ‘‘any The Exchange will continue to
III below, which Items have been registered broker or dealer that has been admitted monitor the amount of revenue
to membership in the Exchange.’’ See Exchange
prepared by the Exchange. The Rule 1.5(n).
collected from the ORF to ensure that it,
Exchange has designated the proposed 6 The Exchange also proposes to insert a colon in combination with its other regulatory
rule change as one establishing or after the title ‘‘Options Regulatory Fee’’. fees and fines, does not exceed the
changing a member due, fee, or other 7 The Exchange notes that it previously proposed
Exchange’s total regulatory costs. The
charge imposed by the Exchange under to decrease its ORF of $0.0008 per contract in Exchange expects to monitor its
August 2016 and to assess ORF to each Member and
Section 19(b)(3)(A)(ii) of the Act 3 and non-Member for all options transactions cleared by regulatory costs and revenues at a
Rule 19b–4(f)(2) thereunder,4 which OCC in the ‘‘customer’’ range, regardless of the minimum on a semi-annual basis. If the
renders the proposed rule change exchange on which the transaction occurred. See Exchange determines regulatory
effective upon filing with the Securities Exchange Act Release No. 78453 (August
1, 2016), 81 FR 51954 (August 5, 2016) (SR–
revenues exceed or are insufficient to
Commission. The Commission is BatsBZX–2016–42). The Exchange then filed to cover a material portion of its regulatory
publishing this notice to solicit delay the implementation of SR–BatsBZX–2016–42 costs, the Exchange will adjust the ORF
comments on the proposed rule change until February 1, 2017. See Securities Exchange Act by submitting a fee change filing to the
from interested persons. Release No. 78746 (September 1, 2016), 81 FR
62225 (September 8, 2016) (SR–BatsBZX–2016–52). Commission. The Exchange will
I. Self-Regulatory Organization’s The Commission later issued an order suspending continue to notify Members of
Statement of the Terms of Substance of and [sic] SR–BatsBZX–2016–42 and instituted adjustments to the ORF at least 30
proceedings to determine whether to approve or
the Proposed Rule Change disapprove the proposed rule change asking
rmajette on DSK2TPTVN1PROD with NOTICES

whether the [sic] ‘‘a sufficient regulatory nexus 2016–52 which delayed the implementation of SR–
The Exchange filed a proposal to exists between the Exchange and a non-Member to BatsBZX–2016–42 until February 1, 2017.
amend the fee schedule applicable to justify imposition of the ORF on such non- 8 The Exchange notes that its regulatory

Member.’’ See Securities Exchange Act Release No. responsibilities with respect to compliance with
1 15
78849 (September 15, 2016), 81 FR 64960 options sales practice rules has been allocated to
U.S.C. 78s(b)(1). (September 21, 2016). On January 10, 2017, the the Financial Industry Regulatory Authority, Inc.
2 17 CFR 240.19b–4. Exchange withdrew SR–Bats–BZX–2016–42. The (‘‘FINRA’’) under a 17d–2 Agreement. The ORF is
3 15 U.S.C. 78s(b)(3)(A)(ii).
Exchange also proposes in this filing to remove text not designed to cover the cost of options sales
4 17 CFR 240.19b–4(f)(2). from its fee schedule adopted by SR–BatsBZX– practice regulation.

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Document Created: 2017-02-23 02:10:53
Document Modified: 2017-02-23 02:10:53

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice of an application under section 6(c) of the Investment Company Act of 1940 (``Act'') for an exemption from section 15(a) of the Act and rule 18f-2 under the Act, as well as from certain disclosure requirements in rule 20a-1 under the Act, Item 19(a)(3) of Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A under the Securities Exchange Act of 1934, and Sections 6- 07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements''). The requested exemption would permit an investment adviser to hire and replace certain sub-advisers without shareholder approval and grant relief from the Disclosure Requirements as they relate to fees paid to the sub-advisers.
Dates		The application was filed December 14, 2015, and amended on May 26, 2016 and February 8, 2017.
Contact		Rachel Loko, Senior Counsel, at (202) 551-6883, or Holly Hunter-Ceci, Acting Assistant Chief Counsel, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
FR Citation		82 FR 11490