82_FR_25571 82 FR 25467 - PIMCO Equity Series, et al.

82 FR 25467 - PIMCO Equity Series, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 104 (June 1, 2017)

Page Range25467-25469
FR Document2017-11242

Federal Register, Volume 82 Issue 104 (Thursday, June 1, 2017)
[Federal Register Volume 82, Number 104 (Thursday, June 1, 2017)]
[Notices]
[Pages 25467-25469]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-11242]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32661; 812-14715]


PIMCO Equity Series, et al.

May 25, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of an application for an order under section 6(c) of the 
Investment Company Act of 1940 (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, under sections 6(c) and 17(b) of the Act for an 
exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under 
section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and 
12(d)(1)(B) of the Act. The requested order would permit (a) index-
based series of certain open-end management investment companies 
(``Funds'') to issue shares redeemable in large aggregations 
(``Creation Units''); (b) secondary market transactions in Fund shares 
to occur at negotiated market prices rather than at net asset value 
(``NAV''); (c) certain Funds to pay redemption proceeds, under certain 
circumstances, more than seven days after the tender of shares for 
redemption; (d) certain affiliated persons of a Fund to deposit 
securities into, and receive securities from, the Fund in connection 
with the purchase and redemption of Creation Units; (e) certain 
registered management investment companies and unit investment trusts 
outside of the same group of investment companies as the Funds (``Funds 
of Funds'') to acquire shares of the Funds; (f) certain Funds (``Feeder 
Funds'') to create and redeem Creation Units in-kind in a master-feeder 
structure; and (g) certain Funds to issue shares in less than Creation 
Unit size to investors participating in a distribution reinvestment 
program.

Applicants: PIMCO Equity Series (the ``Trust''), a Delaware statutory 
trust that is registered under the Act as an open-end management 
investment company with multiple series, Pacific Investment Management 
Company LLC (the ``Initial Adviser''), a Delaware limited liability 
company registered as an investment adviser under the Investment 
Advisers Act of 1940, and PIMCO Investments LLC (the ``Distributor''), 
a Delaware limited liability company and broker-dealer registered under 
the Securities Exchange Act of 1934 (``Exchange Act'').\1\
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    \1\ The Initial Adviser has previously received exemptive relief 
from the Commission permitting it to operate ETFs (defined below) 
that track fixed income securities indexes created by an 
unaffiliated index provider. See Pacific Investment Management 
Company LLC, et al., Investment Company Act Release Nos. 28723 (May 
11, 2009) (notice) and 28752 (Jun. 1, 2009) (order) (``Existing 
Relief''). No Fund relying on the requested order will rely on the 
Existing Relief.

Filing Dates: The application was filed on November 18, 2016 and 
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amended on March 13, 2017, May 2, 2017 and May 25, 2017.

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 June 19, 2017, 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: Secretary, Securities and Exchange Commission, 100 F Street 
NE., Washington, DC 20549-1090; Applicants: Joshua D. Ratner, Esq., 
Pacific Investment Management Company LLC, 650 Newport Center Drive, 
Newport Beach, CA 92660 and Douglas P. Dick, Esq., Dechert LLP, 1900 K 
Street NW., Washington, DC 20006.

FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel, 
at (202) 551-6990, or Robert H. Shapiro, 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

[[Page 25468]]

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 that would allow Funds to operate as 
index exchange traded funds (``ETFs'').\2\ Fund shares will be 
purchased and redeemed at their NAV in Creation Units (other than 
pursuant to a distribution reinvestment program), as described in the 
application. All orders to purchase Creation Units and all redemption 
requests will be placed by or through an ``Authorized Participant'', 
which will have signed a participant agreement with the Distributor. 
Shares will be listed and traded individually on a national securities 
exchange, where share prices will be based on the current bid/offer 
market. Certain Funds may operate as Feeder Funds in a master-feeder 
structure. Any order granting the requested relief would be subject to 
the terms and conditions stated in the application.
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    \2\ Applicants request that the ETFs (i) track a specified index 
(``Underlying Index'') comprised of domestic and/or foreign equity 
securities (``Equity Funds'') for which a third party that is not an 
``affiliated person'' (as such term is defined in section 2(a)(3) of 
the Act), or an affiliated person of an affiliated person, of the 
Trust, the Adviser, any Sub-Adviser, the Distributor or a promoter 
of the Fund will serve as the index provider (each, an ``Equity 
Index-Based Fund''), (ii) track a specified index for which an 
``affiliated person,'' as defined in section 2(a)(3) of the Act, or 
an affiliated person of an affiliated person of the Trust or a Fund, 
of the Adviser, any Sub-Adviser, the Distributor or a promoter of a 
Fund will serve as the index provider (each, a ``Self-Indexing 
Fund''), or (iii) operate as a Feeder Fund pursuant to the Master-
Feeder Relief described in the application.
    Applicants request that the order apply to new series of the 
Trust, and any additional series of the Trust, and any other 
existing or future open-end management investment company or 
existing or future series thereof (each, included in the term 
``Fund''), that operate as (i) Equity Index-Based Funds, and their 
respective existing or future Master Funds, (ii) Self-Indexing Funds 
that are Equity Funds, and their respective existing or future 
Master Funds, or Self-Indexing Funds that track a specified index 
comprised of domestic and/or foreign fixed income securities 
(``Fixed Income Funds''), and their respective existing or future 
Master Funds, and (iii) Feeder Funds, which may be Equity Funds or 
Fixed Income Funds, pursuant to the Master-Feeder Relief. Any Fund 
will (a) be advised by the Initial Adviser or an entity controlling, 
controlled by, or under common control with the Initial Adviser 
(each, an ``Adviser'') and (b) comply with the terms and conditions 
of the application.
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    2. Each Fund will hold investment positions selected to correspond 
closely to the performance of an Underlying Index. In the case of Self-
Indexing Funds, an affiliated person, as defined in section 2(a)(3) of 
the Act (``Affiliated Person''), or an affiliated person of an 
Affiliated Person (``Second-Tier Affiliate''), of the Trust or a Fund, 
of the Adviser, of any sub-adviser, the Distributor or a promoter of a 
Fund will compile, create, sponsor or maintain the Underlying Index.\3\
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    \3\ Each Self-Indexing Fund will post on its Web site the 
identities and quantities of the investment positions that will form 
the basis for the Fund's calculation of its NAV at the end of the 
day. Applicants believe that requiring Self-Indexing Funds to 
maintain full portfolio transparency will help address, together 
with other protections, conflicts of interest with respect to such 
Funds.
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    3. Shares will be purchased and redeemed in Creation Units and 
generally on an in-kind basis, or issued in less than Creation Unit 
size to investors participating in a distribution reinvestment program. 
Except where the purchase or redemption will include cash under the 
limited circumstances specified in the application, purchasers will be 
required to purchase Creation Units by depositing specified instruments 
(``Deposit Instruments''), and shareholders redeeming their shares will 
receive specified instruments (``Redemption Instruments''). The Deposit 
Instruments and the Redemption Instruments will each correspond pro 
rata to the positions in the Fund's portfolio (including cash 
positions) except as specified in the application.
    4. Because shares will not be individually redeemable, applicants 
request an exemption from section 5(a)(1) and section 2(a)(32) of the 
Act that would permit the Funds to register as open-end management 
investment companies and issue shares that are redeemable in Creation 
Units (other than pursuant to a dividend reinvestment program).
    5. Applicants also request an exemption from section 22(d) of the 
Act and rule 22c-1 under the Act as secondary market trading in shares 
will take place at negotiated prices, not at a current offering price 
described in a Fund's prospectus, and not at a price based on NAV. 
Applicants state that (a) secondary market trading in shares does not 
involve a Fund as a party and will not result in dilution of an 
investment in shares, 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 represent that share market prices will 
be disciplined by arbitrage opportunities, which should prevent shares 
from trading at a material discount or premium from NAV.
    6. With respect to Funds that effect creations and redemptions of 
Creation Units in-kind and that are based on certain Underlying Indexes 
that include foreign securities, applicants request relief from the 
requirement imposed by section 22(e) in order to allow such Funds to 
pay redemption proceeds within fifteen calendar days following the 
tender of Creation Units for redemption. Applicants assert that the 
requested relief would not be inconsistent with the spirit and intent 
of section 22(e) to prevent unreasonable, undisclosed or unforeseen 
delays in the actual payment of redemption proceeds.
    7. Applicants request an exemption to permit Funds of Funds to 
acquire Fund shares beyond the limits of section 12(d)(1)(A) of the 
Act; and the Funds, and any principal underwriter for the Funds, and/or 
any broker or dealer registered under the Exchange Act, to sell shares 
to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act. 
The application's terms and conditions are designed to, among other 
things, help prevent any potential (i) undue influence over a Fund 
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) and (B) of the Act.
    8. Applicants request an exemption from sections 17(a)(1) and 
17(a)(2) of the Act to permit persons that are Affiliated Persons, or 
Second-Tier Affiliates, of the Funds, solely by virtue of certain 
ownership interests, to effectuate purchases and redemptions in-kind. 
The deposit procedures for in-kind purchases of Creation Units and the 
redemption procedures for in-kind redemptions of Creation Units will be 
the same for all purchases and redemptions and Deposit Instruments and 
Redemption Instruments will be valued in the same manner as those 
investment positions currently held by the Funds. Applicants also seek 
relief from the prohibitions on affiliated transactions in section 
17(a) to permit a Fund to sell its shares to and redeem its shares from 
a Fund of Funds, and to engage in the accompanying in-kind transactions 
with the Fund of Funds.\4\

[[Page 25469]]

The purchase of Creation Units by a Fund of Funds directly from a Fund 
will be accomplished in accordance with the policies of the Fund of 
Funds and will be based on the NAVs of the Funds.
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    \4\ The requested relief would apply to direct sales of shares 
in Creation Units by a Fund to a Fund of Funds and redemptions of 
those shares. Applicants, moreover, are not seeking relief from 
section 17(a) for, and the requested relief will not apply to, 
transactions where a Fund could be deemed an Affiliated Person, or a 
Second-Tier Affiliate, of a Fund of Funds because an Adviser or an 
entity controlling, controlled by or under common control with an 
Adviser provides investment advisory services to that Fund of Funds.
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    9. Applicants also request relief to permit a Feeder Fund to 
acquire shares of another registered investment company managed by the 
Adviser having substantially the same investment objectives as the 
Feeder Fund (``Master Fund'') beyond the limitations in section 
12(d)(1)(A) and permit the Master Fund, and any principal underwriter 
for the Master Fund, to sell shares of the Master Fund to the Feeder 
Fund beyond the limitations in section 12(d)(1)(B).
    10. 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.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-11242 Filed 5-31-17; 8:45 am]
BILLING CODE 8011-01-P



                                                                                    Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices                                                      25467

                                                  of the Act 60 and paragraph (f) of Rule                    submissions. You should submit only                    APPLICANTS:    PIMCO Equity Series (the
                                                  19b–4 thereunder.61 At any time within                     information that you wish to make                      ‘‘Trust’’), a Delaware statutory trust that
                                                  60 days of the filing of the proposed rule                 available publicly. All submissions                    is registered under the Act as an open-
                                                  change, the Commission summarily may                       should refer to File Number SR–                        end management investment company
                                                  temporarily suspend such rule change if                    BatsEDGA–2017–13 and should be                         with multiple series, Pacific Investment
                                                  it appears to the Commission that such                     submitted on or before June 22, 2017.                  Management Company LLC (the ‘‘Initial
                                                  action is necessary or appropriate in the                    For the Commission, by the Division of               Adviser’’), a Delaware limited liability
                                                  public interest, for the protection of                     Trading and Markets, pursuant to delegated             company registered as an investment
                                                  investors, or otherwise in furtherance of                  authority.62                                           adviser under the Investment Advisers
                                                  the purposes of the Act.                                   Eduardo A. Aleman,                                     Act of 1940, and PIMCO Investments
                                                                                                             Assistant Secretary.                                   LLC (the ‘‘Distributor’’), a Delaware
                                                  IV. Solicitation of Comments                                                                                      limited liability company and broker-
                                                                                                             [FR Doc. 2017–11360 Filed 5–31–17; 8:45 am]
                                                    Interested persons are invited to                                                                               dealer registered under the Securities
                                                                                                             BILLING CODE 8011–01–P
                                                  submit written data, views and                                                                                    Exchange Act of 1934 (‘‘Exchange
                                                  arguments concerning the foregoing,                                                                               Act’’).1
                                                  including whether the proposal is                          SECURITIES AND EXCHANGE                                FILING DATES: The application was filed
                                                  consistent with the Act. Comments may                      COMMISSION                                             on November 18, 2016 and amended on
                                                  be submitted by any of the following                                                                              March 13, 2017, May 2, 2017 and May
                                                  methods:                                                   [Investment Company Act Release No.                    25, 2017.
                                                                                                             32661; 812–14715]
                                                  Electronic Comments                                                                                               HEARING OR NOTIFICATION OF HEARING: An
                                                                                                             PIMCO Equity Series, et al.                            order granting the requested relief will
                                                    • Use the Commission’s Internet                                                                                 be issued unless the Commission orders
                                                  comment form (http://www.sec.gov/                          May 25, 2017.                                          a hearing. Interested persons may
                                                  rules/sro.shtml); or                                       AGENCY: Securities and Exchange                        request a hearing by writing to the
                                                    • Send an email to rule-comments@                        Commission (‘‘Commission’’).                           Commission’s Secretary and serving
                                                  sec.gov. Please include File Number SR–                    ACTION: Notice.                                        applicants with a copy of the request,
                                                  BatsEDGA–2017–13 on the subject line.                                                                             personally or by mail. Hearing requests
                                                                                                                Notice of an application for an order               should be received by the Commission
                                                  Paper Comments
                                                                                                             under section 6(c) of the Investment                   by 5:30 p.m. on June 19, 2017, and
                                                     • Send paper comments in triplicate                     Company Act of 1940 (the ‘‘Act’’) for an
                                                  to Secretary, Securities and Exchange                                                                             should be accompanied by proof of
                                                                                                             exemption from sections 2(a)(32),                      service on applicants, in the form of an
                                                  Commission, 100 F Street NE.,                              5(a)(1), 22(d), and 22(e) of the Act and               affidavit, or for lawyers, a certificate of
                                                  Washington, DC 20549–1090.                                 rule 22c–1 under the Act, under
                                                  All submissions should refer to File                                                                              service. Pursuant to rule 0–5 under the
                                                                                                             sections 6(c) and 17(b) of the Act for an              Act, hearing requests should state the
                                                  Number SR–BatsEDGA–2017–13. This                           exemption from sections 17(a)(1) and
                                                  file number should be included on the                                                                             nature of the writer’s interest, any facts
                                                                                                             17(a)(2) of the Act, and under section                 bearing upon the desirability of a
                                                  subject line if email is used. To help the                 12(d)(1)(J) for an exemption from
                                                  Commission process and review your                                                                                hearing on the matter, the reason for the
                                                                                                             sections 12(d)(1)(A) and 12(d)(1)(B) of                request, and the issues contested.
                                                  comments more efficiently, please use                      the Act. The requested order would                     Persons who wish to be notified of a
                                                  only one method. The Commission will                       permit (a) index-based series of certain               hearing may request notification by
                                                  post all comments on the Commission’s                      open-end management investment                         writing to the Commission’s Secretary.
                                                  Internet Web site (http://www.sec.gov/                     companies (‘‘Funds’’) to issue shares
                                                  rules/sro.shtml). Copies of the                                                                                   ADDRESSES: Secretary, Securities and
                                                                                                             redeemable in large aggregations
                                                  submission, all subsequent                                 (‘‘Creation Units’’); (b) secondary market             Exchange Commission, 100 F Street NE.,
                                                  amendments, all written statements                         transactions in Fund shares to occur at                Washington, DC 20549–1090;
                                                  with respect to the proposed rule                          negotiated market prices rather than at                Applicants: Joshua D. Ratner, Esq.,
                                                  change that are filed with the                             net asset value (‘‘NAV’’); (c) certain                 Pacific Investment Management
                                                  Commission, and all written                                Funds to pay redemption proceeds,                      Company LLC, 650 Newport Center
                                                  communications relating to the                             under certain circumstances, more than                 Drive, Newport Beach, CA 92660 and
                                                  proposed rule change between the                           seven days after the tender of shares for              Douglas P. Dick, Esq., Dechert LLP, 1900
                                                  Commission and any person, other than                      redemption; (d) certain affiliated                     K Street NW., Washington, DC 20006.
                                                  those that may be withheld from the                        persons of a Fund to deposit securities                FOR FURTHER INFORMATION CONTACT:
                                                  public in accordance with the                              into, and receive securities from, the                 Barbara T. Heussler, Senior Counsel, at
                                                  provisions of 5 U.S.C. 552, will be                        Fund in connection with the purchase                   (202) 551–6990, or Robert H. Shapiro,
                                                  available for Web site viewing and                         and redemption of Creation Units; (e)                  Branch Chief, at (202) 551–6821
                                                  printing in the Commission’s Public                        certain registered management                          (Division of Investment Management,
                                                  Reference Room, 100 F Street NE.,                          investment companies and unit                          Chief Counsel’s Office).
                                                  Washington, DC 20549, on official                          investment trusts outside of the same                  SUPPLEMENTARY INFORMATION: The
                                                  business days between the hours of                         group of investment companies as the                   following is a summary of the
                                                  10:00 a.m. and 3:00 p.m. Copies of such                    Funds (‘‘Funds of Funds’’) to acquire                  application. The complete application
                                                  filing will also be available for                          shares of the Funds; (f) certain Funds
                                                                                                                                                                      1 The Initial Adviser has previously received
                                                  inspection and copying at the principal                    (‘‘Feeder Funds’’) to create and redeem
mstockstill on DSK30JT082PROD with NOTICES




                                                                                                                                                                    exemptive relief from the Commission permitting it
                                                  office of the Exchange. All comments                       Creation Units in-kind in a master-                    to operate ETFs (defined below) that track fixed
                                                  received will be posted without change;                    feeder structure; and (g) certain Funds                income securities indexes created by an unaffiliated
                                                  the Commission does not edit personal                      to issue shares in less than Creation                  index provider. See Pacific Investment Management
                                                                                                             Unit size to investors participating in a              Company LLC, et al., Investment Company Act
                                                  identifying information from                                                                                      Release Nos. 28723 (May 11, 2009) (notice) and
                                                                                                             distribution reinvestment program.                     28752 (Jun. 1, 2009) (order) (‘‘Existing Relief’’). No
                                                    60 15   U.S.C. 78s(b)(3)(A).                                                                                    Fund relying on the requested order will rely on the
                                                    61 17   CFR 240.19b–4(f).                                  62 17   CFR 200.30–3(a)(12).                         Existing Relief.



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                                                  25468                           Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices

                                                  may be obtained via the Commission’s                      Person’’), or an affiliated person of an               shares from trading at a material
                                                  Web site by searching for the file                        Affiliated Person (‘‘Second-Tier                       discount or premium from NAV.
                                                  number, or for an applicant using the                     Affiliate’’), of the Trust or a Fund, of the              6. With respect to Funds that effect
                                                  Company name box, at http://                              Adviser, of any sub-adviser, the                       creations and redemptions of Creation
                                                  www.sec.gov/search/search.htm or by                       Distributor or a promoter of a Fund will               Units in-kind and that are based on
                                                  calling (202) 551–8090.                                   compile, create, sponsor or maintain the               certain Underlying Indexes that include
                                                                                                            Underlying Index.3                                     foreign securities, applicants request
                                                  Summary of the Application                                   3. Shares will be purchased and                     relief from the requirement imposed by
                                                     1. Applicants request an order that                    redeemed in Creation Units and                         section 22(e) in order to allow such
                                                  would allow Funds to operate as index                     generally on an in-kind basis, or issued               Funds to pay redemption proceeds
                                                  exchange traded funds (‘‘ETFs’’).2 Fund                   in less than Creation Unit size to                     within fifteen calendar days following
                                                  shares will be purchased and redeemed                     investors participating in a distribution              the tender of Creation Units for
                                                  at their NAV in Creation Units (other                     reinvestment program. Except where the                 redemption. Applicants assert that the
                                                  than pursuant to a distribution                           purchase or redemption will include                    requested relief would not be
                                                  reinvestment program), as described in                    cash under the limited circumstances                   inconsistent with the spirit and intent of
                                                  the application. All orders to purchase                   specified in the application, purchasers               section 22(e) to prevent unreasonable,
                                                  Creation Units and all redemption                         will be required to purchase Creation                  undisclosed or unforeseen delays in the
                                                  requests will be placed by or through an                  Units by depositing specified                          actual payment of redemption proceeds.
                                                  ‘‘Authorized Participant’’, which will                    instruments (‘‘Deposit Instruments’’),                    7. Applicants request an exemption to
                                                  have signed a participant agreement                       and shareholders redeeming their shares                permit Funds of Funds to acquire Fund
                                                  with the Distributor. Shares will be                      will receive specified instruments                     shares beyond the limits of section
                                                  listed and traded individually on a                       (‘‘Redemption Instruments’’). The                      12(d)(1)(A) of the Act; and the Funds,
                                                  national securities exchange, where                       Deposit Instruments and the                            and any principal underwriter for the
                                                  share prices will be based on the current                 Redemption Instruments will each                       Funds, and/or any broker or dealer
                                                  bid/offer market. Certain Funds may                       correspond pro rata to the positions in                registered under the Exchange Act, to
                                                  operate as Feeder Funds in a master-                      the Fund’s portfolio (including cash                   sell shares to Funds of Funds beyond
                                                  feeder structure. Any order granting the                  positions) except as specified in the                  the limits of section 12(d)(1)(B) of the
                                                  requested relief would be subject to the                  application.                                           Act. The application’s terms and
                                                  terms and conditions stated in the                           4. Because shares will not be                       conditions are designed to, among other
                                                  application.                                              individually redeemable, applicants                    things, help prevent any potential (i)
                                                     2. Each Fund will hold investment                      request an exemption from section                      undue influence over a Fund through
                                                  positions selected to correspond closely                  5(a)(1) and section 2(a)(32) of the Act                control or voting power, or in
                                                  to the performance of an Underlying                       that would permit the Funds to register                connection with certain services,
                                                  Index. In the case of Self-Indexing                       as open-end management investment                      transactions, and underwritings, (ii)
                                                  Funds, an affiliated person, as defined                   companies and issue shares that are                    excessive layering of fees, and (iii)
                                                  in section 2(a)(3) of the Act (‘‘Affiliated               redeemable in Creation Units (other                    overly complex fund structures, which
                                                                                                            than pursuant to a dividend                            are the concerns underlying the limits
                                                     2 Applicants request that the ETFs (i) track a         reinvestment program).                                 in sections 12(d)(1)(A) and (B) of the
                                                  specified index (‘‘Underlying Index’’) comprised of          5. Applicants also request an                       Act.
                                                  domestic and/or foreign equity securities (‘‘Equity                                                                 8. Applicants request an exemption
                                                  Funds’’) for which a third party that is not an
                                                                                                            exemption from section 22(d) of the Act
                                                  ‘‘affiliated person’’ (as such term is defined in         and rule 22c–1 under the Act as                        from sections 17(a)(1) and 17(a)(2) of the
                                                  section 2(a)(3) of the Act), or an affiliated person of   secondary market trading in shares will                Act to permit persons that are Affiliated
                                                  an affiliated person, of the Trust, the Adviser, any      take place at negotiated prices, not at a              Persons, or Second-Tier Affiliates, of the
                                                  Sub-Adviser, the Distributor or a promoter of the                                                                Funds, solely by virtue of certain
                                                  Fund will serve as the index provider (each, an
                                                                                                            current offering price described in a
                                                  ‘‘Equity Index-Based Fund’’), (ii) track a specified      Fund’s prospectus, and not at a price                  ownership interests, to effectuate
                                                  index for which an ‘‘affiliated person,’’ as defined      based on NAV. Applicants state that (a)                purchases and redemptions in-kind. The
                                                  in section 2(a)(3) of the Act, or an affiliated person    secondary market trading in shares does                deposit procedures for in-kind
                                                  of an affiliated person of the Trust or a Fund, of the                                                           purchases of Creation Units and the
                                                  Adviser, any Sub-Adviser, the Distributor or a
                                                                                                            not involve a Fund as a party and will
                                                  promoter of a Fund will serve as the index provider       not result in dilution of an investment                redemption procedures for in-kind
                                                  (each, a ‘‘Self-Indexing Fund’’), or (iii) operate as a   in shares, and (b) to the extent different             redemptions of Creation Units will be
                                                  Feeder Fund pursuant to the Master-Feeder Relief          prices exist during a given trading day,               the same for all purchases and
                                                  described in the application.                                                                                    redemptions and Deposit Instruments
                                                                                                            or from day to day, such variances occur
                                                     Applicants request that the order apply to new                                                                and Redemption Instruments will be
                                                  series of the Trust, and any additional series of the     as a result of third-party market forces,
                                                  Trust, and any other existing or future open-end          such as supply and demand. Therefore,                  valued in the same manner as those
                                                  management investment company or existing or              applicants assert that secondary market                investment positions currently held by
                                                  future series thereof (each, included in the term         transactions in shares will not lead to                the Funds. Applicants also seek relief
                                                  ‘‘Fund’’), that operate as (i) Equity Index-Based                                                                from the prohibitions on affiliated
                                                  Funds, and their respective existing or future            discrimination or preferential treatment
                                                  Master Funds, (ii) Self-Indexing Funds that are           among purchasers. Finally, applicants                  transactions in section 17(a) to permit a
                                                  Equity Funds, and their respective existing or future     represent that share market prices will                Fund to sell its shares to and redeem its
                                                  Master Funds, or Self-Indexing Funds that track a         be disciplined by arbitrage                            shares from a Fund of Funds, and to
                                                  specified index comprised of domestic and/or                                                                     engage in the accompanying in-kind
                                                  foreign fixed income securities (‘‘Fixed Income           opportunities, which should prevent
mstockstill on DSK30JT082PROD with NOTICES




                                                  Funds’’), and their respective existing or future                                                                transactions with the Fund of Funds.4
                                                  Master Funds, and (iii) Feeder Funds, which may              3 Each Self-Indexing Fund will post on its Web

                                                  be Equity Funds or Fixed Income Funds, pursuant           site the identities and quantities of the investment      4 The requested relief would apply to direct sales

                                                  to the Master-Feeder Relief. Any Fund will (a) be         positions that will form the basis for the Fund’s      of shares in Creation Units by a Fund to a Fund of
                                                  advised by the Initial Adviser or an entity               calculation of its NAV at the end of the day.          Funds and redemptions of those shares. Applicants,
                                                  controlling, controlled by, or under common               Applicants believe that requiring Self-Indexing        moreover, are not seeking relief from section 17(a)
                                                  control with the Initial Adviser (each, an                Funds to maintain full portfolio transparency will     for, and the requested relief will not apply to,
                                                  ‘‘Adviser’’) and (b) comply with the terms and            help address, together with other protections,         transactions where a Fund could be deemed an
                                                  conditions of the application.                            conflicts of interest with respect to such Funds.      Affiliated Person, or a Second-Tier Affiliate, of a



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                                                                                 Federal Register / Vol. 82, No. 104 / Thursday, June 1, 2017 / Notices                                                     25469

                                                  The purchase of Creation Units by a                     SECURITIES AND EXCHANGE                               A. Self-Regulatory Organization’s
                                                  Fund of Funds directly from a Fund will                 COMMISSION                                            Statement of the Purpose of, and
                                                  be accomplished in accordance with the                                                                        Statutory Basis for, the Proposed Rule
                                                                                                          [Release No. 34–80787; File No. SR–ISE–               Change
                                                  policies of the Fund of Funds and will
                                                                                                          2017–46]
                                                  be based on the NAVs of the Funds.                                                                            1. Purpose
                                                     9. Applicants also request relief to                 Self-Regulatory Organizations; Nasdaq                    Bats BYX Exchange, Inc., Bats BZX
                                                  permit a Feeder Fund to acquire shares                  ISE, LLC; Notice of Filing of Proposed                Exchange, Inc., Bats EDGA Exchange,
                                                  of another registered investment                        Rule Change To Eliminate                              Inc., Bats EDGX Exchange, Inc., BOX
                                                  company managed by the Adviser                          Requirements That Will Be Duplicative                 Options Exchange LLC, C2 Options
                                                  having substantially the same                           of CAT                                                Exchange, Incorporated, Chicago Board
                                                  investment objectives as the Feeder                     May 26, 2017.                                         Options Exchange, Incorporated,
                                                  Fund (‘‘Master Fund’’) beyond the                          Pursuant to Section 19(b)(1) of the                Chicago Stock Exchange, Inc., Financial
                                                  limitations in section 12(d)(1)(A) and                  Securities Exchange Act of 1934                       Industry Regulatory Authority, Inc.
                                                  permit the Master Fund, and any                         (‘‘Act’’) 1 and Rule 19b–4 thereunder,2               (‘‘FINRA’’), Investors’ Exchange LLC,
                                                  principal underwriter for the Master                    notice is hereby given that on May 15,                Miami International Securities
                                                  Fund, to sell shares of the Master Fund                 2017, Nasdaq ISE, LLC (‘‘ISE’’ or                     Exchange, LLC, MIAX PEARL, LLC,
                                                  to the Feeder Fund beyond the                           ‘‘Exchange’’) filed with the Securities               NASDAQ BX, Inc., Nasdaq GEMX, LLC,
                                                  limitations in section 12(d)(1)(B).                                                                           Nasdaq ISE, LLC, Nasdaq MRX, LLC,4
                                                                                                          and Exchange Commission (‘‘SEC’’ or
                                                                                                                                                                NASDAQ PHLX LLC, The NASDAQ
                                                     10. Section 6(c) of the Act permits the              ‘‘Commission’’) the proposed rule
                                                                                                                                                                Stock Market LLC, New York Stock
                                                  Commission to exempt any persons or                     change as described in Items I, II, and
                                                                                                                                                                Exchange LLC, NYSE MKT LLC, NYSE
                                                  transactions from any provision of the                  III, below, which Items have been
                                                                                                                                                                Arca, Inc. and NYSE National, Inc.5
                                                  Act if such exemption is necessary or                   prepared by the Exchange. The
                                                                                                                                                                (collectively, the ‘‘Participants’’) filed
                                                  appropriate in the public interest and                  Commission is publishing this notice to
                                                                                                                                                                with the Commission, pursuant to
                                                  consistent with the protection of                       solicit comments on the proposed rule
                                                                                                                                                                Section 11A of the Exchange Act 6 and
                                                  investors and the purposes fairly                       change from interested persons.
                                                                                                                                                                Rule 608 of Regulation NMS
                                                  intended by the policy and provisions of                I. Self-Regulatory Organization’s                     thereunder,7 CAT NMS Plan.8 The
                                                  the Act. Section 12(d)(1)(J) of the Act                 Statement of the Terms of Substance of                Participants filed the Plan to comply
                                                  provides that the Commission may                        the Proposed Rule Change                              with Rule 613 of Regulation NMS under
                                                  exempt any person, security, or                                                                               the Exchange Act. The Plan was
                                                                                                             The Exchange proposes to amend
                                                  transaction, or any class or classes of                                                                       published for comment in the Federal
                                                                                                          Rule 1404 (the ‘‘EBS Rule’’), as the EBS
                                                  persons, securities, or transactions, from                                                                    Register on May 17, 2016,9 and
                                                                                                          Rule provides for the collection of
                                                  any provision of section 12(d)(1) if the                                                                      approved by the Commission, as
                                                                                                          information that is duplicative of the
                                                  exemption is consistent with the public                                                                       modified, on November 15, 2016.10 On
                                                                                                          data collection requirements of the
                                                  interest and the protection of investors.                                                                     March 15, 2017, the Commission
                                                                                                          Consolidated Audit Trail (‘‘CAT’’)
                                                                                                                                                                approved the new Rule 900 Series to
                                                  Section 17(b) of the Act authorizes the                 adopted pursuant to the National
                                                                                                                                                                implement provisions of the CAT NMS
                                                  Commission to grant an order                            Market System Plan Governing the
                                                                                                                                                                Plan that are applicable to ISE
                                                  permitting a transaction otherwise                      Consolidated Audit Trail (the ‘‘CAT                   members.11
                                                  prohibited by section 17(a) if it finds                 NMS Plan’’ or ‘‘Plan’’).3                                The Plan is designed to create,
                                                  that (a) the terms of the proposed                         The text of the proposed rule change               implement and maintain a CAT that
                                                  transaction are fair and reasonable and                 is available on the Exchange’s Web site
                                                  do not involve overreaching on the part                 at www.ise.com, at the principal office                  4 ISE Gemini, LLC, ISE Mercury, LLC and

                                                  of any person concerned; (b) the                        of the Exchange, and at the                           International Securities Exchange, LLC have been
                                                  proposed transaction is consistent with                 Commission’s Public Reference Room.                   renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC,
                                                                                                                                                                and Nasdaq ISE, LLC, respectively. See Securities
                                                  the policies of each registered                         II. Self-Regulatory Organization’s                    Exchange Act Release No. 80248 (March 15, 2017),
                                                  investment company involved; and (c)                    Statement of the Purpose of, and                      82 FR. 14547 (March 21, 2017); Securities Exchange
                                                                                                                                                                Act Release No. 80326 (March 29, 2017), 82 FR
                                                  the proposed transaction is consistent                  Statutory Basis for, the Proposed Rule                16460 (April 4, 2017); and Securities Exchange Act
                                                  with the general purposes of the Act.                   Change                                                Release No. 80325 (March 29, 2017), 82 FR 16445
                                                                                                                                                                (Apr. 4, 2017).
                                                    For the Commission, by the Division of                  In its filing with the Commission, the                 5 National Stock Exchange, Inc. has been renamed
                                                  Investment Management, under delegated                  Exchange included statements                          NYSE National, Inc. See Securities Exchange Act
                                                  authority.                                              concerning the purpose of and basis for               Release No. 79902 (January 30, 2017), 82 FR 9258
                                                                                                                                                                (February 3, 2017).
                                                  Eduardo A. Aleman,                                      the proposed rule change and discussed                   6 15 U.S.C. 78k–1.
                                                  Assistant Secretary.                                    any comments it received on the                          7 17 CFR 242.608.

                                                  [FR Doc. 2017–11242 Filed 5–31–17; 8:45 am]             proposed rule change. The text of these                  8 See Letter from the Participants to Brent J.

                                                                                                          statements may be examined at the                     Fields, Secretary, Commission, dated September 30,
                                                  BILLING CODE 8011–01–P
                                                                                                          places specified in Item IV below. The                2014; and Letter from Participants to Brent J. Fields,
                                                                                                                                                                Secretary, Commission, dated February 27, 2015.
                                                                                                          Exchange has prepared summaries, set                  On December 24, 2015, the Participants submitted
                                                                                                          forth in sections A, B, and C below, of               an amendment to the CAT NMS Plan. See Letter
                                                                                                          the most significant aspects of such                  from Participants to Brent J. Fields, Secretary,
mstockstill on DSK30JT082PROD with NOTICES




                                                                                                          statements.                                           Commission, dated December 23, 2015.
                                                                                                                                                                   9 Securities Exchange Act Release No. 77724

                                                                                                                                                                (April 27, 2016), 81 FR 30614 (May 17, 2016).
                                                                                                            1 15U.S.C. 78s(b)(1).                                  10 Securities Exchange Act Release No. 79318
                                                                                                            2 17CFR 240.19b–4.                                  (Nov. 15, 2016), 81 FR 84696 (November 23, 2016)
                                                  Fund of Funds because an Adviser or an entity             3 Unless otherwise specified, capitalized terms     (‘‘Approval Order’’).
                                                  controlling, controlled by or under common control      used in this rule filing are defined as set forth        11 See Securities Exchange Act Release No. 80256
                                                  with an Adviser provides investment advisory            herein, or in the CAT Compliance Rule Series or in    (March 15, 2017), 82 FR 14526 (March 21, 2017)
                                                  services to that Fund of Funds.                         the CAT NMS Plan.                                     (SR–ISE–2017–08).



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Document Created: 2017-06-01 03:05:01
Document Modified: 2017-06-01 03:05:01
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice.
DatesThe application was filed on November 18, 2016 and
ContactBarbara T. Heussler, Senior Counsel, at (202) 551-6990, or Robert H. Shapiro, Branch Chief, at (202) 551- 6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation82 FR 25467 

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