83 FR 22541 - U.S. Global Investors, Inc. et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 94 (May 15, 2018)

Page Range		22541-22543
FR Document		2018-10245
Federal Register, Volume 83 Issue 94 (Tuesday, May 15, 2018)
[Federal Register Volume 83, Number 94 (Tuesday, May 15, 2018)]
[Notices]
[Pages 22541-22543]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-10245]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33092; 812-14869]


U.S. Global Investors, Inc. et al.

May 9, 2018.
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) of the Act for an exemption from sections 
12(d)(1)(A) and 12(d)(1)(B) of the Act. The requested order would 
permit (a) actively-managed 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

[[Page 22542]]

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; and (f) certain Funds (``Feeder Funds'') 
to create and redeem Creation Units in-kind in a master-feeder 
structure.


Applicants: U.S. Global Investors ETF Trust (``Trust''), a Delaware 
statutory trust registered under the Act as an open-end management 
investment company with multiple series, and U.S. Global Investors, 
Inc. (``Initial Adviser''), a Texas corporation that is registered as 
an investment adviser under the Investment Advisers Act of 1940.


Filing Dates: The application was filed on January 22, 2018.


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 4, 2018, 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: Susan McGee, U.S. Global 
Investors, Inc., 7900 Callaghan Road, San Antonio, Texas 78229-2327 and 
Stacy L. Fuller, Esq., K&L Gates LLP, 1601 K Street NW, Washington, DC 
20006-1600.

FOR FURTHER INFORMATION CONTACT:  Erin C. Loomis, Senior Counsel, at 
(202) 551-6721 or Parisa Haghshenas, Branch Chief, at (202) 551-6723 
(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 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 
actively-managed 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. 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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    \1\ Applicants request that the order apply to the new series of 
the Trust as well as to additional series of the Trust and any other 
open-end management investment company or series thereof that 
currently exist or that may be created in the future (each, included 
in the term ``Fund''), each of which will operate as an actively-
managed ETF. 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 such entity and any successor thereto is 
included in the term ``Adviser'') and (b) comply with the terms and 
conditions of the application.
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    2. Each Fund will consist of a portfolio of securities and other 
assets and investment positions (``Portfolio Instruments''). Each Fund 
will disclose on its website the identities and quantities of the 
Portfolio Instruments that will form the basis for the Fund's 
calculation of NAV at the end of the day.
    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 hold non-U.S. Portfolio Instruments 
and that effect creations and redemptions of Creation Units in kind, 
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 Securities Exchange Act of 
1934, 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

[[Page 22543]]

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 
Portfolio Instruments 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.\2\ 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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    \2\ 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. 2018-10245 Filed 5-14-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices 22541

impose any burden on intermarket or update its rules immediately to provide Commission, and all written
intra-market competition that is not more detailed and reorganized communications relating to the
necessary or appropriate in furtherance information regarding its offerings and proposed rule change between the
of the purposes of the Act. The further the protection of investors and Commission and any person, other than
Exchange’s proposal does not impose an the public interest because it will those that may be withheld from the
undue burden on competition, rather provide greater transparency as to the public in accordance with the
the Exchange is seeking to provide offerings available to members. For this provisions of 5 U.S.C. 552, will be
greater transparency within its rules reason, the Commission believes that available for website viewing and
with respect to the various order and waiving the 30-day operative delay is printing in the Commission’s Public
execution information offered on NOM. consistent with the protection of Reference Room, 100 F Street NE,
The offerings are available to all investors and the public interest and, Washington, DC 20549, on official
Participants. The Exchange does not therefore, the Commission designates business days between the hours of
intend to amend pricing, rather it the proposed rule change to be operative 10:00 a.m. and 3:00 p.m. Copies of the
proposes to make clear the application upon filing.13 filing also will be available for
of the current pricing. At any time within 60 days of the inspection and copying at the principal
With respect to the ITTO Wave Ports, filing of the proposed rule change, the office of the Exchange. All comments
no Participant utilizes these services Commission summarily may received will be posted without change.
today. Eliminating these fees will avoid temporarily suspend such rule change if Persons submitting comments are
confusion as to the Exchange’s current it appears to the Commission that such cautioned that we do not redact or edit
offerings. action is necessary or appropriate in the personal identifying information from
public interest, for the protection of comment submissions. You should
C. Self-Regulatory Organization’s
investors, or otherwise in furtherance of submit only information that you wish
Statement on Comments on the
the purposes of the Act. If the to make available publicly. All
Proposed Rule Change Received From
Commission takes such action, the submissions should refer to File
Members, Participants, or Others
Commission shall institute proceedings Number SR–NASDAQ–2018–036, and
No written comments were either to determine whether the proposed rule should be submitted on or before June
solicited or received. should be approved or disapproved. 5, 2018.
III. Date of Effectiveness of the IV. Solicitation of Comments For the Commission, by the Division of
Proposed Rule Change and Timing for Trading and Markets, pursuant to delegated
Interested persons are invited to authority.14
Commission Action
submit written data, views, and Eduardo A. Aleman,
Because the proposed rule change arguments concerning the foregoing,
does not (i) significantly affect the Assistant Secretary.
including whether the proposed rule
protection of investors or the public [FR Doc. 2018–10253 Filed 5–14–18; 8:45 am]
change is consistent with the Act.
interest; (ii) impose any significant Comments may be submitted by any of BILLING CODE 8011–01–P
burden on competition; and (iii) become the following methods:
operative for 30 days from the date on
which it was filed, or such shorter time Electronic Comments SECURITIES AND EXCHANGE
as the Commission may designate if • Use the Commission’s internet COMMISSION
consistent with the protection of comment form (http://www.sec.gov/ [Investment Company Act Release No.
investors and the public interest, the rules/sro.shtml); or 33092; 812–14869]
proposed rule change has become • Send an email to rule-comments@
effective pursuant to Section 19(b)(3)(A) sec.gov. Please include File Number SR– U.S. Global Investors, Inc. et al.
of the Act 9 and Rule 19b–4(f)(6) NASDAQ–2018–036 on the subject line.
May 9, 2018.
thereunder.10 Paper Comments AGENCY: Securities and Exchange
A proposed rule change filed under
• Send paper comments in triplicate Commission (‘‘Commission’’).
Rule 19b–4(f)(6) 11 normally does not
to Secretary, Securities and Exchange ACTION: Notice.
become operative for 30 days after the
date of filing. However, pursuant to Commission, 100 F Street NE, Notice of an application for an order
Rule 19b–4(f)(6)(iii),12 the Commission Washington, DC 20549–1090. under section 6(c) of the Investment
may designate a shorter time if such All submissions should refer to File Company Act of 1940 (the ‘‘Act’’) for an
action is consistent with the protection Number SR–NASDAQ–2018–036. This exemption from sections 2(a)(32),
of investors and the public interest. The file number should be included on the 5(a)(1), 22(d), and 22(e) of the Act and
Exchange has asked the Commission to subject line if email is used. To help the rule 22c–1 under the Act, under
waive the 30-day operative delay so that Commission process and review your sections 6(c) and 17(b) of the Act for an
the proposal may become operative comments more efficiently, please use exemption from sections 17(a)(1) and
immediately upon filing. The Exchange only one method. The Commission will 17(a)(2) of the Act, and under section
states that such waiver will allow it to post all comments on the Commission’s 12(d)(1)(J) of the Act for an exemption
internet website (http://www.sec.gov/ from sections 12(d)(1)(A) and
9 15 U.S.C. 78s(b)(3)(A). rules/sro.shtml). Copies of the 12(d)(1)(B) of the Act. The requested
10 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– submission, all subsequent order would permit (a) actively-
4(f)(6)(iii) requires the Exchange to give the amendments, all written statements managed series of certain open-end
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Commission written notice of the Exchange’s intent
to file the proposed rule change, along with a brief with respect to the proposed rule management investment companies
description and text of the proposed rule change, change that are filed with the (‘‘Funds’’) to issue shares redeemable in
at least five business days prior to the date of filing large aggregations only (‘‘Creation
of the proposed rule change, or such shorter time 13 For purposes only of waiving the 30-day
as designated by the Commission. The Exchange Units’’); (b) secondary market
operative delay, the Commission has also
has satisfied this requirement. considered the proposed rule’s impact on transactions in Fund shares to occur at
11 17 CFR 240.19b–4(f)(6).
efficiency, competition, and capital formation. See
12 17 CFR 240.19b–4(f)(6)(iii). 15 U.S.C. 78c(f). 14 17 CFR 200.30–3(a)(12).

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Federal Register / Vol. 83, No. 94 / Tuesday, May 15, 2018 / Notices 22543

underwritings, (ii) excessive layering of any provision of section 12(d)(1) if the and at the Commission’s Public
fees, and (iii) overly complex fund exemption is consistent with the public Reference Room.
structures, which are the concerns interest and the protection of investors.
II. Self-Regulatory Organization’s
underlying the limits in sections Section 17(b) of the Act authorizes the
Statement of the Purpose of, and
12(d)(1)(A) and (B) of the Act. Commission to grant an order
8. Applicants request an exemption Statutory Basis for, the Proposed Rule
permitting a transaction otherwise
from sections 17(a)(1) and 17(a)(2) of the Change
prohibited by section 17(a) if it finds
Act to permit persons that are affiliated that (a) the terms of the proposed In its filing with the Commission, the
persons, or second tier affiliates, of the transaction are fair and reasonable and Exchange included statements
Funds, solely by virtue of certain do not involve overreaching on the part concerning the purpose of and basis for
ownership interests, to effectuate of any person concerned; (b) the the proposed rule change and discussed
purchases and redemptions in-kind. The proposed transaction is consistent with any comments it received on the
deposit procedures for in-kind the policies of each registered proposed rule change. The text of these
purchases of Creation Units and the investment company involved; and (c) statements may be examined at the
redemption procedures for in-kind the proposed transaction is consistent places specified in Item IV below. The
redemptions of Creation Units will be with the general purposes of the Act. Exchange has prepared summaries, set
the same for all purchases and forth in sections A, B, and C below, of
For the Commission, by the Division of
redemptions and Deposit Instruments Investment Management, under delegated the most significant aspects of such
and Redemption Instruments will be authority. statements.
valued in the same manner as those
Eduardo A. Aleman, A. Self-Regulatory Organization’s
Portfolio Instruments currently held by
the Funds. Applicants also seek relief Assistant Secretary. Statement of the Purpose of, and
from the prohibitions on affiliated [FR Doc. 2018–10245 Filed 5–14–18; 8:45 am] Statutory Basis for, the Proposed Rule
transactions in section 17(a) to permit a BILLING CODE 8011–01–P Change
Fund to sell its shares to and redeem its 1. Purpose
shares from a Fund of Funds, and to
SECURITIES AND EXCHANGE The Exchange proposes to relocate the
engage in the accompanying in-kind
COMMISSION zero-bid options series rule text
transactions with the Fund of Funds.2
currently located in Rule 1080(i) to Rule
The purchase of Creation Units by a [Release No. 34–83195; File No. SR–Phlx– 1035, which is currently reserved. The
Fund of Funds directly from a Fund will 2018–35] Exchange desires to rename Rule 1035
be accomplished in accordance with the
as ‘‘Zero-Bid Option Series.’’ The
policies of the Fund of Funds and will Self-Regulatory Organizations; Nasdaq
be based on the NAVs of the Funds. Exchange believes it will make it easier
PHLX LLC; Notice of Filing and
9. Applicants also request relief to to locate this rule text in a separate rule.
Immediate Effectiveness of Proposed
permit a Feeder Fund to acquire shares The Exchange also proposes to amend
Rule Change Relating to the Zero-Bid
of another registered investment the current rule text which does not
Option Series
company managed by the Adviser accurately describe the operation of the
having substantially the same May 9, 2018. System.
investment objectives as the Feeder Pursuant to Section 19(b)(1) of the Current Rule 1080(i) states that the
Fund (‘‘Master Fund’’) beyond the Securities Exchange Act of 1934 System 3 will convert market orders to
limitations in section 12(d)(1)(A) and (‘‘Act’’),1 and Rule 19b–4 thereunder,2 sell a particular option series to limit
permit the Master Fund, and any notice is hereby given that on April 27, orders to sell with a limit price of the
principal underwriter for the Master 2018, Nasdaq PHLX LLC (‘‘Phlx’’ or minimum trading increment applicable
Fund, to sell shares of the Master Fund ‘‘Exchange’’) filed with the Securities to such series that are received when,
to the Feeder Fund beyond the and Exchange Commission for options listed only on the Exchange,
limitations in section 12(d)(1)(B). (‘‘Commission’’) the proposed rule (1) the Exchange’s disseminated bid
10. Section 6(c) of the Act permits the change as described in Items I and II price in such option series is zero; 4 and
Commission to exempt any persons or below, which Items have been prepared (2) the Exchange’s disseminated
transactions from any provision of the by the Exchange. The Commission is quotation in the series has a bid/ask
Act if such exemption is necessary or publishing this notice to solicit differential less than or equal to $0.25.
appropriate in the public interest and comments on the proposed rule change For options that are listed on multiple
consistent with the protection of from interested persons. exchanges: (1) The disseminated NBBO
investors and the purposes fairly includes a bid price of zero in the series;
intended by the policy and provisions of I. Self-Regulatory Organization’s and (2) the Exchange’s disseminated
the Act. Section 12(d)(1)(J) of the Act Statement of the Terms of Substance of quotation in the series has a bid/ask
provides that the Commission may the Proposed Rule Change differential less than or equal to $0.25.
exempt any person, security, or The Exchange proposes to relocate the Such orders will be automatically
transaction, or any class or classes of rule text relating to zero-bid option placed on the limit order book in price-
persons, securities, or transactions, from series currently located at Rule 1080(i) time priority.
to new Rule 1035 and amend the Background
2 The requested relief would apply to direct sales current rule text to describe the current
of shares in Creation Units by a Fund to a Fund of operation of a zero bid series. The Exchange adopted Rule 1080(i) in
daltland on DSKBBV9HB2PROD with NOTICES

Funds and redemptions of those shares. Applicants, 2005 to permit Phlx’s former order entry
moreover, are not seeking relief from section 17(a)
The text of the proposed rule change
for, and the requested relief will not apply to, is available on the Exchange’s website at system, AUTOM, to automatically
transactions where a Fund could be deemed an http://nasdaqphlx.cchwallstreet.com/,
3 The current rule refers to the ‘‘AUTOM
affiliated person, or a second-tier affiliate, of a Fund at the principal office of the Exchange,
of Funds because an Adviser or an entity System’’. The term ‘‘AUTOM’’ is outdated and is
controlling, controlled by or under common control being removed from the rule.
1 15 U.S.C. 78s(b)(1).
with an Adviser provides investment advisory 4 A zero bid refers to an option where the bid

services to that Fund of Funds. 2 17 CFR 240.19b–4. price is $0.00.

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Document Created: 2018-05-15 00:33:20
Document Modified: 2018-05-15 00:33:20
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 January 22, 2018.
Contact		Erin C. Loomis, Senior Counsel, at (202) 551-6721 or Parisa Haghshenas, Branch Chief, at (202) 551-6723 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 22541