82 FR 49882 - PIMCO Funds, et al.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 207 (October 27, 2017)
Federal Register Volume 82, Issue 207 (October 27, 2017)
| Page Range | 49882-49884 | |
| FR Document | 2017-23369 |
[Federal Register Volume 82, Number 207 (Friday, October 27, 2017)] [Notices] [Pages 49882-49884] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-23369] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32867; File No. 812-14756] PIMCO Funds, et al. October 23, 2017. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice. ----------------------------------------------------------------------- Notice of an application for an order pursuant to: (a) Section 6(c) of the Investment Company Act of 1940 (``Act'') granting an exemption from sections 18(f) and 21(b) of the Act; (b) section 12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) section 17(d) of the Act and rule 17d-1 under the Act to permit certain joint arrangements and transactions. Applicants request an order that would permit certain registered open-end management investment companies to participate in a joint lending and borrowing facility. APPLICANTS: PIMCO Funds, PIMCO Variable Insurance Trust, PIMCO ETF Trust, PIMCO Equity Series, PIMCO Equity Series VIT, PIMCO Managed Accounts Trust, each an investment company organized as a Delaware statutory trust or a Massachusetts business trust and registered under the Act as an open-end management investment company, on behalf of all existing series,\1\ and Pacific Investment Management Company LLC (the ``Adviser''), a Delaware limited liability company registered as an investment [[Page 49883]] adviser under the Investment Advisers Act of 1940. --------------------------------------------------------------------------- \1\ Currently, one series of the Funds (as defined below) is a money market fund that complies with Rule 2a-7 of the Act, and applicants request that the order also apply to any future Fund that is a money market fund that complies with rule 2a-7 of the Act (each a ``Money Market Fund''). Money Market Funds typically will not participate as borrowers under the interfund lending facility because they rarely need to borrow cash to meet redemptions. FILING DATES: The application was filed on March 17, 2017 and amended --------------------------------------------------------------------------- on June 28, 2017 and October 16, 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 November 17, 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: Joshua Ratner, Pacific Investment Management Company LLC, 1633 Broadway, New York, New York 10019 and Robert W. Helm, Brendan C. Fox, Dechert LLP, 1900 K Street NW., Washington, DC 20006. 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 an applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090. Summary of the Application 1. Applicants request an order that would permit the applicants to participate in an interfund lending facility where each Fund could lend money directly to and borrow money directly from other Funds to cover unanticipated cash shortfalls, such as unanticipated redemptions or trade fails.\2\ The Funds will not borrow under the facility for leverage purposes and the loans' duration will be no more than 7 days.\3\ --------------------------------------------------------------------------- \2\ Applicants request that the order apply to the applicants and to any existing or future registered open-end management investment company or series thereof for which the Adviser or any successor thereto or an investment adviser controlling, controlled by, or under common control with the Adviser or any successor thereto serves as investment adviser (each a ``Fund'' and collectively the ``Funds'' and each such investment adviser an ``Adviser''). For purposes of the requested order, ``successor'' is limited to any entity that results from a reorganization into another jurisdiction or a change in the type of a business organization. \3\ Any Fund, however, will be able to call a loan on one business day's notice. --------------------------------------------------------------------------- 2. Applicants anticipate that the proposed facility would provide a borrowing Fund with a source of liquidity at a rate lower than the bank borrowing rate at times when the cash position of the Fund is insufficient to meet temporary cash requirements. In addition, Funds making short-term cash loans directly to other Funds would earn interest at a rate higher than they otherwise could obtain from investing their cash in repurchase agreements or certain other short term money market instruments. Thus, applicants assert that the facility would benefit both borrowing and lending Funds. 3. Applicants agree that any order granting the requested relief will be subject to the terms and conditions stated in the application. Among others, the Adviser, through a designated committee, would administer the facility as a disinterested fiduciary as part of its duties under the investment management and administrative agreements with the Funds and would receive no additional fee as compensation for its services in connection with the administration of the facility.\4\ The facility would be subject to oversight and certain approvals by the Funds' Board, including, among others, approval of the interest rate formula and of the method for allocating loans across Funds, as well as review of the process in place to evaluate the liquidity implications for the Funds. A Fund's aggregate outstanding interfund loans will not exceed 15% of its net assets, and the Fund's loans to any one Fund will not exceed 5% of the lending Fund's net assets.\5\ --------------------------------------------------------------------------- \4\ Members of the designated committee may include one or more investment professionals, including individuals involved in making investment decisions regarding short-term investments. \5\ Under certain circumstances, a borrowing Fund will be required to pledge collateral to secure the loan. --------------------------------------------------------------------------- 4. Applicants assert that the facility does not raise the concerns underlying section 12(d)(1) of the Act given that the Funds are part of the same group of investment companies and there will be no duplicative costs or fees to the Funds.\6\ Applicants also assert that the proposed transactions do not raise the concerns underlying sections 17(a)(1), 17(a)(3), 17(d) and 21(b) of the Act as the Funds would not engage in lending transactions that unfairly benefit insiders or are detrimental to the Funds. Applicants state that the facility will offer both reduced borrowing costs and enhanced returns on loaned funds to all participating Funds and each Fund would have an equal opportunity to borrow and lend on equal terms based on an interest rate formula that is objective and verifiable. With respect to the relief from section 17(a)(2) of the Act, applicants note that any collateral pledged to secure an interfund loan would be subject to the same conditions imposed by any other lender to a Fund that imposes conditions on the quality of or access to collateral for a borrowing (if the lender is another Fund) or the same or better conditions (in any other circumstance).\7\ --------------------------------------------------------------------------- \6\ Applicants state that the obligation to repay an interfund loan could be deemed to constitute a security for the purposes of sections 17(a)(1) and 12(d)(1) of the Act. \7\ Applicants state that any pledge of securities to secure an interfund loan could constitute a purchase of securities for purposes of section 17(a)(2) of the Act. --------------------------------------------------------------------------- 5. Applicants also believe that the limited relief from section 18(f)(1) of the Act that is necessary to implement the facility (because the lending Funds are not banks) is appropriate in light of the conditions and safeguards described in the application and because the open-end Funds would remain subject to the requirement of section 18(f)(1) that all borrowings of the open-end Fund, including combined interfund loans and bank borrowings, have at least 300% asset coverage. 6. Section 6(c) of the Act permits the Commission to exempt any persons or transactions from any provision of the Act if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision of section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part [[Page 49884]] of any person concerned; (b) the proposed transaction is consistent with the policies of each registered investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act. Rule 17d-1(b) under the Act provides that in passing upon an application filed under the rule, the Commission will consider whether the participation of the registered investment company in a joint enterprise, joint arrangement or profit sharing plan on the basis proposed is consistent with the provisions, policies and purposes of the Act and the extent to which such participation is on a basis different from or less advantageous than that of the other participants. For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-23369 Filed 10-26-17; 8:45 am] BILLING CODE 8011-01-P
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Applicants’ Legal Analysis the portfolio of each Fund will be before notification of the next
1. Section 6(c) of the Act provides that managed to provide ample liquidity for repurchase offer is sent to shareholders
the Commission may exempt any monthly repurchase offers. Applicants of BGFREI (or Future Fund relying on
person, security, or transaction, or any do not believe that a change to monthly this relief).
class or classes of persons, securities, or repurchases would necessitate any For the Commission, by the Division of
transactions, from any provision of the change in portfolio management Investment Management, under delegated
Act or rule thereunder, if and to the practices of any of the Funds in order authority.
extent that such exemption is necessary to satisfy rule 23c–3. In fact, applicants Eduardo A. Aleman,
or appropriate in the public interest and expect limited or no impact on overall Assistant Secretary.
portfolio management or performance of
consistent with the protection of [FR Doc. 2017–23368 Filed 10–26–17; 8:45 am]
such Funds upon converting to monthly
investors and the purposes fairly BILLING CODE 8011–01–P
offers and believe that it may be easier
intended by the policy and provisions of
to manage the cash of the portfolio for
the Act.
the smaller monthly offers compared to
2. Section 23(c) of the Act provides in SECURITIES AND EXCHANGE
the larger quarterly ones.
relevant part that no registered closed- COMMISSION
6. Applicants propose to send
end investment company shall purchase notification to shareholders at least
any securities of any class of which it seven days, but no more than fourteen [Investment Company Act Release No.
is the issuer except: (a) On a securities calendar days, in advance of a 32867; File No. 812–14756]
exchange or other open market; (b) repurchase request deadline. Applicants
pursuant to tenders, after reasonable PIMCO Funds, et al.
assert that, because BGFREI (and any
opportunity to submit tenders given to Future Fund) currently intends to make October 23, 2017.
all holders of securities of the class to payment on the next business day
be purchased; or (c) under such other AGENCY:Securities and Exchange
following the pricing date, the entire
circumstances as the Commission may Commission (‘‘Commission’’).
procedure can be completed before the
permit by rules and regulations or next notification is sent out to ACTION: Notice.
orders for the protection of investors. shareholders; thus avoiding any overlap.
3. Rule 23c–3 under the Act permits Applicants believe that these Notice of an application for an order
a registered closed-end investment procedures will eliminate any pursuant to: (a) Section 6(c) of the
company to make repurchase offers for possibility of investor confusion. Investment Company Act of 1940
its common stock at net asset value at Applicants also state that monthly (‘‘Act’’) granting an exemption from
periodic intervals pursuant to a repurchase offers will be a fundamental sections 18(f) and 21(b) of the Act; (b)
fundamental policy of the investment feature of the Funds, and their section 12(d)(1)(J) of the Act granting an
company. ‘‘Periodic interval’’ is defined prospectuses will provide a clear exemption from section 12(d)(1) of the
in rule 23c–3(a)(1) as an interval of explanation of the repurchase program. Act; (c) sections 6(c) and 17(b) of the
three, six, or twelve months. Rule 23c– 7. Applicants submit that for the Act granting an exemption from sections
3(b)(4) requires that notification of each reasons given above the requested relief 17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
repurchase offer be sent to shareholders is appropriate in the public interest and and (d) section 17(d) of the Act and rule
no less than 21 calendar days and no is consistent with the protection of 17d-1 under the Act to permit certain
more than 42 calendar days before the investors and the purposes fairly joint arrangements and transactions.
repurchase request deadline. intended by the policy and provisions of Applicants request an order that would
4. Applicants request an order the Act. permit certain registered open-end
pursuant to sections 6(c) and 23(c) of management investment companies to
the Act exempting them from rule 23c– Applicants’ Conditions
participate in a joint lending and
3(a)(1) to the extent necessary to permit Applicants agree that any order borrowing facility.
the Funds to make monthly repurchase granting the requested relief shall be
offers. Applicants also request an APPLICANTS: PIMCO Funds, PIMCO
subject to the following conditions:
exemption from the notice provisions of 1. BGFREI (and any Future Fund Variable Insurance Trust, PIMCO ETF
rule 23c–3(b)(4) to the extent necessary relying on this relief) will make a Trust, PIMCO Equity Series, PIMCO
to permit each Fund to send notification repurchase offer pursuant to rule 23c– Equity Series VIT, PIMCO Managed
of an upcoming repurchase offer to 3(b) for a repurchase offer amount of not Accounts Trust, each an investment
shareholders at least seven days but no less than 5% in any one-month period. company organized as a Delaware
more than fourteen calendar days in In addition, the repurchase offer amount statutory trust or a Massachusetts
advance of the repurchase request for the then-current monthly period, business trust and registered under the
deadline. plus the repurchase offer amounts for Act as an open-end management
5. Applicants contend that monthly the two monthly periods immediately investment company, on behalf of all
repurchase offers are in the preceding the then-current monthly existing series,1 and Pacific Investment
shareholders’ best interests and period, will not exceed 25% of Management Company LLC (the
consistent with the policies underlying BGFREI’s (or Future Fund’s, as ‘‘Adviser’’), a Delaware limited liability
rule 23c–3. Applicants assert that applicable) outstanding common shares. company registered as an investment
asabaliauskas on DSKBBXCHB2PROD with NOTICES
monthly repurchase offers will provide BGFREI (and any Future Fund relying
1 Currently, one series of the Funds (as defined
investors with more liquidity than on this relief) may repurchase
below) is a money market fund that complies with
quarterly repurchase offers. Applicants additional tendered shares pursuant to Rule 2a–7 of the Act, and applicants request that
assert that shareholders will be better rule 23c–3(b)(5) only to the extent the the order also apply to any future Fund that is a
able to manage their investments and percentage of additional shares so money market fund that complies with rule 2a–7 of
plan transactions, because if they decide repurchased does not exceed 2% in any the Act (each a ‘‘Money Market Fund’’). Money
Market Funds typically will not participate as
to forego a repurchase offer, they will three-month period. borrowers under the interfund lending facility
only need to wait one month for the 2. Payment for repurchased shares because they rarely need to borrow cash to meet
next offer. Applicants also contend that will occur at least five business days redemptions.
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![49884 Federal Register / Vol. 82, No. 207 / Friday, October 27, 2017 / Notices
of any person concerned; (b) the received any comments on the proposed commodity interests, or any other
proposed transaction is consistent with rule change. This order approves the instruments regulated by the
the policies of each registered proposed rule change, as modified by Commodity Exchange Act. The Trust
investment company involved; and (c) Amendment No. 1. will take delivery of physical gold that
the proposed transaction is consistent complies with the London Bullion
II. The Description of the Proposed
with the general purposes of the Act. Market Association (‘‘LBMA’’) gold
Rule Change, as Modified by
Rule 17d–1(b) under the Act provides delivery rules. According to the
Amendment No. 1 5
that in passing upon an application filed Exchange, the Shares, which are
under the rule, the Commission will The Exchange proposes to list and Commodity Based Trust Shares, will
consider whether the participation of trade shares (‘‘Shares’’) of The Gold represent investors’ discrete identifiable
the registered investment company in a Trust (‘‘Trust’’), a series of the World and undivided beneficial ownership
joint enterprise, joint arrangement or Currency Gold Trust (‘‘WCGT’’),6 under interest in the commodities deposited
profit sharing plan on the basis NYSE Arca Rule 8.201–E.7 NYSE Arca into the Trust.
proposed is consistent with the Rule 8.201–E governs the listing and The sponsor of the Trust is WGC USA
provisions, policies and purposes of the trading, or trading pursuant to unlisted Asset Management Company, LLC
Act and the extent to which such trading privileges, of Commodity-Based (‘‘Sponsor’’). The sole trustee of WCGT
participation is on a basis different from Trust Shares on the Exchange.8 is Delaware Trust Company. BNY
or less advantageous than that of the The investment objective of the Trust Mellon Asset Servicing, a division of
other participants. is for the Shares to reflect the The Bank of New York Mellon
performance of the price of gold bullion, (‘‘BNYM’’), will be the Trust’s
For the Commission, by the Division of less the expenses of the Trust’s administrator and transfer agent. BNYM
Investment Management, under delegated operations. The Trust will not trade in
authority. will serve as the custodian of the Trust’s
gold futures, options, or swap contracts cash, if any. A bank will serve as the
Eduardo A. Aleman, on any futures exchange or over the custodian of the Trust’s gold.
Assistant Secretary. counter. The Trust will not hold or trade
[FR Doc. 2017–23369 Filed 10–26–17; 8:45 am] in commodity futures contracts, III. Discussion and Commission
BILLING CODE 8011–01–P
Findings
(‘‘ISG’’); (2) stated that the net asset value (‘‘NAV’’) After careful review, the Commission
of the Trust will be published by the Sponsor (as finds that the Exchange’s proposed rule
SECURITIES AND EXCHANGE defined herein) by 5:30 p.m., Eastern time on each
day that the NYSE Arca is open for regular trading
change, as modified by Amendment No.
COMMISSION and will be posted on the Trust’s Web site; (3) 1, to list and trade the Shares is
[Release No. 34–81918; File No. SR– clarified that the intraday indicative value (‘‘IIV’’) consistent with the Act and the rules
per Share for the Shares will be widely and regulations thereunder applicable to
NYSEArca–2017–98] disseminated by one or more major market data
vendors at least every 15 seconds during the a national securities exchange.9 In
Self-Regulatory Organizations; NYSE Exchange’s Core Trading Session (as defined in the particular, the Commission finds that
Arca, Inc.; Order Approving a Exchange’s rules; and (4) stated that the Web site the proposal, as modified by
for the Trust will provide the two most recent Amendment No. 1, is consistent with
Proposed Rule Change, as Modified by reports to stockholders. Amendment No. 1 also
Amendment No. 1 Thereto, To List and made non-substantive, technical amendments. Section 11A(a)(1)(C)(iii) of the Act,10
Trade Shares of The Gold Trust Under Amendment No. 1 is available at: https:// which sets forth Congress’ finding that
NYSE Arca Rule 8.201–E www.sec.gov/comments/sr-nysearca-2017-98/ it is in the public interest and
nysearca201798-2614707-161129.pdf. Amendment appropriate for the protection of
October 23, 2017. No. 1 is not subject to notice and comment because
it is a technical amendment that does not materially investors and the maintenance of fair
I. Introduction alter the substance of the proposed rule change or and orderly markets to assure the
raise any novel regulatory issues. availability to brokers, dealers, and
On August 30, 2017, NYSE Arca, Inc. 5 A more detailed description of the Trust and the
investors of information with respect to
(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed Shares, as well as investment risks, creation and
quotations for and transactions in
with the Securities and Exchange redemption procedures, NAV calculation,
availability of information and fees, among other securities. The last-sale price for the
Commission (‘‘Commission’’), pursuant things, is included in the Registration Statement, Shares will be disseminated over the
to Section 19(b)(1) of the Securities infra note 7, and in Amendment No. 1, supra note Consolidated Tape. According to the
Exchange Act of 1934 (‘‘Act’’) 1 and Rule 4.
Exchange, there is a considerable
6 According to the Exchange, WCGT is a Delaware
19b–4 thereunder,2 a proposed rule amount of information about gold and
statutory trust consisting of multiple series, each of
change to list and trade shares of The which issues common units of beneficial interest, gold markets available on public Web
Gold Trust under NYSE Arca Rule which represent units of fractional undivided sites and through professional and
8.201–E. The proposed rule change was beneficial interest in and ownership of such series.
subscription services. Investors may
published for comment in the Federal The term of WCGT and each series will be
perpetual (unless terminated earlier in certain obtain gold pricing information on a 24-
Register on September 15, 2017.3 On circumstances). hour basis based on the spot price for an
September 28, 2017, the Exchange filed 7 On August 29, 2017, WCGT submitted to the
ounce of gold from various financial
Amendment No. 1 to the proposed rule Commission its draft registration statement on Form information service providers.11
change.4 The Commission has not S–1 with respect to the Trust (‘‘Registration
Statement’’) under the Securities Act of 1933 (‘‘1933
9 In approving this proposed rule change, the
Act’’).
1 15 U.S.C. 78s(b)(1). Commission has considered the proposed rule’s
asabaliauskas on DSKBBXCHB2PROD with NOTICES
8 A ‘‘Commodity-Based Trust Share’’ is a security
2 17 CFR 240.19b–4. impact on efficiency, competition, and capital
(a) that is issued by a trust that holds a specified
3 See Securities Exchange Act Release No. 81568
commodity deposited with the trust; (b) that is formation. See 15 U.S.C. 78c(f).
(Sep. 11, 2017), 82 FR 43417. issued by such trust in a specified aggregate 10 15 U.S.C. 78k–1(a)(1)(C)(iii).
4 Amendment No. 1 to the proposed rule change minimum number in return for a deposit of a 11 The Exchange states that Reuters and
replaces and supersedes the original filing in its quantity of the underlying commodity; and (c) that, Bloomberg, for example, provide at no charge on
entirety. In Amendment No. 1, the Exchange: (1) when aggregated in the same specified minimum their Web sites delayed information regarding the
Provided additional information regarding the number, may be redeemed at a holder’s request by spot price of gold and last sale prices of gold
futures exchanges that trade in gold futures such trust which will deliver to the redeeming futures, as well as information about news and
contracts and which of those exchanges are holder the quantity of the underlying commodity. developments in the gold market. Reuters and
members of the Intermarket Surveillance Group See NYSE Arca Rule 8.201–E(c)(1). Bloomberg also offer a professional service to
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Document Created: 2017-10-27 02:06:26
Document Modified: 2017-10-27 02:06:26
| 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 March 17, 2017 and amended | |
| 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 49882 |
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