82 FR 42201 - SL Advisors, LLC, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 171 (September 6, 2017)

Page Range		42201-42203
FR Document		2017-18777
Federal Register, Volume 82 Issue 171 (Wednesday, September 6, 2017)
[Federal Register Volume 82, Number 171 (Wednesday, September 6, 2017)]
[Notices]
[Pages 42201-42203]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-18777]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32801; 812-14802]


SL Advisors, LLC, et al.

August 30, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

-----------------------------------------------------------------------

    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 only 
(``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; and (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.

Applicants:  SL Advisors, LLC (the ``Initial Adviser''), a New Jersey 
limited liability company that is registered as an investment adviser 
under the Investment Advisers Act of 1940, ETF Series Solutions (the 
``Trust''), a Delaware statutory trust registered under the Act as an 
open-end management investment company with multiple series, and Quasar 
Distributors, LLC (the ``Distributor''), a Delaware limited liability 
company and broker-dealer registered under the Securities Exchange Act 
of 1934 (``Exchange Act'').

Filing Dates:  The application was filed on July 20, 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 September 25, 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:  Brent J. Fields, Secretary, Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: W. 
John McGuire, Esq., Morgan, Lewis & Bockius LLP, 1111 Pennsylvania 
Avenue NW., Washington, DC 20004-2541 and Michael D. Barolsky, Esq., 
U.S. Bancorp Fund Services, LLC, 615 E. Michigan Street, Milwaukee, WI 
53202.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at 
(202) 551-6876, 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 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.

[[Page 42202]]

Summary of the Application

    1. Applicants request an order that would allow Funds to operate as 
index exchange traded funds (``ETFs'').\1\ Fund shares will be 
purchased and redeemed at their NAV in Creation Units only. 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. Any order 
granting the requested relief would be subject to the terms and 
conditions stated in the application.
---------------------------------------------------------------------------

    \1\ Applicants request that the order apply to the new series of 
the Trust and any additional series of the Trust, and any other 
open-end management investment company or series thereof (each, 
included in the term ``Fund''), each of which will operate as an ETF 
and will track a specified index comprised of domestic or foreign 
equity and/or fixed income securities (each, an ``Underlying 
Index''). 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.
---------------------------------------------------------------------------

    2. Each Fund will hold investment positions selected to correspond 
generally 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 to or promoter of a Fund, or 
of the Distributor will compile, create, sponsor or maintain the 
Underlying Index.\2\
---------------------------------------------------------------------------

    \2\ 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.
---------------------------------------------------------------------------

    3. Shares will be purchased and redeemed in Creation Units and 
generally on an in-kind basis. 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 only.
    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.\3\ 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.
---------------------------------------------------------------------------

    \3\ 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.
---------------------------------------------------------------------------

    9. 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)

[[Page 42203]]

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. 2017-18777 Filed 9-5-17; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 42203

the proposed transaction is consistent operative delay period contained in 15c6–1(a), as amended, and to conform
with the general purposes of the Act. Exchange Act Rule 19b–4(f)(6)(iii).3 them to similar changes that other
For the Commission, by the Division of While these amendments are effective exchanges have made.6
Investment Management, under delegated upon filing, the Exchange has Specifically, the Exchange proposes to
authority. designated the proposed amendments to amend Rule 431 (Ex-dividend, Ex-
Eduardo A. Aleman, be operative on September 5, 2017. rights), which presently provides that
Assistant Secretary. The text of the proposed rule change transactions in stocks (except for those
[FR Doc. 2017–18777 Filed 9–5–17; 8:45 am]
is available on the Exchange’s Web site made for cash) shall be ex-dividend or
at http://nasdaqphlx.cchwallstreet.com/, ex-rights on the second business day
BILLING CODE 8011–01–P
at the principal office of the Exchange, preceding the record date fixed by the
and at the Commission’s Public corporation or the date of the closing of
SECURITIES AND EXCHANGE Reference Room. transfer books thereof. It also provides
COMMISSION II. Self-Regulatory Organization’s that if the record date or closing of
Statement of the Purpose of, and transfer books occurs on a day other
[Release No. 34–81501; File No. SR–Phlx– than a business day, the transaction will
2017–71] Statutory Basis for, the Proposed Rule
Change be ex-dividend or ex-rights on the third
Self-Regulatory Organizations; preceding business day. The Exchange
In its filing with the Commission, the proposes to amend this Rule to provide
NASDAQ PHLX LLC; Notice of Filing Exchange included statements
and Immediate Effectiveness of that: (1) The transactions shall be ex-
concerning the purpose of and basis for dividend or ex-rights on the first
Proposed Rule Change to Rules 431, the proposed rule change and discussed
432, and 835 To Conform Them to business day preceding the record date
any comments it received on the fixed by the corporation or the date of
Securities Exchange Act Rule 15c6– proposed rule change. The text of these
1(a), Which Shortens the Settlement the closing of transfer books thereof; and
statements may be examined at the (2) the transaction will be ex-dividend
Cycle to Two Dates After the Trade places specified in Item IV below. The
Date, and To Interpret the Amended or ex-rights on the second preceding
Exchange has prepared summaries, set business day if the record date or
Rules To Exclude September 5, 2017 forth in sections A, B, and C below, of
as the First Ex-Dividend Date closing of transfer books occurs on a day
the most significant aspects of such
Thereunder other than a business day.
statements. Similarly, the Exchange proposes to
August 30, 2017. A. Self-Regulatory Organization’s amend Rule 432 (Ex-warrants), which
Pursuant to Section 19(b)(1) of the Statement of the Purpose of, and the presently provides that transactions in
Securities Exchange Act of 1934 Statutory Basis for, the Proposed Rule securities which have subscription
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 Change warrants attached (except those made
notice is hereby given that on August for cash) shall be ex-warrants on the
22, 2017, NASDAQ PHLX LLC (‘‘Phlx’’ 1. Purpose
second business day preceding the date
or ‘‘Exchange’’) filed with the Securities Background of expiration of the warrants, except that
and Exchange Commission (‘‘SEC’’ or On March 22, 2017, the SEC adopted when the date of expiration occurs on
‘‘Commission’’) the proposed rule amendments to SEA Rule 15c6–1(a) to a day other than a business day, the
change as described in Items I and II, shorten the standard settlement cycle transactions will be ex-warrants on the
below, which Items have been prepared third business day preceding the date of
for U.S. secondary market transactions
by the Exchange. The Commission is expiration. The proposal will amend
in equities, corporate and municipal
publishing this notice to solicit this Rule to provide that transactions in
bonds, unit investment trusts and
comments on the proposed rule change securities which have subscription
financial instruments composed of these
from interested persons. warrants attached (except those made
products, from T+3 to T+2.4 The
I. Self-Regulatory Organization’s industry-wide initiative is designed to for cash) shall be ex-warrants on the
Statement of the Terms of Substance of reduce a number of risks, including first business day preceding the date of
the Proposed Rule Change credit risk, market risk, and liquidity expiration of the warrants, except that
risk and, as a result, reduce systemic when the date of expiration occurs on
The Exchange proposes to amend
risk for U.S. market participants.5 The a day other than a business day, the
PHLX Rules 431, 432, and 825 to
compliance date for the rule transactions will be ex-warrants on the
conform them to SEA Rule 15c6–1(a) to
amendments is September 5, 2017. second business day preceding the date
shorten the standard settlement cycle
The Exchange [sic] proposing changes of expiration.
for most broker-dealer transactions from Third, the Exchange proposes to
three business days after the trade date to its Rules pertaining to securities
settlement to conform them to SEA Rule amend Rule 825 (Ex-dividend
(‘‘T+3’’) to two business days after the Procedure), which sets forth the ex-
trade date (‘‘T+2’’) and the industry-led 3 17 dividend rules for transactions in
CFR 240.19b–4(f)(6)(iii).
initiative to shorten the settlement cycle 4 See securities subject to unlisted trading
Securities Exchange Act Release No. 80295
from T+3 to T+2. The proposal also (March 22, 2017), 82 FR 15564 (March 29, 2017) privileges. The Rule presently provides
addresses the application of these Rules (Securities Transaction Settlement Cycle) (File No.
that transactions in stocks (except those
as they relate to establishing ex- S7–22–16) (stating that, as amended, SEA Rule
made for cash) are ex-dividend on the
asabaliauskas on DSKBBXCHB2PROD with NOTICES

dividend dates in connection with the 15c6–1(a) will prohibit broker-dealers from
effecting or entering into a contract for the purchase second business day preceding the
implementation of the T+2 settlement or sale of a security (other than an exempted record date and that, if the record date
cycle on September 5, 2017. security, government security, municipal security,
selected is not a business day, then the
The Exchange requests that the commercial paper, bankers’ acceptances or
commercial bills) that provides for payment of stock will be quoted ex-dividend on the
Commission waive the five-day pre-
funds and delivery of securities later than the
filing requirement and the 30-day second business day after the date of the contract, 6 See, e.g., Securities Exchange Act Release No.
unless otherwise expressly agreed to by the parties 34–80640 (May 16, 2017), 82 FR 22598 (May 10,
1 15 U.S.C. 78s(b)(1). at the time of the transaction). 2017) (Order Approving File No. SR–NASDAQ–
2 17 CFR 240.19b–4. 5 See id. 2017–13).

VerDate Sep<11>2014 17:37 Sep 05, 2017 Jkt 241001 PO 00000 Frm 00148 Fmt 4703 Sfmt 4703 E:\FR\FM\06SEN1.SGM 06SEN1
Document Created: 2017-09-06 00:56:32
Document Modified: 2017-09-06 00:56:32
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice.
Dates		The application was filed on July 20, 2017.
Contact		Deepak T. Pai, Senior Counsel, at (202) 551-6876, or Robert H. Shapiro, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		82 FR 42201