83 FR 28697 - Sprott ETF Trust and Sprott Asset Management USA Inc.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 119 (June 20, 2018)

Page Range		28697-28699
FR Document		2018-13217
Federal Register, Volume 83 Issue 119 (Wednesday, June 20, 2018)
[Federal Register Volume 83, Number 119 (Wednesday, June 20, 2018)]
[Notices]
[Pages 28697-28699]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-13217]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33123; 812-14872]


Sprott ETF Trust and Sprott Asset Management USA Inc.

June 15, 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) for an exemption from sections 12(d)(1)(A) and 
12(d)(1)(B) of the Act. The requested order would permit (a) index-
based series of certain open-end management investment companies 
(``Funds'') to issue shares redeemable in large aggregations 
(``Creation Units''); (b) secondary market transactions in Fund shares 
to occur at negotiated market prices rather than at net asset value 
(``NAV''); (c) certain Funds to pay redemption proceeds, under certain 
circumstances, more than seven days after the tender of shares for 
redemption; (d) certain affiliated persons of a Fund to deposit 
securities into, and receive securities from, the Fund in connection 
with the purchase and redemption of Creation Units; (e) certain 
registered management investment companies and unit investment trusts 
outside of the same

[[Page 28698]]

group of investment companies as the Funds (``Funds of Funds'') to 
acquire shares of the Funds; (f) certain Funds (``Feeder Funds'') to 
create and redeem Creation Units in-kind in a master-feeder structure; 
and (g) certain Funds to issue Shares in less than Creation Unit size 
to investors participating in a distribution reinvestment program.
    Applicants: Sprott ETF Trust (the ``Trust''), a Delaware statutory 
trust, which is registered under the Act as an open-end management 
investment company with multiple series, and Sprott Asset Management 
USA Inc. (the ``Initial Adviser''), a California Corporation registered 
as an investment adviser under the Investment Advisers Act of 1940.
    Filing Dates: The application was filed on January 23, 2018, and 
amended on May 22, 2018. Applicants have agreed to file an amendment 
during the notice period, the substance of which is reflected in this 
notice.
    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 July 9, 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, 1910 Palomar Point Way, 
Suite 200, Carlsbad, CA 92008.

FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior 
Counsel, at (202) 551-6879, or Andrea Ottomanelli Magovern, 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 for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Summary of the Application

    1. Applicants request an order that would allow Funds to operate as 
index exchange traded funds (``ETFs'').\1\ Fund shares will be 
purchased and redeemed at their NAV in Creation Units (other than 
pursuant to a distribution reinvestment program, as described in the 
application). All orders to purchase Creation Units and all redemption 
requests will be placed by or through an ``Authorized Participant,'' 
which will have signed a participant agreement with the Distributor. 
Shares will be listed and traded individually on a national securities 
exchange, where share prices will be based on the current bid/offer 
market. Certain Funds may operate as Feeder Funds in a master-feeder 
structure. Any order granting the requested relief would be subject to 
the terms and conditions stated in the application.
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    \1\ Applicants request that the order apply to the Initial Fund 
and any additional series of the Trust, and any other existing or 
future open-end management investment company or existing or future 
series thereof (each, included in the term ``Fund''), each of which 
will operate as an ETF, and their respective existing or future 
master funds, and will track a specified index comprised of domestic 
and/or foreign equity securities and/or domestic and/or foreign 
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 of the foregoing and any successor thereto, an ``Adviser'') 
and (b) comply with the terms and conditions of the application. For 
purposes of the requested order, a ``successor'' is limited to an 
entity or entities that result from a reorganization into another 
jurisdiction or a change in the type of business organization.
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    2. Each Fund will hold investment positions selected to correspond 
closely to the performance of an Underlying Index. In the case of Self-
Indexing Funds, an affiliated person, as defined in section 2(a)(3) of 
the Act (``Affiliated Person''), or an affiliated person of an 
Affiliated Person (``Second-Tier Affiliate''), of the Trust or a Fund, 
of the Adviser, of any sub-adviser to or promoter of a Fund, or of the 
Distributor will compile, create, sponsor or maintain the Underlying 
Index.\2\
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    \2\ Each Self-Indexing Fund will post on its website the 
identities and quantities of the investment positions that will form 
the basis for the Fund's calculation of its NAV at the end of the 
day. Applicants believe that requiring Self-Indexing Funds to 
maintain full portfolio transparency will help address, together 
with other protections, conflicts of interest with respect to such 
Funds.
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    3. Shares will be purchased and redeemed in Creation Units and 
generally on an in-kind basis, or issued in less than Creation Unit 
size to investors participating in a distribution reinvestment program. 
Except where the purchase or redemption will include cash under the 
limited circumstances specified in the application, purchasers will be 
required to purchase Creation Units by depositing specified instruments 
(``Deposit Instruments''), and shareholders redeeming their shares will 
receive specified instruments (``Redemption Instruments''). The Deposit 
Instruments and the Redemption Instruments will each correspond pro 
rata to the positions in the Fund's portfolio (including cash 
positions) except as specified in the application.
    4. Because shares will not be individually redeemable, applicants 
request an exemption from section 5(a)(1) and section 2(a)(32) of the 
Act that would permit the Funds to register as open-end management 
investment companies and issue shares that are redeemable in Creation 
Units (other than pursuant to a dividend reinvestment program).
    5. Applicants also request an exemption from section 22(d) of the 
Act and rule 22c-1 under the Act as secondary market trading in shares 
will take place at negotiated prices, not at a current offering price 
described in a Fund's prospectus, and not at a price based on NAV. 
Applicants state that (a) secondary market trading in shares does not 
involve a Fund as a party and will not result in dilution of an 
investment in shares, and (b) to the extent different prices exist 
during a given trading day, or from day to day, such variances occur as 
a result of third-party market forces, such as supply and demand. 
Therefore, applicants assert that secondary market transactions in 
shares will not lead to discrimination or preferential treatment among 
purchasers. Finally, applicants represent that share market prices will 
be disciplined by arbitrage opportunities, which should prevent shares 
from trading at a material discount or premium from NAV.
    6. With respect to Funds that effect creations and redemptions of 
Creation Units in kind and that are based on certain Underlying Indexes 
that include foreign securities, applicants request relief from the 
requirement imposed by section 22(e) in order to allow such Funds to 
pay redemption proceeds within fifteen calendar days following the 
tender of Creation Units for redemption. Applicants assert that the 
requested relief would not be inconsistent with the spirit and intent 
of section 22(e) to prevent unreasonable, undisclosed or unforeseen 
delays in the actual payment of redemption proceeds.
    7. Applicants request an exemption to permit Funds of Funds to 
acquire Fund shares beyond the limits of section 12(d)(1)(A) of the 
Act; and the Funds, and any principal underwriter for the Funds, and/or 
any broker or dealer

[[Page 28699]]

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.
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    \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.
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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. 2018-13217 Filed 6-19-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 119 / Wednesday, June 20, 2018 / Notices 28699

registered under the Exchange Act, to Act if such exemption is necessary or I. Self-Regulatory Organization’s
sell shares to Funds of Funds beyond appropriate in the public interest and Statement of the Terms of Substance of
the limits of section 12(d)(1)(B) of the consistent with the protection of the Proposed Rule Change
Act. The application’s terms and investors and the purposes fairly The Exchange proposes to increase
conditions are designed to, among other intended by the policy and provisions of certain route-out fees set forth in
things, help prevent any potential (i) the Act. Section 12(d)(1)(J) of the Act Section II.A of the Schedule of Fees.
undue influence over a Fund through provides that the Commission may The text of the proposed rule change
control or voting power, or in exempt any person, security, or is available on the Exchange’s website at
connection with certain services, transaction, or any class or classes of http://nasdaqgemx.cchwallstreet.com/,
transactions, and underwritings, (ii) persons, securities, or transactions, from at the principal office of the Exchange,
excessive layering of fees, and (iii) any provision of section 12(d)(1) if the and at the Commission’s Public
overly complex fund structures, which exemption is consistent with the public Reference Room.
are the concerns underlying the limits
interest and the protection of investors. II. Self-Regulatory Organization’s
in sections 12(d)(1)(A) and (B) of the
Section 17(b) of the Act authorizes the Statement of the Purpose of, and
Act.
8. Applicants request an exemption Commission to grant an order Statutory Basis for, the Proposed Rule
from sections 17(a)(1) and 17(a)(2) of the permitting a transaction otherwise Change
Act to permit persons that are Affiliated prohibited by section 17(a) if it finds In its filing with the Commission, the
Persons, or Second Tier Affiliates, of the that (a) the terms of the proposed Exchange included statements
Funds, solely by virtue of certain transaction are fair and reasonable and concerning the purpose of and basis for
ownership interests, to effectuate do not involve overreaching on the part the proposed rule change and discussed
purchases and redemptions in-kind. The of any person concerned; (b) the any comments it received on the
deposit procedures for in-kind proposed transaction is consistent with proposed rule change. The text of these
purchases of Creation Units and the the policies of each registered statements may be examined at the
redemption procedures for in-kind investment company involved; and (c) places specified in Item IV below. The
redemptions of Creation Units will be the proposed transaction is consistent Exchange has prepared summaries, set
the same for all purchases and with the general purposes of the Act. forth in sections A, B, and C below, of
redemptions, and Deposit Instruments the most significant aspects of such
For the Commission, by the Division of
and Redemption Instruments will be Investment Management, under delegated statements.
valued in the same manner as those authority.
investment positions currently held by A. Self-Regulatory Organization’s
the Funds. Applicants also seek relief Eduardo A. Aleman, Statement of the Purpose of, and
from the prohibitions on affiliated Assistant Secretary. Statutory Basis for, the Proposed Rule
transactions in section 17(a) to permit a [FR Doc. 2018–13217 Filed 6–19–18; 8:45 am] Change
Fund to sell its shares to and redeem its BILLING CODE 8011–01–P 1. Purpose
shares from a Fund of Funds, and to
The purpose of the proposed rule
engage in the accompanying in-kind
change is to increase certain route-out
transactions with the Fund of Funds.3 SECURITIES AND EXCHANGE fees set forth in Section II.A of the
The purchase of Creation Units by a COMMISSION Schedule of Fees. Today, the Exchange
Fund of Funds directly from a Fund will
charges Non-Priority Customers (i.e.,
be accomplished in accordance with the [Release No. 34–83445; File No. SR–GEMX– Market Maker,3 Non-Nasdaq GEMX
policies of the Fund of Funds and will 2018–20] Market Maker,4 Firm Proprietary 5/
be based on the NAVs of the Funds.
9. Applicants also request relief to Broker-Dealer,6 and Professional
Self-Regulatory Organizations; Nasdaq Customer 7) route-out fees of $0.95 per
permit a Feeder Fund to acquire shares GEMX, LLC; Notice of Filing and
of another registered investment contract for orders in Non-Penny
Immediate Effectiveness of Proposed Symbols that are routed to away
company managed by the Adviser Rule Change To Increase Certain
having substantially the same exchanges in connection with the
Route-Out Fees Set Forth in Section Options Order Protection and Locked/
investment objectives as the Feeder
II.A of the Schedule of Fees Crossed Market Plan (the ‘‘Plan’’). The
Fund (‘‘Master Fund’’) beyond the
limitations in section 12(d)(1)(A) and Exchange now proposes to increase this
June 14, 2018.
permit the Master Fund, and any fee to $1.09 per contract for all Non-
principal underwriter for the Master Pursuant to Section 19(b)(1) of the Priority Customer orders in Non-Penny
Fund, to sell shares of the Master Fund Securities Exchange Act of 1934 Symbols that are routed to away
to the Feeder Fund beyond the (‘‘Act’’),1 and Rule 19b–4 thereunder,2
limitations in section 12(d)(1)(B). notice is hereby given that on June 1, 3 The term ‘‘Market Makers’’ refers to

2018, Nasdaq GEMX, LLC (‘‘GEMX’’ or ‘‘Competitive Market Makers’’ and ‘‘Primary Market
10. Section 6(c) of the Act permits the Makers’’ collectively. See Rule 100(a)(30).
Commission to exempt any persons or ‘‘Exchange’’) filed with the Securities 4 A ‘‘Non-Nasdaq GEMX Market Maker’’ is a

transactions from any provision of the and Exchange Commission market maker as defined in Section 3(a)(38) of the
(‘‘Commission’’) the proposed rule Securities Exchange Act of 1934, as amended,
3 The requested relief would apply to direct sales change as described in Items I and II registered in the same options class on another
options exchange.
of shares in Creation Units by a Fund to a Fund of below, which Items have been prepared
sradovich on DSK3GMQ082PROD with NOTICES

5 A ‘‘Firm Proprietary’’ order is an order
Funds and redemptions of those shares. Applicants, by the Exchange. The Commission is
moreover, are not seeking relief from section 17(a) submitted by a member for its own proprietary
for, and the requested relief will not apply to, publishing this notice to solicit account.
transactions where a Fund could be deemed an comments on the proposed rule change 6 A ‘‘Broker-Dealer’’ order is an order submitted

Affiliated Person, or a Second-Tier Affiliate, of a from interested persons. by a member for a broker-dealer account that is not
Fund of Funds because an Adviser or an entity its own proprietary account.
controlling, controlled by or under common control 7 A ‘‘Professional Customer’’ is a person or entity
1 15 U.S.C. 78s(b)(1).
with an Adviser provides investment advisory that is not a broker/dealer and is not a Priority
services to that Fund of Funds. 2 17 CFR 240.19b–4. Customer.

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Document Created: 2018-06-20 00:20:25
Document Modified: 2018-06-20 00:20:25
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 23, 2018, and amended on May 22, 2018. Applicants have agreed to file an amendment during the notice period, the substance of which is reflected in this notice.
Contact		Christine Y. Greenlees, Senior Counsel, at (202) 551-6879, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 28697