83 FR 1644 - Harbor Funds and Harbor Capital Advisors, Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 9 (January 12, 2018)

Page Range		1644-1646
FR Document		2018-00431
Federal Register, Volume 83 Issue 9 (Friday, January 12, 2018)
[Federal Register Volume 83, Number 9 (Friday, January 12, 2018)]
[Notices]
[Pages 1644-1646]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-00431]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32965; File No. 812-14784]


Harbor Funds and Harbor Capital Advisors, Inc.

January 9, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    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: Harbor Funds, a Delaware statutory trust registered under 
the Act as an open-end management series investment company, and Harbor 
Capital Advisors, Inc. (the ``Adviser''), registered as an investment 
adviser under the Investment Advisers Act of 1940.

Filing Dates: The application was filed on June 13, 2017 and amended on 
November 15, 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 February 2, 2018 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,

[[Page 1645]]

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: 111 South Wacker 
Drive, 34th Floor, Chicago, IL 60606.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at 
(202) 551-6817, or David J. Marcinkus, 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 website 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.\1\ The Funds will not borrow under the facility for 
leverage purposes and the loans' duration will be no more than 7 
days.\2\
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    \1\ 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. Certain of the Funds are money market funds that 
comply with Rule 2a-7 of the 1940 Act (each a ``Money Market Fund'' 
and they are included in the term ``Funds''). Although Money Market 
Funds are applying for the requested relief, they will not 
participate as borrowers because such Funds rarely need to borrow 
cash to meet redemptions. All Funds that currently intend to rely on 
the requested order have been named as Applicants and any other Fund 
that relies on the requested order in the future will comply with 
the terms and conditions of the Application.
    \2\ Any Fund, however, will be able to call a loan on one 
business day's notice.
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    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 agreements with each Fund and 
would receive no additional fee as compensation for its services in 
connection with the administration of the facility. 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.\3\
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    \3\ Under certain circumstances, a borrowing Fund will be 
required to pledge collateral to secure the loan.
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    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.\4\ 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).\5\
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    \4\ 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.
    \5\ 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.
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    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 Funds would remain subject to the requirement of section 18(f)(1) 
that all borrowings of a 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 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.


[[Page 1646]]


    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-00431 Filed 1-11-18; 8:45 am]
 BILLING CODE 8011-01-P
1644 Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Notices

B. Self-Regulatory Organization’s IV. Solicitation of Comments For the Commission, by the Division of
Statement on Burden on Competition Trading and Markets, pursuant to delegated
Interested persons are invited to authority.10
The Exchange does not believe that submit written data, views, and Eduardo A. Aleman,
the proposed rule change will impose arguments concerning the foregoing, Assistant Secretary.
any burden on competition that is not including whether the proposed rule [FR Doc. 2018–00408 Filed 1–11–18; 8:45 am]
necessary or appropriate in furtherance change is consistent with the Act. BILLING CODE 8011–01–P
of the purposes of the Act. The Comments may be submitted by any of
proposed rule change will apply in the the following methods:
same manner to all stop and stop-limit SECURITIES AND EXCHANGE
orders Trading Permit Holders submit to Electronic Comments COMMISSION
the Exchange and will help prevent • Use the Commission’s internet [Investment Company Act Release No.
potentially erroneous executions, which
comment form (http://www.sec.gov/ 32965; File No. 812–14784]
benefits all market participants. Because
rules/sro.shtml); or
pursuant to the proposed rule change Harbor Funds and Harbor Capital
the System will reject stop and stop- • Send an email to rule-comments@ Advisors, Inc.
limit orders it receives under certain sec.gov. Please include File Number SR–
conditions, the proposed rule change C2–2017–033 on the subject line. January 9, 2018.
will only impact stop and stop-limit AGENCY: Securities and Exchange
Paper Comments Commission (‘‘Commission’’).
orders Trading Permit Holders submit to
the Exchange, based on quotes on the • Send paper comments in triplicate ACTION: Notice.
Exchange, and thus will have no impact to Brent J. Fields, Secretary, Securities
on intermarket competition. Notice of an application for an order
and Exchange Commission, 100 F Street
pursuant to: (a) Section 6(c) of the
C. Self-Regulatory Organization’s NE, Washington, DC 20549–1090.
Investment Company Act of 1940
Statement on Comments on the All submissions should refer to File (‘‘Act’’) granting an exemption from
Proposed Rule Change Received From Number SR–C2–2017–033. This file sections 18(f) and 21(b) of the Act; (b)
Members, Participants, or Others number should be included on the section 12(d)(1)(J) of the Act granting an
subject line if email is used. To help the exemption from section 12(d)(1) of the
The Exchange neither solicited nor Act; (c) sections 6(c) and 17(b) of the
received comments on the proposed Commission process and review your
comments more efficiently, please use Act granting an exemption from sections
rule change. 17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
only one method. The Commission will
III. Date of Effectiveness of the post all comments on the Commission’s and (d) section 17(d) of the Act and rule
Proposed Rule Change and Timing for internet website (http://www.sec.gov/ 17d–1 under the Act to permit certain
Commission Action rules/sro.shtml). Copies of the joint arrangements and transactions.
submission, all subsequent Applicants request an order that would
The Exchange has designated this rule permit certain registered open-end
amendments, all written statements
filing as non-controversial under management investment companies to
with respect to the proposed rule
Section 19(b)(3)(A) 8 of the Act and Rule participate in a joint lending and
19b–4(f)(6) 9 thereunder. Because the change that are filed with the
borrowing facility.
proposed rule change does not: (i) Commission, and all written
APPLICANTS: Harbor Funds, a Delaware
Significantly affect the protection of communications relating to the
statutory trust registered under the Act
investors or the public interest; (ii) proposed rule change between the
as an open-end management series
impose any significant burden on Commission and any person, other than
investment company, and Harbor
competition; and (iii) become operative those that may be withheld from the
Capital Advisors, Inc. (the ‘‘Adviser’’),
for 30 days from the date on which it public in accordance with the registered as an investment adviser
was filed, or such shorter time as the provisions of 5 U.S.C. 552, will be under the Investment Advisers Act of
Commission may designate, it has available for website viewing and 1940.
become effective pursuant to Section printing in the Commission’s Public
FILING DATES: The application was filed
19(b)(3)(A) of the Act and Rule 19b– Reference Room, 100 F Street NE, on June 13, 2017 and amended on
4(f)(6) thereunder. Washington, DC 20549, on official November 15, 2017.
At any time within 60 days of the business days between the hours of
HEARING OR NOTIFICATION OF HEARING: An
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the
order granting the requested relief will
Commission summarily may filing also will be available for
be issued unless the Commission orders
temporarily suspend such rule change if inspection and copying at the principal a hearing. Interested persons may
it appears to the Commission that such office of the Exchange. All comments request a hearing by writing to the
action is necessary or appropriate in the received will be posted without change. Commission’s Secretary and serving
public interest, for the protection of Persons submitting comments are applicants with a copy of the request,
investors, or otherwise in furtherance of cautioned that we do not redact or edit personally or by mail.
the purposes of the Act. If the personal identifying information from Hearing requests should be received
Commission takes such action, the comment submissions. You should
sradovich on DSK3GMQ082PROD with NOTICES

by the Commission by 5:30 p.m. on
Commission shall institute proceedings submit only information that you wish February 2, 2018 and should be
to determine whether the proposed rule to make available publicly. All accompanied by proof of service on the
change should be approved or submissions should refer to File applicants, in the form of an affidavit,
disapproved. Number SR–C2–2017–033 and should or, for lawyers, a certificate of service.
be submitted on or before February 2, Pursuant to Rule 0–5 under the Act,
8 15 U.S.C. 78s(b)(3)(A). 2018.
9 17 CFR 240.19b–4(f)(6). 10 17 CFR 200.30–3(a)(12).

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1646 Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Notices

For the Commission, by the Division of forth in sections A, B, and C below, of Update Table of Contents
Investment Management, under delegated the most significant aspects of such
authority. Currently, the Exchange’s Schedule of
statements. Fees contains a number of section
Eduardo A. Aleman,
A. Self-Regulatory Organization’s headings that are not currently reflected
Assistant Secretary. in the Table of Contents. The Exchange
[FR Doc. 2018–00431 Filed 1–11–18; 8:45 am] Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule added, eliminated, or renamed these
BILLING CODE 8011–01–P headings as part of a previously-
Change
approved rule change, and inadvertently
1. Purpose did not make the corresponding updates
SECURITIES AND EXCHANGE to the Table of Contents.5 Accordingly,
COMMISSION The purpose of the proposed rule the Exchange proposes to update the
[Release No. 34–82460; File No. SR–GEMX– change is to amend the Exchange’s Table of Contents to make its Schedule
2017–62] Schedule of Fees to (i) eliminate the of Fees easier to read.
annual regulatory fee currently assessed
Self-Regulatory Organizations; Nasdaq 2. Statutory Basis
to Market Makers (i.e., Primary Market
GEMX, LLC; Notice of Filing and Makers and Competitive Market Makers) The Exchange believes that its
Immediate Effectiveness of Proposed at Section III.C and (ii) make a number proposal is consistent with Section 6(b)
Rule Change Relating to Market of non-substantive clean-up changes to of the Act,6 in general, and furthers the
Makers’ Regulatory Fees update the Table of Contents. Each objectives of Sections 6(b)(4) and 6(b)(5)
change is discussed further below. of the Act,7 in particular, in that it
January 8, 2018. provides for the equitable allocation of
Pursuant to Section 19(b)(1) of the Eliminate Annual Regulatory Fee reasonable dues, fees, and other charges
Securities Exchange Act of 1934 among members and issuers and other
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 GEMX currently charges its members persons using any facility, and is not
notice is hereby given that on December various non-transaction fees to trade on designed to permit unfair
26, 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ the Exchange and use its facilities, discrimination between customers,
or ‘‘Exchange’’) filed with the Securities including a tiered annual regulatory fee. issuers, brokers, or dealers.
and Exchange Commission This fee is assessed to all Primary
(‘‘Commission’’) the proposed rule Market Makers (‘‘PMMs’’) and Eliminate Annual Regulatory Fee
change as described in Items I, II, and Competitive Market Makers (‘‘CMMs’’) The Exchange believes that the
III, below, which Items have been to help defray the regulatory and proposed elimination of the annual
prepared by the Exchange. The administrative costs associated with a regulatory fee and all related references
Commission is publishing this notice to member’s use of the Exchange’s from the Schedule of Fees is reasonable
solicit comments on the proposed rule facilities. In particular, the regulatory because the Exchange has determined
change from interested persons. fee is $1,000 per year for a PMM that the annual regulatory fee is
membership, and, for PMMs that are outdated and no longer reflects the costs
I. Self-Regulatory Organization’s
also CMMs, $250 per year for each CMM associated with supporting and
Statement of the Terms of Substance of
membership. For CMMs that are not regulating its members. This fee has not
the Proposed Rule Change
also PMMs the regulatory fee is $500 per been amended since its adoption in
The Exchange proposes to amend the 2013. Furthermore, GEMX charges its
year for the first CMM membership, and
Exchange’s Schedule of Fees, as members various non-transaction fees
$250 per year for each additional CMM
described further below. outside of the annual regulatory fee to
While these amendments are effective membership.3 The Exchange does not
charge a regulatory fee to Electronic help defray such costs, as noted above.
upon filing, the Exchange has The Exchange therefore believes that the
designated the proposed amendments to Access Members (‘‘EAMs’’).
proposed fee change will be a more
be operative on January 2, 2018. The Exchange proposes to eliminate accurate reflection of the administration
The text of the proposed rule change the annual regulatory fee and all related and regulatory costs associated with a
is available on the Exchange’s website at references from the Schedule of Fees member’s use of the Exchange today.
http://nasdaqgemx.cchwallstreet.com/, because it has determined that this fee The Exchange also believes that the
at the principal office of the Exchange, is outdated and no longer reflects the proposed elimination of the annual
and at the Commission’s Public costs associated with supporting and regulatory fee is equitable and not
Reference Room. regulating its members today. The unfairly discriminatory because the
II. Self-Regulatory Organization’s annual regulatory fee was adopted in proposed change will apply equally to
Statement of the Purpose of, and 2013, and has not been amended since all similarly situated members.
Statutory Basis for, the Proposed Rule that time.4 And because GEMX charges
Update Table of Contents
Change its members various non-transaction
fees outside of the annual regulatory fee The Exchange believes that the clean-
In its filing with the Commission, the to help defray such costs, as noted up changes to update the Table of
Exchange included statements above, the Exchange believes that the Contents is reasonable, equitable and
concerning the purpose of and basis for proposed fee change will be a more not unfairly discriminatory because
the proposed rule change and discussed accurate reflection of the administration these are non-substantive changes
sradovich on DSK3GMQ082PROD with NOTICES

any comments it received on the and regulatory costs associated with a
proposed rule change. The text of these member’s use of the Exchange today.
5 In particular, the Exchange renamed Section IV,

statements may be examined at the deleted Section IV.C, and added Sections IV.F–IV.I
as part of a previous rule change to amend GEMX’s
places specified in Item IV below. The 3 See GEMX Schedule of Fees, Section III.C connectivity fees. See Securities Exchange Release
Exchange has prepared summaries, set Regulatory Fees. No. 81902 (October 19, 2017), 82 FR 49453 (October
4 See Securities Exchange Act Release No. 71149 25, 2017) (SR–GEMX–2017–48).
1 15 U.S.C. 78s(b)(1). 6 15 U.S.C. 78f(b).
(December 19, 2013), 78 FR 78447 (December 26,
2 17 CFR 240.19b–4. 2013) (SR-Topaz-2013–16). 7 15 U.S.C. 78f(b)(4) and (5).

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Document Created: 2018-10-26 09:52:58
Document Modified: 2018-10-26 09:52:58
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 June 13, 2017 and amended on November 15, 2017.
Contact		Bruce R. MacNeil, Senior Counsel, at (202) 551-6817, or David J. Marcinkus, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 1644