83_FR_35432 83 FR 35289 - IndexIQ ETF Trust, et al.

83 FR 35289 - IndexIQ ETF Trust, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 143 (July 25, 2018)

Page Range35289-35291
FR Document2018-15861

Federal Register, Volume 83 Issue 143 (Wednesday, July 25, 2018)
[Federal Register Volume 83, Number 143 (Wednesday, July 25, 2018)]
[Notices]
[Pages 35289-35291]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-15861]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33163; 812-14889]


IndexIQ ETF Trust, et al.

July 19, 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

[[Page 35290]]

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 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. The requested order would supersede the applicant's prior 
orders.\1\
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    \1\ IndexIQ ETF Trust, et. al., Investment Company Act Release 
Nos. 28638 (Feb. 27, 2009) (notice) and 28653 (Mar. 20, 2009) 
(order) and IndexIQ ETF Trust, et. al., Investment Company Release 
Nos. 30843 (Dec. 23, 2013) (notice) and 30888 (Jan. 22, 2014) 
(order).

Applicants: IndexIQ ETF Trust (the ``Trust''), a Delware statutory 
trust registered under the Act as an open-end management investment 
company with multiple series, IndexIQ Advisors LLC (the ``Adviser''), a 
Delaware limited liability company registered as an investment adviser 
under the Investment Advisers Act of 1940, and ALPS Distributors, Inc. 
(the ``Distributor''), a Colorado corporation and broker-dealer 
registered under the Securities Exchange Act of 1934 (``Exchange 
---------------------------------------------------------------------------
Act'').

Filing Dates: The application was filed on March 16, 2018 and amended 
on May 25, 2018, July 2, 2018, and July 12, 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 August 13, 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: The Trust and the Adviser, 
51 Madison Avenue 4th Floor, New York, NY 10010, and the Distributor, 
1290 Broadway, Suite 1100, Denver, CO 80203.

FOR FURTHER INFORMATION CONTACT: Hae-Sung Lee, Attorney-Adviser, at 
(202) 551-7345, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 
551-6825 (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'').\2\ 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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    \2\ Applicants request that the order apply to the current 
series of the Trust identified and described in Appendix A to the 
application (``Current Funds'') and any additional series of the 
Trust, and any other existing or future open-end management 
investment company or existing or future series thereof (together 
with the Current Funds, ``Funds''), 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 
Adviser or an entity controlling, controlled by, or under common 
control with the Adviser (each such entity 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.\3\
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    \3\ 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.
    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,

[[Page 35291]]

such as supply and demand. Therefore, applicants assert that secondary 
market transactions in shares will not lead to discrimination or 
preferential treatment among purchasers. Finally, applicants represent 
that share market prices will be disciplined by arbitrage 
opportunities, which should prevent shares from trading at a material 
discount or premium from NAV.
    6. With respect to Funds that effect creations and redemptions of 
Creation Units in kind and that are based on certain Underlying Indexes 
that include foreign securities, applicants request relief from the 
requirement imposed by section 22(e) in order to allow such Funds to 
pay redemption proceeds within fifteen calendar days following the 
tender of Creation Units for redemption. Applicants assert that the 
requested relief would not be inconsistent with the spirit and intent 
of section 22(e) to prevent unreasonable, undisclosed or unforeseen 
delays in the actual payment of redemption proceeds.
    7. Applicants request an exemption to permit Funds of Funds to 
acquire Fund shares beyond the limits of section 12(d)(1)(A) of the 
Act; and the Funds, and any principal underwriter for the Funds, and/or 
any broker or dealer registered under the Exchange Act, to sell shares 
to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act. 
The application's terms and conditions are designed to, among other 
things, help prevent any potential (i) undue influence over a Fund 
through control or voting power, or in connection with certain 
services, transactions, and underwritings, (ii) excessive layering of 
fees, and (iii) overly complex fund structures, which are the concerns 
underlying the limits in sections 12(d)(1)(A) and (B) of the Act.
    8. Applicants request an exemption from sections 17(a)(1) and 
17(a)(2) of the Act to permit persons that are Affiliated Persons, or 
Second Tier Affiliates, of the Funds, solely by virtue of certain 
ownership interests, to effectuate purchases and redemptions in-kind. 
The deposit procedures for in-kind purchases of Creation Units and the 
redemption procedures for in-kind redemptions of Creation Units will be 
the same for all purchases and redemptions, and Deposit Instruments and 
Redemption Instruments will be valued in the same manner as those 
investment positions currently held by the Funds. Applicants also seek 
relief from the prohibitions on affiliated transactions in section 
17(a) to permit a Fund to sell its shares to and redeem its shares from 
a Fund of Funds, and to engage in the accompanying in-kind transactions 
with the Fund of Funds.\4\ 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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    \4\ The requested relief would apply to direct sales of shares 
in Creation Units by a Fund to a Fund of Funds and redemptions of 
those shares. Applicants, moreover, are not seeking relief from 
section 17(a) for, and the requested relief will not apply to, 
transactions where a Fund could be deemed an Affiliated Person, or a 
Second-Tier Affiliate, of a Fund of Funds because an Adviser or an 
entity controlling, controlled by or under common control with an 
Adviser provides investment advisory services to that Fund of Funds.
---------------------------------------------------------------------------

    9. 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. 2018-15861 Filed 7-24-18; 8:45 am]
 BILLING CODE 8011-01-P



                                                                            Federal Register / Vol. 83, No. 143 / Wednesday, July 25, 2018 / Notices                                                  35289

                                               ACTION:   Notice.                                        online process. A hyperlink titled                    will create a dispute queue case
                                                                                                        ‘‘Submit Refund Request for Unused                    number, accessible through both the
                                               SUMMARY:    The Postal Service gives                     Labels’’ will be added to the eVS                     eVS landing page and the dispute
                                               notice of filing a request with the Postal               Monthly Account and Sampling                          queue. If PIC/EFNs fail format
                                               Regulatory Commission to add a                           Summary page. This hyperlink provides                 validation, an error message will be
                                               domestic shipping services contract to                   access to the portal to use the two new               displayed for any of the following
                                               the list of Negotiated Service                           options. The two options are as follows:              reasons: invalid PIC length, duplicate
                                               Agreements in the Mail Classification                                                                          EFN, commas in EFN, invalid EFN
                                               Schedule’s Competitive Products List.                    Option 1—PIC/EFN Submission (Text
                                                                                                        File Option)                                          prefix, EFN submitted as a PIC, and/or
                                               DATES: Date of required notice: July 25,                                                                       invalid EFN length. If PIC/EFNs pass
                                               2018.                                                       A mailer can upload a text (.txt) file             format validation, the system will
                                               FOR FURTHER INFORMATION CONTACT:                         with multiple Package Identification                  reconcile uploaded file to manifest data
                                               Elizabeth Reed, 202–268–3179.                            Codes/Electronic File Numbers (PIC/                   to verify payment activity, physical scan
                                               SUPPLEMENTARY INFORMATION: The
                                                                                                        EFNs). There is no limit to the number                activity, timely submission, and
                                               United States Postal Service® hereby                     of PIC/EFNs submitted if using the text               uniqueness. As a result of the system
                                               gives notice that, pursuant to 39 U.S.C.                 (.txt) upload option. Refer to appendix               evaluation, PIC/EFNs are approved or
                                               3642 and 3632(b)(3), on July 19, 2018,                   N in Postal Service Publication 205,                  denied. Mailers can view the status and
                                               it filed with the Postal Regulatory                      Electronic Verification System (eVS®)                 the results by accessing the Unused
                                               Commission a USPS Request to Add                         Business and Technical Guide (https://                Label Refund Report in the Dispute
                                               Priority Mail Express, Priority Mail, &                  postalpro.usps.com/node/3724) for                     Queue in PostalOne!. A refund will be
                                                                                                        guidance on using the online interface                issued within 20 days to the shipper’s
                                               First-Class Package Service Contract 42
                                                                                                        for uploading text files or using the                 CAPS account for the approved PIC/
                                               to Competitive Product List. Documents
                                                                                                        entry box when requesting refunds for                 EFNs. As is the current practice, the
                                               are available at www.prc.gov, Docket
                                                                                                        unused labels. All refund requests made               refund will be 90 percent of the labels’
                                               Nos. MC2018–193, CP2018–271.
                                                                                                        through the online interface must be                  postage value unless a different
                                               Elizabeth Reed,                                          submitted within 60 days of the date of               percentage is authorized.
                                               Attorney, Corporate and Postal Business Law.             mailing. The system will validate if PIC/                The addition of the above two
                                               [FR Doc. 2018–15843 Filed 7–24–18; 8:45 am]              EFNs are formatted appropriately, and                 automated options will provide a
                                               BILLING CODE 7710–12–P
                                                                                                        will create a dispute queue case number               benefit to mailers by reducing the
                                                                                                        accessible through both the eVS landing               processing time of refund requests for
                                                                                                        page and the dispute queue. If PIC/EFNs               unused labels while providing mailers
                                               POSTAL SERVICE                                           fail format validation, an error message              better visibility into the status of refund
                                                                                                        will be displayed for any of the                      cases. Once deployed, the two
                                               Unused Label Refunds                                     following reasons: Invalid PIC length,                automated options will be the only
                                                                                                        duplicate EFN, commas in EFN, invalid                 method to submit unused label refund
                                               AGENCY:   Postal ServiceTM.                              EFN prefix, EFN submitted as a PIC,
                                               ACTION:   Notice.                                                                                              requests.
                                                                                                        and/or invalid EFN length. If PIC/EFNs
                                               SUMMARY:   The Postal Service will                       pass format validation, the system will               Maria W. Votsch,
                                               implement two new options for mailers                    reconcile the uploaded file to manifest               Attorney, Corporate and Postal Business Law.
                                                                                                        data to verify payment activity, physical             [FR Doc. 2018–15826 Filed 7–24–18; 8:45 am]
                                               to submit refund requests for unused
                                                                                                        scan activity, timely submission, and
                                               labels using an automated online                                                                               BILLING CODE 7710–12–P
                                                                                                        uniqueness. As a result of the system
                                               process. A hyperlink will be located on
                                                                                                        evaluation, PIC/EFNs are approved or
                                               the Electronic Verification System
                                                                                                        denied. Mailers can view the status and               SECURITIES AND EXCHANGE
                                               (eVS®) Monthly Account and Sampling
                                                                                                        the results by accessing the Unused                   COMMISSION
                                               Summary page where users can access
                                                                                                        Label Refund Report in the Dispute
                                               a portal to submit unused label refunds.
                                                                                                        Queue in PostalOne! ®. A refund will be               [Investment Company Act Release No.
                                               DATES: These options shall be                            issued within 20 days to the shipper’s                33163; 812–14889]
                                               implemented August 1, 2018.                              CAPS account for the approved PIC/
                                               FOR FURTHER INFORMATION CONTACT:                                                                               IndexIQ ETF Trust, et al.
                                                                                                        EFNs. As is the current practice, the
                                               Direct questions to Jimmy A. Palma by                    refund will be 90 percent of the labels’              July 19, 2018.
                                               email at jimmy.a.palma@usps.gov or by                    postage value unless a different                      AGENCY: Securities and Exchange
                                               phone at (202) 268–8798.                                 percentage is authorized.                             Commission (‘‘Commission’’).
                                               SUPPLEMENTARY INFORMATION:                                                                                     ACTION: Notice.
                                                                                                        Option 2—PIC/EFN Submission (Entry
                                               Background                                               Option)                                                 Notice of an application for an order
                                                  Currently the Postal Service allows                     A mailer can enter up to 200 PIC/                   under section 6(c) of the Investment
                                               eVS mailers to submit a refund request                   EFNs in the online entry form in                      Company Act of 1940 (the ‘‘Act’’) for an
                                               for unused labels using a Type ‘‘4’’                     PostalOne!. Refer to appendix N in                    exemption from sections 2(a)(32),
                                               Corrections Shipping Services File.                      Postal Service Publication 205 (https://              5(a)(1), 22(d), and 22(e) of the Act and
                                               Additionally, eVS mailers can submit                     postalpro.usps.com/node/3724) for                     rule 22c–1 under the Act, under
                                               refund requests for unused labels                        guidance on using the online interface                sections 6(c) and 17(b) of the Act for an
daltland on DSKBBV9HB2PROD with NOTICES




                                               through the Dispute Queue accessible                     for uploading text files or using the                 exemption from sections 17(a)(1) and
                                               from the Business Customer Gateway. In                   entry box when requesting refunds for                 17(a)(2) of the Act, and under section
                                               this Notice, the Postal Service is                       unused labels. All refund requests made               12(d)(1)(J) for an exemption from
                                               announcing its plan to replace these                     through the online interface must be                  sections 12(d)(1)(A) and 12(d)(1)(B) of
                                               methods with two new options for eVS                     submitted within 60 days of the date of               the Act. The requested order would
                                               mailers to submit refund requests for                    mailing. The system will validate if PIC/             permit (a) index-based series of certain
                                               unused labels, using an automated                        EFNs are formatted appropriately, and                 open-end management investment


                                          VerDate Sep<11>2014   18:50 Jul 24, 2018   Jkt 244001   PO 00000   Frm 00088   Fmt 4703   Sfmt 4703   E:\FR\FM\25JYN1.SGM   25JYN1


                                               35290                        Federal Register / Vol. 83, No. 143 / Wednesday, July 25, 2018 / Notices

                                               companies (‘‘Funds’’) to issue shares                    bearing upon the desirability of a                      feeder structure. Any order granting the
                                               redeemable in large aggregations                         hearing on the matter, the reason for the               requested relief would be subject to the
                                               (‘‘Creation Units’’); (b) secondary market               request, and the issues contested.                      terms and conditions stated in the
                                               transactions in Fund shares to occur at                  Persons who wish to be notified of a                    application.
                                               negotiated market prices rather than at                  hearing may request notification by                        2. Each Fund will hold investment
                                               net asset value (‘‘NAV’’); (c) certain                   writing to the Commission’s Secretary.                  positions selected to correspond closely
                                               Funds to pay redemption proceeds,                        ADDRESSES: Secretary, Securities and                    to the performance of an Underlying
                                               under certain circumstances, more than                   Exchange Commission, 100 F Street NE,                   Index. In the case of Self-Indexing
                                               seven days after the tender of shares for                Washington, DC 20549–1090;                              Funds, an affiliated person, as defined
                                               redemption; (d) certain affiliated                       Applicants: The Trust and the Adviser,                  in section 2(a)(3) of the Act (‘‘Affiliated
                                               persons of a Fund to deposit securities                  51 Madison Avenue 4th Floor, New                        Person’’), or an affiliated person of an
                                               into, and receive securities from, the                   York, NY 10010, and the Distributor,                    Affiliated Person (‘‘Second-Tier
                                               Fund in connection with the purchase                     1290 Broadway, Suite 1100, Denver, CO                   Affiliate’’), of the Trust or a Fund, of the
                                               and redemption of Creation Units; (e)                    80203.                                                  Adviser, of any sub-adviser to or
                                               certain registered management                                                                                    promoter of a Fund, or of the Distributor
                                                                                                        FOR FURTHER INFORMATION CONTACT: Hae-
                                               investment companies and unit                                                                                    will compile, create, sponsor or
                                                                                                        Sung Lee, Attorney-Adviser, at (202)
                                               investment trusts outside of the same                                                                            maintain the Underlying Index.3
                                                                                                        551–7345, or Andrea Ottomanelli                            3. Shares will be purchased and
                                               group of investment companies as the
                                                                                                        Magovern, Branch Chief, at (202) 551–                   redeemed in Creation Units and
                                               Funds (‘‘Funds of Funds’’) to acquire
                                                                                                        6825 (Division of Investment                            generally on an in-kind basis, or issued
                                               shares of the Funds; (f) certain Funds
                                                                                                        Management, Chief Counsel’s Office).                    in less than Creation Unit size to
                                               (‘‘Feeder Funds’’) to create and redeem
                                               Creation Units in-kind in a master-                      SUPPLEMENTARY INFORMATION: The                          investors participating in a distribution
                                               feeder structure; and (g) certain Funds                  following is a summary of the                           reinvestment program. Except where the
                                               to issue Shares in less than Creation                    application. The complete application                   purchase or redemption will include
                                               Unit size to investors participating in a                may be obtained via the Commission’s                    cash under the limited circumstances
                                               distribution reinvestment program. The                   website by searching for the file                       specified in the application, purchasers
                                               requested order would supersede the                      number, or for an applicant using the                   will be required to purchase Creation
                                               applicant’s prior orders.1                               Company name box, at http://                            Units by depositing specified
                                               APPLICANTS: IndexIQ ETF Trust (the
                                                                                                        www.sec.gov/search/search.htm or by                     instruments (‘‘Deposit Instruments’’),
                                               ‘‘Trust’’), a Delware statutory trust                    calling (202) 551–8090.                                 and shareholders redeeming their shares
                                               registered under the Act as an open-end                  Summary of the Application                              will receive specified instruments
                                               management investment company with                                                                               (‘‘Redemption Instruments’’). The
                                                                                                           1. Applicants request an order that                  Deposit Instruments and the
                                               multiple series, IndexIQ Advisors LLC
                                                                                                        would allow Funds to operate as index                   Redemption Instruments will each
                                               (the ‘‘Adviser’’), a Delaware limited
                                                                                                        exchange traded funds (‘‘ETFs’’).2 Fund                 correspond pro rata to the positions in
                                               liability company registered as an
                                                                                                        shares will be purchased and redeemed                   the Fund’s portfolio (including cash
                                               investment adviser under the
                                                                                                        at their NAV in Creation Units (other                   positions) except as specified in the
                                               Investment Advisers Act of 1940, and
                                                                                                        than pursuant to a distribution                         application.
                                               ALPS Distributors, Inc. (the
                                                                                                        reinvestment program, as described in                      4. Because shares will not be
                                               ‘‘Distributor’’), a Colorado corporation
                                                                                                        the application). All orders to purchase                individually redeemable, applicants
                                               and broker-dealer registered under the
                                                                                                        Creation Units and all redemption                       request an exemption from section
                                               Securities Exchange Act of 1934
                                                                                                        requests will be placed by or through an                5(a)(1) and section 2(a)(32) of the Act
                                               (‘‘Exchange Act’’).
                                                                                                        ‘‘Authorized Participant,’’ which will                  that would permit the Funds to register
                                               FILING DATES: The application was filed                  have signed a participant agreement
                                               on March 16, 2018 and amended on                                                                                 as open-end management investment
                                                                                                        with the Distributor. Shares will be                    companies and issue shares that are
                                               May 25, 2018, July 2, 2018, and July 12,                 listed and traded individually on a
                                               2018.                                                                                                            redeemable in Creation Units.
                                                                                                        national securities exchange, where                        5. Applicants also request an
                                               HEARING OR NOTIFICATION OF HEARING: An                   share prices will be based on the current               exemption from section 22(d) of the Act
                                               order granting the requested relief will                 bid/offer market. Certain Funds may                     and rule 22c–1 under the Act as
                                               be issued unless the Commission orders                   operate as Feeder Funds in a master-                    secondary market trading in shares will
                                               a hearing. Interested persons may                                                                                take place at negotiated prices, not at a
                                               request a hearing by writing to the                         2 Applicants request that the order apply to the
                                                                                                                                                                current offering price described in a
                                               Commission’s Secretary and serving                       current series of the Trust identified and described
                                                                                                                                                                Fund’s prospectus, and not at a price
                                               applicants with a copy of the request,                   in Appendix A to the application (‘‘Current Funds’’)
                                                                                                        and any additional series of the Trust, and any         based on NAV. Applicants state that (a)
                                               personally or by mail. Hearing requests                  other existing or future open-end management            secondary market trading in shares does
                                               should be received by the Commission                     investment company or existing or future series         not involve a Fund as a party and will
                                               by 5:30 p.m. on August 13, 2018, and                     thereof (together with the Current Funds, ‘‘Funds’’),
                                                                                                                                                                not result in dilution of an investment
                                               should be accompanied by proof of                        each of which will operate as an ETF, and their
                                                                                                        respective existing or future Master Funds, and will    in shares, and (b) to the extent different
                                               service on applicants, in the form of an                 track a specified index comprised of domestic and/      prices exist during a given trading day,
                                               affidavit, or for lawyers, a certificate of              or foreign equity securities and/or domestic and/or     or from day to day, such variances occur
                                               service. Pursuant to rule 0–5 under the                  foreign fixed income securities (each, an
                                                                                                                                                                as a result of third-party market forces,
                                               Act, hearing requests should state the                   ‘‘Underlying Index’’). Any Fund will (a) be advised
daltland on DSKBBV9HB2PROD with NOTICES




                                                                                                        by the Adviser or an entity controlling, controlled
                                               nature of the writer’s interest, any facts               by, or under common control with the Adviser              3 Each Self-Indexing Fund will post on its website

                                                                                                        (each such entity and any successor thereto, an         the identities and quantities of the investment
                                                 1 IndexIQ ETF Trust, et. al., Investment Company       ‘‘Adviser’’) and (b) comply with the terms and          positions that will form the basis for the Fund’s
                                               Act Release Nos. 28638 (Feb. 27, 2009) (notice) and      conditions of the application. For purposes of the      calculation of its NAV at the end of the day.
                                               28653 (Mar. 20, 2009) (order) and IndexIQ ETF            requested order, a ‘‘successor’’ is limited to an       Applicants believe that requiring Self-Indexing
                                               Trust, et. al., Investment Company Release Nos.          entity or entities that result from a reorganization    Funds to maintain full portfolio transparency will
                                               30843 (Dec. 23, 2013) (notice) and 30888 (Jan. 22,       into another jurisdiction or a change in the type of    help address, together with other protections,
                                               2014) (order).                                           business organization.                                  conflicts of interest with respect to such Funds.



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                                                                            Federal Register / Vol. 83, No. 143 / Wednesday, July 25, 2018 / Notices                                                  35291

                                               such as supply and demand. Therefore,                    transactions with the Fund of Funds.4                   SECURITIES AND EXCHANGE
                                               applicants assert that secondary market                  The purchase of Creation Units by a                     COMMISSION
                                               transactions in shares will not lead to                  Fund of Funds directly from a Fund will
                                                                                                                                                                [Release No. 34–83673; File No. SR–
                                               discrimination or preferential treatment                 be accomplished in accordance with the                  CboeBZX–2018–051]
                                               among purchasers. Finally, applicants                    policies of the Fund of Funds and will
                                               represent that share market prices will                  be based on the NAVs of the Funds.                      Self-Regulatory Organizations; Cboe
                                               be disciplined by arbitrage                                                                                      BZX Exchange, Inc.; Notice of Filing
                                                                                                           9. Applicants also request relief to
                                               opportunities, which should prevent                                                                              and Immediate Effectiveness of a
                                               shares from trading at a material                        permit a Feeder Fund to acquire shares
                                                                                                        of another registered investment                        Proposed Rule Change to Exchange
                                               discount or premium from NAV.                                                                                    Rule 11.13, Order Execution and
                                                  6. With respect to Funds that effect                  company managed by the Adviser
                                                                                                        having substantially the same                           Routing, To Amend the Operation of
                                               creations and redemptions of Creation                                                                            the Super Aggressive Order
                                               Units in kind and that are based on                      investment objectives as the Feeder
                                                                                                        Fund (‘‘Master Fund’’) beyond the                       Instruction
                                               certain Underlying Indexes that include
                                               foreign securities, applicants request                   limitations in section 12(d)(1)(A) and                  July 19, 2018.
                                               relief from the requirement imposed by                   permit the Master Fund, and any                            Pursuant to Section 19(b)(1) of the
                                               section 22(e) in order to allow such                     principal underwriter for the Master                    Securities Exchange Act of 1934
                                               Funds to pay redemption proceeds                         Fund, to sell shares of the Master Fund                 (‘‘Act’’),1 and Rule 19b–4 thereunder,2
                                               within fifteen calendar days following                   to the Feeder Fund beyond the                           notice is hereby given that on July 11,
                                               the tender of Creation Units for                         limitations in section 12(d)(1)(B).                     2018, Cboe BZX Exchange, Inc. (the
                                               redemption. Applicants assert that the                      10. Section 6(c) of the Act permits the              ‘‘Exchange’’ or ‘‘BZX’’) filed with the
                                               requested relief would not be                                                                                    Securities and Exchange Commission
                                                                                                        Commission to exempt any persons or
                                               inconsistent with the spirit and intent of                                                                       (‘‘Commission’’) the proposed rule
                                                                                                        transactions from any provision of the
                                               section 22(e) to prevent unreasonable,                                                                           change as described in Items I and II
                                                                                                        Act if such exemption is necessary or
                                               undisclosed or unforeseen delays in the                                                                          below, which Items have been prepared
                                               actual payment of redemption proceeds.                   appropriate in the public interest and
                                                                                                        consistent with the protection of                       by the Exchange. The Exchange has
                                                  7. Applicants request an exemption to                                                                         designated this proposal as a ‘‘non-
                                               permit Funds of Funds to acquire Fund                    investors and the purposes fairly
                                                                                                                                                                controversial’’ proposed rule change
                                               shares beyond the limits of section                      intended by the policy and provisions of
                                                                                                                                                                pursuant to Section 19(b)(3)(A) of the
                                               12(d)(1)(A) of the Act; and the Funds,                   the Act. Section 12(d)(1)(J) of the Act
                                                                                                                                                                Act 3 and Rule 19b–4(f)(6) thereunder,4
                                               and any principal underwriter for the                    provides that the Commission may
                                                                                                                                                                which renders it effective upon filing
                                               Funds, and/or any broker or dealer                       exempt any person, security, or                         with the Commission. The Commission
                                               registered under the Exchange Act, to                    transaction, or any class or classes of                 is publishing this notice to solicit
                                               sell shares to Funds of Funds beyond                     persons, securities, or transactions, from              comments on the proposed rule change
                                               the limits of section 12(d)(1)(B) of the                 any provision of section 12(d)(1) if the                from interested persons.
                                               Act. The application’s terms and                         exemption is consistent with the public
                                               conditions are designed to, among other                  interest and the protection of investors.               I. Self-Regulatory Organization’s
                                               things, help prevent any potential (i)                   Section 17(b) of the Act authorizes the                 Statement of the Terms of Substance of
                                               undue influence over a Fund through                      Commission to grant an order                            the Proposed Rule Change
                                               control or voting power, or in                           permitting a transaction otherwise                         The Exchange filed a proposal to
                                               connection with certain services,                        prohibited by section 17(a) if it finds                 amend the operation of the Super
                                               transactions, and underwritings, (ii)                    that (a) the terms of the proposed                      Aggressive order instruction under
                                               excessive layering of fees, and (iii)                    transaction are fair and reasonable and                 paragraph (b)(4)(C) of Exchange Rule
                                               overly complex fund structures, which                    do not involve overreaching on the part                 11.13.
                                               are the concerns underlying the limits                   of any person concerned; (b) the                           The text of the proposed rule change
                                               in sections 12(d)(1)(A) and (B) of the                   proposed transaction is consistent with                 is available at the Exchange’s website at
                                               Act.                                                     the policies of each registered                         www.markets.cboe.com, at the principal
                                                  8. Applicants request an exemption                                                                            office of the Exchange, and at the
                                               from sections 17(a)(1) and 17(a)(2) of the               investment company involved; and (c)
                                                                                                        the proposed transaction is consistent                  Commission’s Public Reference Room.
                                               Act to permit persons that are Affiliated
                                               Persons, or Second Tier Affiliates, of the               with the general purposes of the Act.                   II. Self-Regulatory Organization’s
                                               Funds, solely by virtue of certain                         For the Commission, by the Division of                Statement of the Purpose of, and
                                               ownership interests, to effectuate                       Investment Management, under delegated                  Statutory Basis for, the Proposed Rule
                                               purchases and redemptions in-kind. The                   authority.                                              Change
                                               deposit procedures for in-kind                           Eduardo A. Aleman,                                        In its filing with the Commission, the
                                               purchases of Creation Units and the                                                                              Exchange included statements
                                                                                                        Assistant Secretary.
                                               redemption procedures for in-kind                                                                                concerning the purpose of and basis for
                                               redemptions of Creation Units will be                    [FR Doc. 2018–15861 Filed 7–24–18; 8:45 am]
                                                                                                                                                                the proposed rule change and discussed
                                               the same for all purchases and                           BILLING CODE 8011–01–P
                                                                                                                                                                any comments it received on the
                                               redemptions, and Deposit Instruments                                                                             proposed rule change. The text of these
                                               and Redemption Instruments will be                          4 The requested relief would apply to direct sales
                                                                                                                                                                statements may be examined at the
                                               valued in the same manner as those                       of shares in Creation Units by a Fund to a Fund of
                                                                                                                                                                places specified in Item IV below. The
daltland on DSKBBV9HB2PROD with NOTICES




                                                                                                        Funds and redemptions of those shares. Applicants,
                                               investment positions currently held by                   moreover, are not seeking relief from section 17(a)     Exchange has prepared summaries, set
                                               the Funds. Applicants also seek relief                   for, and the requested relief will not apply to,        forth in Sections A, B, and C below, of
                                               from the prohibitions on affiliated                      transactions where a Fund could be deemed an
                                               transactions in section 17(a) to permit a                Affiliated Person, or a Second-Tier Affiliate, of a      1 15
                                                                                                        Fund of Funds because an Adviser or an entity                 U.S.C. 78s(b)(1).
                                               Fund to sell its shares to and redeem its                controlling, controlled by or under common control
                                                                                                                                                                 2 17 CFR 240.19b–4.
                                               shares from a Fund of Funds, and to                      with an Adviser provides investment advisory             3 15 U.S.C. 78s(b)(3)(A).

                                               engage in the accompanying in-kind                       services to that Fund of Funds.                          4 17 CFR 240.19b–4(f)(6).




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Document Created: 2018-07-25 00:44:23
Document Modified: 2018-07-25 00:44:23
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice.
DatesThe application was filed on March 16, 2018 and amended on May 25, 2018, July 2, 2018, and July 12, 2018.
ContactHae-Sung Lee, Attorney-Adviser, at (202) 551-7345, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
FR Citation83 FR 35289 

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