83 FR 58315 - ABR Dynamic Funds, LLC, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 223 (November 19, 2018)

Page Range		58315-58317
FR Document		2018-25180
Federal Register, Volume 83 Issue 223 (Monday, November 19, 2018)
[Federal Register Volume 83, Number 223 (Monday, November 19, 2018)]
[Notices]
[Pages 58315-58317]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-25180]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33295; 812-14920]


ABR Dynamic Funds, LLC, et al.

November 14, 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

[[Page 58316]]

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 only (``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; and 
(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.

APPLICANTS:  ABR Dynamic Funds, LLC (the ``Initial Adviser''), a 
Delaware limited liability company that is registered as an investment 
adviser under the Investment Advisers Act of 1940, ETF Series Solutions 
(the ``Trust''), a Delaware statutory trust registered under the Act as 
an open-end management investment company with multiple series, and 
Foreside Fund Services, LLC, (the ``Distributor''), a Delaware limited 
liability company and broker-dealer registered under the Securities 
Exchange Act of 1934 (``Exchange Act'').

Filing Dates:  The application was filed on June 14, 2018, and amended 
on October 16, 2018 and November 8, 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 December 10, 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: ABR Dynamic Funds, LLC, 48 
Wall Street Suite 1100, New York, New York 10005; ETF Series Solutions, 
615 East Michigan Street, Milwaukee, Wisconsin 53202; Foreside Fund 
Services, LLC, Three Canal Plaza, Portland, Maine 04101.

FOR FURTHER INFORMATION CONTACT: Barbara T. Heussler, Senior Counsel, 
at (202) 551-6990, 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 only. All orders 
to purchase Creation Units and all redemption requests will be placed 
by or through an ``Authorized Participant,'' which will have signed a 
participant agreement with the Distributor. Shares will be listed and 
traded individually on a national securities exchange, where share 
prices will be based on the current bid/offer market. 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 ABR Dynamic 
Weight ETF and any additional series of the Trust and any other 
open-end management investment company or series thereof (each, 
included in the term ``Fund''), each of which will operate as an ETF 
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''). Each Fund will 
(a) be advised by the Initial Adviser or an entity controlling, 
controlled by, or under common control with the Initial Adviser 
(each such entity and any successor thereto, an ``Adviser'') and (b) 
comply with the terms and conditions of the application. For 
purposes of the requested order, the term ``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 
generally 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. Except where the purchase or redemption 
will include cash under the limited circumstances specified in the 
application, purchasers will be required to purchase Creation Units by 
depositing specified instruments (``Deposit Instruments''), and 
shareholders redeeming their shares will receive specified instruments 
(``Redemption Instruments''). The Deposit Instruments and the 
Redemption Instruments will each correspond pro rata to the positions 
in the Fund's portfolio (including cash positions) except as specified 
in the application.
    4. Because shares will not be individually redeemable, applicants 
request an exemption from section 5(a)(1) and section 2(a)(32) of the 
Act that would permit the Funds to register as open-end management 
investment companies and issue shares that are redeemable in Creation 
Units only.
    5. Applicants also request an exemption from section 22(d) of the 
Act and rule 22c-1 under the Act as secondary market trading in shares 
will take place at negotiated prices, not at a current offering price 
described in a Fund's prospectus, and not at a price based on NAV. 
Applicants state that (a) secondary market trading in shares does not 
involve a Fund as a party and will not result in dilution of an 
investment in shares, and (b) to the extent different prices exist 
during a given trading day, or from day to day, such variances occur as 
a result of third-party market forces, such as supply and demand. 
Therefore, applicants assert that secondary market transactions in 
shares will not lead to discrimination or preferential treatment among 
purchasers. Finally, applicants represent that share market prices will 
be disciplined by arbitrage opportunities, which should prevent shares 
from trading at a material discount or premium from NAV.
    6. With respect to Funds that effect creations and redemptions of 
Creation Units in kind and that are based on certain Underlying Indexes 
that include

[[Page 58317]]

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.\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 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. 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. 2018-25180 Filed 11-16-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 223 / Monday, November 19, 2018 / Notices 58315

arguments concerning whether Amendment Nos. 1, 2, and 3 in the Register on October 1, 2018.3 The
Amendment Nos. 1, 2, and 3 is Federal Register. The Commission notes Commission has received no comment
consistent with the Act. Comments may that Amendment Nos. 1, 2, and 3 letters on the proposed rule change.
be submitted by any of the following provide clarifications and additional Section 19(b)(2) of the Act 4 provides
methods: information to the proposed rule that, within 45 days of the publication
change. The changes and additional of notice of the filing of a proposed rule
Electronic Comments
information in Amendment Nos. 1, 2, change, or within such longer period up
• Use the Commission’s internet and 3 assist the Commission in finding to 90 days as the Commission may
comment form (http://www.sec.gov/ that the proposal is consistent with the designate if it finds such longer period
rules/sro.shtml); or Act. Accordingly, the Commission finds to be appropriate and publishes its
• Send an email to rule-comments@ good cause, pursuant to Section 19(b)(2) reasons for so finding or as to which the
sec.gov. Please include File Number SR– of the Act,107 to approve the proposed self-regulatory organization consents,
NASDAQ–2018–070 on the subject line. rule change, as modified by Amendment the Commission shall either approve the
Paper Comments Nos. 1, 2, and 3, on an accelerated proposed rule change, disapprove the
basis.VI. proposed rule change, or institute
• Send paper comments in triplicate
proceedings to determine whether the
to Secretary, Securities and Exchange VI. Conclusion proposed rule change should be
Commission, 100 F Street NE,
It is therefore ordered, pursuant to disapproved. The 45th day after
Washington, DC 20549–1090.
Section 19(b)(2) of the Act,108 that the publication of the notice for this
All submissions should refer to File proposed rule change is November 15,
Number SR–NASDAQ–2018–070. This proposed rule change (SR–NASDAQ–
2018–070), as modified by Amendment 2018. The Commission is extending this
file number should be included on the 45-day time period.
subject line if email is used. To help the Nos. 1, 2, and 3, be, and it hereby is,
approved. The Commission finds that it is
Commission process and review your appropriate to designate a longer period
comments more efficiently, please use For the Commission, by the Division of within which to take action on the
only one method. The Commission will Trading and Markets, pursuant to delegated
proposed rule change so that it has
post all comments on the Commission’s authority.109
sufficient time to consider the proposed
internet website (http://www.sec.gov/ Eduardo A. Aleman,
rule change. Accordingly, the
rules/sro.shtml). Copies of the Assistant Secretary. Commission, pursuant to Section
submission, all subsequent [FR Doc. 2018–25093 Filed 11–16–18; 8:45 am] 19(b)(2) of the Act,5 designates
amendments, all written statements BILLING CODE P December 30, 2018, as the date by
with respect to the proposed rule
which the Commission shall either
change that are filed with the
approve or disapprove or institute
Commission, and all written SECURITIES AND EXCHANGE proceedings to determine whether to
communications relating to the COMMISSION disapprove the proposed rule change
proposed rule change between the
(File Number SR–NYSEArca–2018–67).
Commission and any person, other than [Release No. 34–84576; File No. SR–
those that may be withheld from the For the Commission, by the Division of
NYSEArca–2018–67] Trading and Markets, pursuant to delegated
public in accordance with the
authority.6
provisions of 5 U.S.C. 552, will be Self-Regulatory Organizations; NYSE
available for website viewing and Eduardo A. Aleman,
Arca, Inc.; Notice of Designation of a
printing in the Commission’s Public Longer Period for Commission Action Assistant Secretary.
Reference Room, 100 F Street NE, on Proposed Rule Change To Amend [FR Doc. 2018–25094 Filed 11–16–18; 8:45 am]
Washington, DC 20549, on official NYSE Arca Rule 5.2–E(j)(6) Relating to BILLING CODE 8011–01–P
business days between the hours of Equity Index-Linked Securities Listing
10:00 a.m. and 3:00 p.m. Copies of the Standards Set Forth in NYSE Arca Rule
filing also will be available for 5.2–E(j)(6)(B)(I) SECURITIES AND EXCHANGE
inspection and copying at the principal COMMISSION
office of the Exchange. All comments November 13, 2018.
[Investment Company Act Release No.
received will be posted without change. On September 10, 2018, NYSE Arca, 33295; 812–14920]
Persons submitting comments are Inc. (‘‘Exchange’’) filed with the
cautioned that we do not redact or edit Securities and Exchange Commission ABR Dynamic Funds, LLC, et al.
personal identifying information from (‘‘Commission’’), pursuant to Section November 14, 2018.
comment submissions. You should 19(b)(1) of the Securities Exchange Act
submit only information that you wish AGENCY: Securities and Exchange
of 1934 (‘‘Act’’) 1 and Rule 19b–4
to make available publicly. All Commission (‘‘Commission’’).
thereunder,2 a proposed rule change to
submissions should refer to File ACTION: Notice.
amend listing standards set forth in
Number SR–NASDAQ–2018–070 and NYSE Arca Rule 5.2–E (j)(6)(B)(I) Notice of an application for an order
should be submitted on or before relating to criteria applicable to under section 6(c) of the Investment
December 10, 2018. components of an index underlying an Company Act of 1940 (the ‘‘Act’’) for an
V. Accelerated Approval of Proposed issue of Equity Index-Linked Securities. exemption from sections 2(a)(32),
khammond on DSK30JT082PROD with NOTICES

Rule Change, as Modified by The proposed rule change was 5(a)(1), 22(d), and 22(e) of the Act and
Amendment Nos. 1, 2, and 3 published for comment in the Federal rule 22c–1 under the Act, under
The Commission finds good cause to 107 15 U.S.C. 78s(b)(2). 3 See Securities Exchange Act Release No. 84279
approve the proposed rule change, as 108 15 U.S.C. 78s(b)(2). (Sept. 25, 2018), 83 FR 49437.
modified by Amendment Nos. 1, 2, and 109 17 CFR 200.30–3(a)(12). 4 15 U.S.C. 78s(b)(2).

3 prior to the thirtieth day after the date 1 15 U.S.C. 78s(b)(1). 5 Id.

of publication of notice of the filing of 2 17 CFR 240.19b–4. 6 17 CFR 200.30–3(a)(31).

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Document Created: 2018-11-17 02:47:14
Document Modified: 2018-11-17 02:47:14
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice.
Dates		The application was filed on June 14, 2018, and amended on October 16, 2018 and November 8, 2018.
Contact		Barbara T. Heussler, Senior Counsel, at (202) 551-6990, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 58315