83 FR 5153 - Columbia Funds Series Trust, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 24 (February 5, 2018)

Page Range		5153-5154
FR Document		2018-02169
Federal Register, Volume 83 Issue 24 (Monday, February 5, 2018)
[Federal Register Volume 83, Number 24 (Monday, February 5, 2018)]
[Notices]
[Pages 5153-5154]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-02169]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32998; File No. 812-14842]


Columbia Funds Series Trust, et al.

January 30, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of an application for an order pursuant to: (a) Section 6(c) 
of the Investment Company Act of 1940 (``Act'') granting an exemption 
from sections 18(f) and 21(b) of the Act; (b) section 12(d)(1)(J) of 
the Act granting an exemption from section 12(d)(1) of the Act; (c) 
sections 6(c) and 17(b) of the Act granting an exemption from sections 
17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) section 17(d) of 
the Act and rule 17d-1 under the Act to permit certain joint 
arrangements and transactions. Applicants request an order that would 
permit certain registered open-end management investment companies to 
participate in a joint lending and borrowing facility.\1\
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    \1\ The requested order would supersede an exemptive order 
issued by the Commission on October 24, 2006, with the result that 
no person will continue to rely on the prior order if the order is 
granted. RiverSource Diversified Income Series, Inc., et al., 
Investment Company Act Release Nos. 27506 (September 28, 2006) 
(notice) and 27525 (October 24, 2016) (order). All existing entities 
that currently intend to rely on the order have been named as 
applicants. Any other existing or future entity that relies on the 
order in the future will comply with the terms and conditions of the 
application.

Applicants:  Columbia Funds Series Trust, Columbia Funds Series Trust 
I, Columbia Funds Series Trust II, Columbia Funds Variable Insurance 
Trust, Columbia Funds Variable Series Trust II, Columbia ETF Trust I 
and Columbia ETF Trust II (each a ``Trust'' and collectively, the 
``Trusts''), each registered under the Act as open-end management 
investment companies with one or more series, and Columbia Management 
Investment Advisers, LLC (``Columbia Management''), registered as an 
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investment adviser under the Investment Advisers Act of 1940.

Filing Date:  The application was filed on November 9, 2017.

Hearing or Notification of Hearing:  An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on February 26, 2018 and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES:  Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE, Washington, DC 20549-1090; Applicants: c/o Brian D. McCabe, 
Esq. and Nathan D. Somogie, Esq., Rope & Gray LLP, Prudential Tower, 
800 Boylston Street, Boston, MA 02199.

FOR FURTHER INFORMATION CONTACT:  Hae-Sung Lee, Attorney-Adviser, at 
(202) 551-7345 or Robert H. Shapiro, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION:  The following is a summary of the 
application. The complete application may be obtained via the 
Commission's website by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Summary of the Application

    1. Applicants request an order that would permit the applicants to 
participate in an interfund lending facility where each Fund could lend 
money directly to and borrow money directly from other Funds to cover 
unanticipated cash shortfalls, such as unanticipated redemptions or 
trade fails.\2\ The Funds will not borrow under the facility for 
leverage purposes and the loans' duration will be no more than 7 
days.\3\
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    \2\ Applicants request that the order apply to the applicants 
and to any existing or future series of the Trusts and to any other 
registered open-end or closed-end management investment company or 
its series for which Columbia Management and each successor thereto 
or a person controlling, controlled by, or under common control with 
Columbia Management serves as investment adviser (each such 
investment adviser may be referred to as an ``Adviser'' and 
collectively, the ``Advisers''). For purposes of the requested 
order, ``successor'' is limited to any entity that results from a 
reorganization into another jurisdiction or a change in the type of 
a business organization. The Funds that are closed-end management 
investment companies will not participate as borrowers in the 
interfund lending facility.
    \3\ Any Fund, however, will be able to call a loan on one 
business day's notice.
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    2. Applicants anticipate that the proposed facility would provide a 
borrowing Fund with a source of liquidity at a rate lower than the bank 
borrowing rate at times when the cash position of the Fund is 
insufficient to meet temporary cash requirements. In addition, Funds 
making short-term cash loans directly to other Funds would earn 
interest at a rate higher than they otherwise could obtain from 
investing their cash in repurchase agreements or certain other short 
term money market instruments. Thus, applicants assert that the 
facility would benefit both borrowing and lending Funds.
    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the Application. 
Among others, the Adviser, through a designated committee, would 
administer the facility as a disinterested fiduciary as part of its 
duties under the investment management and administrative agreements 
with the Funds and would receive no additional fee as compensation for 
its services in connection with the administration of the facility. The 
facility would be subject to oversight and certain approvals by the 
Funds' Board, including, among others, approval of the interest rate 
formula and of the method for allocating loans across Funds, as well as 
review of the process in place to evaluate the liquidity implications 
for the Funds. A Fund's aggregate outstanding interfund loans will not 
exceed 15% of its net assets, and the Fund's loans to any one Fund will 
not exceed 5% of the lending Fund's net assets.\4\
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    \4\ Under certain circumstances, a borrowing Fund will be 
required to pledge collateral to secure the loan.
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    4. Applicants assert that the facility does not raise the concerns 
underlying section 12(d)(1) of the Act given that the Funds are part of 
the same group of investment companies and there will be no duplicative 
costs or fees to the Funds.\5\ Applicants also assert that the proposed 
transactions do not raise the concerns underlying sections 17(a)(1), 
17(a)(3), 17(d) and 21(b) of the Act as the Funds would not engage in 
lending transactions that unfairly benefit

[[Page 5154]]

insiders or are detrimental to the Funds. Applicants state that the 
facility will offer both reduced borrowing costs and enhanced returns 
on loaned funds to all participating Funds and each Fund would have an 
equal opportunity to borrow and lend on equal terms based on an 
interest rate formula that is objective and verifiable. With respect to 
the relief from section 17(a)(2) of the Act, applicants note that any 
collateral pledged to secure an interfund loan would be subject to the 
same conditions imposed by any other lender to a Fund that imposes 
conditions on the quality of or access to collateral for a borrowing 
(if the lender is another Fund) or the same or better conditions (in 
any other circumstance).\6\
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    \5\ Applicants state that the obligation to repay an interfund 
loan could be deemed to constitute a security for the purposes of 
sections 17(a)(1) and 12(d)(1) of the Act.
    \6\ Applicants state that any pledge of securities to secure an 
interfund loan could constitute a purchase of securities for 
purposes of section 17(a)(2) of the Act.
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    5. Applicants also believe that the limited relief from section 
18(f)(1) of the Act that is necessary to implement the facility 
(because the lending Funds are not banks) is appropriate in light of 
the conditions and safeguards described in the application and because 
the Funds would remain subject to the requirement of section 18(f)(1) 
that all borrowings of a Fund, including combined interfund loans and 
bank borrowings, have at least 300% asset coverage.
    6. Section 6(c) of the Act permits the Commission to exempt any 
persons or transactions from any provision of the Act if such exemption 
is necessary or appropriate in the public interest and consistent with 
the protection of investors and the purposes fairly intended by the 
policy and provisions of the Act. Section 12(d)(1)(J) of the Act 
provides that the Commission may exempt any person, security, or 
transaction, or any class or classes of persons, securities, or 
transactions, from any provision of section 12(d)(1) if the exemption 
is consistent with the public interest and the protection of investors. 
Section 17(b) of the Act authorizes the Commission to grant an order 
permitting a transaction otherwise prohibited by section 17(a) if it 
finds that (a) the terms of the proposed transaction are fair and 
reasonable and do not involve overreaching on the part of any person 
concerned; (b) the proposed transaction is consistent with the policies 
of each registered investment company involved; and (c) the proposed 
transaction is consistent with the general purposes of the Act. Rule 
17d-1(b) under the Act provides that in passing upon an application 
filed under the rule, the Commission will consider whether the 
participation of the registered investment company in a joint 
enterprise, joint arrangement or profit sharing plan on the basis 
proposed is consistent with the provisions, policies and purposes of 
the Act and the extent to which such participation is on a basis 
different from or less advantageous than that of the other 
participants.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-02169 Filed 2-2-18; 8:45 am]
 BILLING CODE 8011-01-P
5154 Federal Register / Vol. 83, No. 24 / Monday, February 5, 2018 / Notices

insiders or are detrimental to the Funds. consider whether the participation of The text of the proposed rule change
Applicants state that the facility will the registered investment company in a is available on the Exchange’s website at
offer both reduced borrowing costs and joint enterprise, joint arrangement or http://nasdaq.cchwallstreet.com, at the
enhanced returns on loaned funds to all profit sharing plan on the basis principal office of the Exchange, and at
participating Funds and each Fund proposed is consistent with the the Commission’s Public Reference
would have an equal opportunity to provisions, policies and purposes of the Room.
borrow and lend on equal terms based Act and the extent to which such
II. Self-Regulatory Organization’s
on an interest rate formula that is participation is on a basis different from
Statement of the Purpose of, and
objective and verifiable. With respect to or less advantageous than that of the
Statutory Basis for, the Proposed Rule
the relief from section 17(a)(2) of the other participants.
Change
Act, applicants note that any collateral For the Commission, by the Division of
pledged to secure an interfund loan Investment Management, under delegated In its filing with the Commission, the
would be subject to the same conditions authority. Exchange included statements
imposed by any other lender to a Fund Eduardo A. Aleman, concerning the purpose of and basis for
that imposes conditions on the quality Assistant Secretary.
the proposed rule change and discussed
of or access to collateral for a borrowing any comments it received on the
[FR Doc. 2018–02169 Filed 2–2–18; 8:45 am]
(if the lender is another Fund) or the proposed rule change. The text of these
BILLING CODE 8011–01–P
same or better conditions (in any other statements may be examined at the
circumstance).6 places specified in Item IV below. The
5. Applicants also believe that the SECURITIES AND EXCHANGE Exchange has prepared summaries, set
limited relief from section 18(f)(1) of the COMMISSION forth in sections A, B, and C below, of
Act that is necessary to implement the the most significant aspects of such
facility (because the lending Funds are [Release No. 34–82604; File No. SR– statements.
not banks) is appropriate in light of the NASDAQ–2018–007]
A. Self-Regulatory Organization’s
conditions and safeguards described in
Self-Regulatory Organizations; The Statement of the Purpose of, and
the application and because the Funds
Nasdaq Stock Market LLC; Notice of Statutory Basis for, the Proposed Rule
would remain subject to the
Filing and Immediate Effectiveness of Change
requirement of section 18(f)(1) that all
borrowings of a Fund, including Proposed Rule Change To Relocate 1. Purpose
combined interfund loans and bank the Consolidated Audit Trail
Compliance Rules The Exchange proposes to relocate the
borrowings, have at least 300% asset CAT Rules, currently under the 6800
coverage. January 30, 2018. Series, Rules 6810 through 6896, to
6. Section 6(c) of the Act permits the
Pursuant to Section 19(b)(1) of the General 7, Sections 1 through 13 of the
Commission to exempt any persons or
Securities Exchange Act of 1934 Rulebook’s shell structure.
transactions from any provision of the
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 The Exchange adopted the CAT Rules
Act if such exemption is necessary or
notice is hereby given that on January to implement a consolidated audit trail
appropriate in the public interest and
29, 2018, The Nasdaq Stock Market LLC in order to capture customer and order
consistent with the protection of
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the event information to comply with the
investors and the purposes fairly
Securities and Exchange Commission provisions of the National Market
intended by the policy and provisions of
(‘‘Commission’’) the proposed rule System Plan Governing the
the Act. Section 12(d)(1)(J) of the Act
change as described in Items I and II Consolidated Audit Trail.4 Because the
provides that the Commission may
below, which Items have been prepared CAT Rules apply across all markets and
exempt any person, security, or
by the Exchange. The Commission is to all products,5 the Exchange believes
transaction, or any class or classes of
publishing this notice to solicit it is pertinent that they be located in the
persons, securities, or transactions, from
comments on the proposed rule change General section of the Rulebook’s shell;
any provision of section 12(d)(1) if the
from interested persons. therefore, the Exchange will amend the
exemption is consistent with the public
shell structure, creating a new ‘‘General
interest and the protection of investors. I. Self-Regulatory Organization’s
7 Consolidated Audit Trail Compliance’’
Section 17(b) of the Act authorizes the Statement of the Terms of Substance of
title under ‘‘General Equity and Options
Commission to grant an order the Proposed Rule Change
Rules,’’ and make conforming changes
permitting a transaction otherwise The Exchange proposes to relocate the to the ‘‘Options Rules’’ titles; moreover,
prohibited by section 17(a) if it finds Consolidated Audit Trail Compliance this proposal is consistent with similar
that (a) the terms of the proposed rules (‘‘CAT Rules’’), currently under filings concurrently submitted by the
transaction are fair and reasonable and the 6800 Series (Rules 6810 through Affiliated Exchanges.
do not involve overreaching on the part 6896), to General 7, Sections 1 through The relocation of the CAT Rules is
of any person concerned; (b) the 13 in the Exchange’s rulebook’s part of the Exchange’s continued effort
proposed transaction is consistent with (‘‘Rulebook’’) shell structure.3 to promote efficiency and conformity of
the policies of each registered
its processes with those of its Affiliated
investment company involved; and (c) 1 15 U.S.C. 78s(b)(1). Exchanges.6 The Exchange believes that
the proposed transaction is consistent 2 17 CFR 240.19b–4. the migration of the CAT Rules to their
with the general purposes of the Act. 3 Recently, the Exchange added a shell structure
sradovich on DSK3GMQ082PROD with NOTICES

new location will facilitate the use of
Rule 17d–1(b) under the Act provides to its Rulebook with the purpose of improving
that in passing upon an application filed efficiency and readability and to align its rules
4 See Securities Exchange Act Release No. 80256
closer to those of its five sister exchanges, Nasdaq
under the rule, the Commission will BX, Inc.; Nasdaq PHLX LLC; Nasdaq ISE, LLC; (March 15, 2017), 82 FR 14526 (March 21, 2017)
Nasdaq GEMX, LLC; and Nasdaq MRX, LLC (SR–NASDAQ–2017–008) (Order Approving
6 Applicants state that any pledge of securities to (‘‘Affiliated Exchanges’’). See Securities Exchange Proposed Rule Changes To Adopt Consolidated
secure an interfund loan could constitute a Act Release No. 82175 (November 29, 2017), 82 FR Audit Trail Compliance Rules).
5 Id.
purchase of securities for purposes of section 57494 (December 5, 2017) (SR–NASDAQ–2017–
17(a)(2) of the Act. 125). 6 See footnote 3.

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Document Created: 2018-02-03 01:24:48
Document Modified: 2018-02-03 01:24:48
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 November 9, 2017.
Contact		Hae-Sung Lee, Attorney-Adviser, at (202) 551-7345 or Robert H. Shapiro, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 5153