83 FR 64389 - Pacific Global ETF Trust and Cadence Capital Management LLC
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 83, Issue 240 (December 14, 2018)
Federal Register Volume 83, Issue 240 (December 14, 2018)
| Page Range | 64389-64391 | |
| FR Document | 2018-27128 |
[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)] [Notices] [Pages 64389-64391] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2018-27128] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 33320; 812-14933] Pacific Global ETF Trust and Cadence Capital Management LLC December 11, 2018. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice. ----------------------------------------------------------------------- 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) actively- managed series of certain open-end management investment companies (``Funds'') to issue shares redeemable in large aggregations only (``Creation Units''); (b) secondary market transactions in Fund shares to occur at negotiated market prices rather than at net asset value (``NAV''); (c) certain Funds to pay redemption proceeds, under certain circumstances, more than seven days after the tender of shares for redemption; (d) certain affiliated persons of a Fund to deposit securities into, and receive securities from, the Fund in connection with the purchase and redemption of Creation Units; (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the Funds (``Funds of Funds'') to acquire shares of the Funds; and (f) certain Funds (``Feeder Funds'') to create and redeem Creation Units in-kind in a master-feeder structure. Applicants: Pacific Global ETF Trust (``Trust''), a Delaware statutory trust that will be registered under the Act as an open-end management investment company with multiple series, and Cadence Capital Management LLC (``Initial Adviser''), a Delaware limited liability company registered as an investment adviser under the Investment Advisers Act of 1940. Filing Dates: The application was filed on July 24, 2018 and amended on November 21, 2018. Hearing or Notification of Hearing: An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may [[Page 64390]] 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 31, 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, 265 Franklin Street, 4th Floor, Boston, MA 02110-3113. FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior Counsel, at (202) 551-6879, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained via the Commission's website by searching for the file number, or for an applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090. Summary of the Application 1. Applicants request an order that would allow Funds to operate as actively-managed exchange traded funds (``ETFs'').\1\ Fund shares will be purchased and redeemed at their NAV in Creation Units only. All orders to purchase Creation Units and all redemption requests will be placed by or through an ``Authorized Participant,'' which will have signed a participant agreement with a broker-dealer registered under the Securities Exchange Act of 1934 (``Exchange Act'') (``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. --------------------------------------------------------------------------- \1\ Applicants request that the order apply to the Initial Fund, as well as to future series of the Trust and any other existing or future open-end management investment companies or series thereof (each, included in the term ``Fund''), each of which will operate as an actively-managed ETF. Any Fund will (a) be advised by the Initial Adviser or an entity controlling, controlled by, or under common control with the Initial Adviser (each of the foregoing and any successor thereto included in the term ``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. --------------------------------------------------------------------------- 2. Each Fund will consist of a portfolio of securities and other assets and investment positions (``Portfolio Instruments''). Each Fund will disclose on its website the identities and quantities of the Portfolio Instruments that will form the basis for the Fund's calculation of NAV at the end of the day. 3. Shares will be purchased and redeemed in Creation Units and generally on an in-kind basis. Except where the purchase or redemption will include cash under the limited circumstances specified in the application, purchasers will be required to purchase Creation Units by depositing specified instruments (``Deposit Instruments''), and shareholders redeeming their shares will receive specified instruments (``Redemption Instruments''). The Deposit Instruments and the Redemption Instruments will each correspond pro rata to the positions in the Fund's portfolio (including cash positions) except as specified in the application. 4. Because shares will not be individually redeemable, applicants request an exemption from section 5(a)(1) and section 2(a)(32) of the Act that would permit the Funds to register as open-end management investment companies and issue shares that are redeemable in Creation Units only. 5. Applicants also request an exemption from section 22(d) of the Act and rule 22c-1 under the Act as secondary market trading in shares will take place at negotiated prices, not at a current offering price described in a Fund's prospectus, and not at a price based on NAV. Applicants state that (a) secondary market trading in shares does not involve a Fund as a party and will not result in dilution of an investment in shares, and (b) to the extent different prices exist during a given trading day, or from day to day, such variances occur as a result of third-party market forces, such as supply and demand. Therefore, applicants assert that secondary market transactions in shares will not lead to discrimination or preferential treatment among purchasers. Finally, applicants represent that share market prices will be disciplined by arbitrage opportunities, which should prevent shares from trading at a material discount or premium from NAV. 6. With respect to Funds that hold non-U.S. Portfolio Instruments and that effect creations and redemptions of Creation Units in kind, applicants request relief from the requirement imposed by section 22(e) in order to allow such Funds to pay redemption proceeds within fifteen calendar days following the tender of Creation Units for redemption. Applicants assert that the requested relief would not be inconsistent with the spirit and intent of section 22(e) to prevent unreasonable, undisclosed or unforeseen delays in the actual payment of redemption proceeds. 7. Applicants request an exemption to permit Funds of Funds to acquire Fund shares beyond the limits of section 12(d)(1)(A) of the Act; and the Funds, and any principal underwriter for the Funds, and/or any broker or dealer registered under the 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 a person who is 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 Funds, solely by virtue of certain ownership interests, to effectuate purchases and redemptions in-kind. The deposit procedures for in-kind purchases of Creation Units and the redemption procedures for in-kind redemptions of Creation Units will be the same for all purchases and redemptions and Deposit Instruments and Redemption Instruments will be valued in the same manner as those Portfolio Instruments currently held by the Funds. Applicants also seek relief from the prohibitions on affiliated transactions in section 17(a) to permit a Fund to sell its shares to and redeem its shares from a Fund of Funds, and to engage in the accompanying in-kind transactions with the Fund of Funds.\2\ [[Page 64391]] 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. --------------------------------------------------------------------------- \2\ The requested relief would apply to direct sales of shares in Creation Units by a Fund to a Fund of Funds and redemptions of those shares. Applicants, moreover, are not seeking relief from section 17(a) for, and the requested relief will not apply to, transactions where a Fund could be deemed an Affiliated Person, or a Second-Tier Affiliate, of a Fund of Funds because an investment adviser to the Funds is also an investment adviser to a 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, Deputy Secretary. [FR Doc. 2018-27128 Filed 12-13-18; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices 64389
Rules 17h–1T and 17h–2T chart requires one hour and establishing SECURITIES AND EXCHANGE
Notice is hereby given that pursuant a system for complying with the risk COMMISSION
to the Paperwork Reduction Act of 1995 assessment rules requires three hours.
[Investment Company Act Release No.
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the Based on the reduction in the number 33320; 812–14933]
Securities and Exchange Commission of filers in recent years, the staff
(‘‘Commission’’) has submitted to the estimates there will be zero new Pacific Global ETF Trust and Cadence
Office of Management and Budget respondents, and thus, a corresponding Capital Management LLC
(‘‘OMB’’) a request for approval of estimated burden of zero hours for new
December 11, 2018.
extension of the previously approved respondents. Thus, the total compliance
collection of information provided for in AGENCY: Securities and Exchange
burden per year is approximately 6,840
Rules 17h–1T and 17h–2T (17 CFR Commission (‘‘Commission’’).
burden hours (2,850 hours + 3,990
240.17h–1T and 17 CFR 240.17h–2T), ACTION: Notice.
hours).
under the Securities Exchange Act of Notice of an application for an order
The retention period for the
1934 (15 U.S.C. 78a et seq.). under section 6(c) of the Investment
recordkeeping requirement for the
Rule 17h–1T requires a covered
information, reports and records Company Act of 1940 (the ‘‘Act’’) for an
broker-dealer to maintain and preserve
required under Rule 17h–1T is not less exemption from sections 2(a)(32),
records and other information
than three years. There is no specific 5(a)(1), 22(d), and 22(e) of the Act and
concerning certain entities that are
retention period or recordkeeping rule 22c–1 under the Act, under
associated with the broker-dealer. This
requirement for Rule 17h–2T. The sections 6(c) and 17(b) of the Act for an
requirement extends to the financial and
collection of information is mandatory. exemption from sections 17(a)(1) and
securities activities of the holding
All information obtained by the 17(a)(2) of the Act, and under section
company, affiliates and subsidiaries of
Commission pursuant to the provisions 12(d)(1)(J) for an exemption from
the broker-dealer that are reasonably
of Rules 17h–1T and 17h–2T from a sections 12(d)(1)(A) and 12(d)(1)(B) of
likely to have a material impact on the
the Act. The requested order would
financial or operational condition of the broker or dealer concerning a material
permit (a) actively-managed series of
broker-dealer. Rule 17h–2T requires a associated person is deemed
certain open-end management
covered broker-dealer to file with the confidential information for the investment companies (‘‘Funds’’) to
Commission quarterly reports and a purposes of section 24(b) of the issue shares redeemable in large
cumulative year-end report concerning Exchange Act. aggregations only (‘‘Creation Units’’); (b)
the information required to be An agency may not conduct or secondary market transactions in Fund
maintained and preserved under Rule
sponsor, and a person is not required to shares to occur at negotiated market
17h–1T.
respond to, a collection of information prices rather than at net asset value
The collection of information required
under the PRA unless it displays a (‘‘NAV’’); (c) certain Funds to pay
by Rules 17h–1T and 17h–2T,
currently valid OMB control number. redemption proceeds, under certain
collectively referred to as the ‘‘risk
The public may view background circumstances, more than seven days
assessment rules,’’ is necessary to
after the tender of shares for
enable the Commission to monitor the documentation for this information
redemption; (d) certain affiliated
activities of a broker-dealer affiliate collection at the following website:
persons of a Fund to deposit securities
whose business activities are reasonably www.reginfo.gov. Comments should be into, and receive securities from, the
likely to have a material impact on the directed to: (i) Desk Officer for the Fund in connection with the purchase
financial or operational condition of the Securities and Exchange Commission, and redemption of Creation Units; (e)
broker-dealer. Without this information, Office of Information and Regulatory certain registered management
the Commission would be unable to Affairs, Office of Management and investment companies and unit
assess the potentially damaging impact Budget, Room 10102, New Executive investment trusts outside of the same
of the affiliate’s activities on the broker- Office Building, Washington, DC 20503, group of investment companies as the
dealer. or by sending an email to: Funds (‘‘Funds of Funds’’) to acquire
There are currently 285 respondents Lindsay.M.Abate@omb.eop.gov; and (ii) shares of the Funds; and (f) certain
that must comply with Rules 17h–1T Charles Riddle, Acting Director/Chief Funds (‘‘Feeder Funds’’) to create and
and 17h–2T. Each of these 285
Information Officer, Securities and redeem Creation Units in-kind in a
respondents are estimated to require 10
Exchange Commission, c/o Candace master-feeder structure.
hours per year to maintain the records
required under Rule 17h–1T, for an Kenner, 100 F Street NE, Washington, APPLICANTS: Pacific Global ETF Trust
aggregate estimated annual burden of DC 20549, or by sending an email to: (‘‘Trust’’), a Delaware statutory trust that
2,850 hours (285 respondents × 10 PRA_Mailbox@sec.gov. Comments must will be registered under the Act as an
hours). In addition, each of these 285 be submitted to OMB within 30 days of open-end management investment
respondents must make five annual this notice. company with multiple series, and
responses under Rule 17h–2T. These Dated: December 10, 2018.
Cadence Capital Management LLC
five responses are estimated to require (‘‘Initial Adviser’’), a Delaware limited
Eduardo A. Aleman, liability company registered as an
14 hours per respondent per year for an Deputy Secretary.
aggregate estimated annual burden of investment adviser under the
3,990 hours (285 respondents × 14
[FR Doc. 2018–27091 Filed 12–13–18; 8:45 am] Investment Advisers Act of 1940.
amozie on DSK3GDR082PROD with NOTICES1
hours). BILLING CODE 8011–01–P FILING DATES: The application was filed
In addition, new respondents must on July 24, 2018 and amended on
draft an organizational chart required November 21, 2018.
under Rule 17h–1T and establish a HEARING OR NOTIFICATION OF HEARING: An
system for complying with the risk order granting the requested relief will
assessment rules. The staff estimates be issued unless the Commission orders
that drafting the required organizational a hearing. Interested persons may
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![Federal Register / Vol. 83, No. 240 / Friday, December 14, 2018 / Notices 64391
The purchase of Creation Units by a SECURITIES AND EXCHANGE with effect from the beginning of the
Fund of Funds directly from a Fund will COMMISSION calendar year commencing on January 1,
be accomplished in accordance with the 2019.
[Release No. 34–84775; File No. SR–NYSE– The annual fee set forth in Section
policies of the Fund of Funds and will 2018–57]
be based on the NAVs of the Funds. 902.03 of the Manual will increase from
Self-Regulatory Organizations; New $0.00108 per share to $0.0011 per share
9. Applicants also request relief to for each of the following: A primary
permit a Feeder Fund to acquire shares York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of class of common shares (including
of another registered investment Equity Investment Tracking Stocks);
company managed by the Adviser Proposed Rule Change To Amend
Certain of Its Listing Fees each additional class of common shares
having substantially the same (including tracking stock), a primary
investment objectives as the Feeder December 10, 2018. class of preferred stock (if no class of
Fund (‘‘Master Fund’’) beyond the Pursuant to Section 19(b)(1) 1 of the common shares is listed); each
limitations in section 12(d)(1)(A) and Securities Exchange Act of 1934 (the additional class of preferred stock
permit the Master Fund, and any ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 (whether the primary class is common
principal underwriter for the Master notice is hereby given that, on or preferred stock); and each class of
Fund, to sell shares of the Master Fund November 29, 2018, New York Stock warrants. In addition, the minimum
to the Feeder Fund beyond the Exchange LLC (‘‘NYSE’’ or the annual fee will be increased from
limitations in section 12(d)(1)(B). ‘‘Exchange’’) filed with the Securities $65,000 to $68,000 for each of (i) a
and Exchange Commission (the primary class of common shares
10. Section 6(c) of the Act permits the ‘‘Commission’’) the proposed rule (including Equity Investment Tracking
Commission to exempt any persons or change as described in Items I, II, and Stocks) and (ii) a primary class of
transactions from any provision of the III below, which Items have been preferred stock (if no class of common
Act if such exemption is necessary or prepared by the self-regulatory shares is listed).
appropriate in the public interest and organization. The Commission is The Exchange proposes to amend the
consistent with the protection of publishing this notice to solicit annual fee schedule for structured
investors and the purposes fairly comments on the proposed rule change products set forth in Section 902.05 of
intended by the policy and provisions of from interested persons. the Manual and for short term securities
the Act. Section 12(d)(1)(J) of the Act set forth in Section 902.06. In each case,
I. Self-Regulatory Organization’s
provides that the Commission may the annual fee per share will increase
Statement of the Terms of Substance of
exempt any person, security, or from $0.00108 to $0.0011 per share. The
the Proposed Rule Change
transaction, or any class or classes of minimum annual fee will increase from
persons, securities, or transactions, from The Exchange proposes to amend $25,000 to $35,000 for securities listed
any provision of section 12(d)(1) if the certain of its listing fees. The proposed under Sections 902.05 and 902.06
rule change is available on the (except for warrants to purchase equity
exemption is consistent with the public
Exchange’s website at www.nyse.com, at securities, which will remain $5,000). In
interest and the protection of investors.
the principal office of the Exchange, and addition, the Exchange proposes to
Section 17(b) of the Act authorizes the at the Commission’s Public Reference amend the provision in Section 902.02
Commission to grant an order Room. relating to the $500,000 Total Maximum
permitting a transaction otherwise
II. Self-Regulatory Organization’s Fee by including annual fees paid for all
prohibited by section 17(a) if it finds structured products in calculating the
that (a) the terms of the proposed Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Total Maximum Fee. The Exchange
transaction are fair and reasonable and notes that retail debt securities are
do not involve overreaching on the part Change
already included in the Total Maximum
of any person concerned; (b) the In its filing with the Commission, the Fee calculation. Historically many listed
proposed transaction is consistent with self-regulatory organization included structured products were financial
the policies of each registered statements concerning the purpose of, products issued by banks and other
investment company involved; and (c) and basis for, the proposed rule change financial institutions so there was a
the proposed transaction is consistent and discussed any comments it received reasonable basis for excluding them
with the general purposes of the Act. on the proposed rule change. The text from the benefits of the Total Maximum
of those statements may be examined at Fee provision. Today, however, most
For the Commission, by the Division of the places specified in Item IV below.
Investment Management, under delegated
structured products listed on the
The Exchange has prepared summaries, Exchange are issued by listed
authority.
set forth in sections A, B, and C below, companies for similar financing reasons
Eduardo A. Aleman, of the most significant parts of such to those for which they issue retail debt,
Deputy Secretary. statements. so it is reasonable to treat them the same
[FR Doc. 2018–27128 Filed 12–13–18; 8:45 am]
A. Self-Regulatory Organization’s for purposes of the Total Maximum Fee
BILLING CODE 8011–01–P Statement of the Purpose of, and the calculation.
Statutory Basis for, the Proposed Rule The Exchange proposes to make an
adjustment to the Investment
Change
Management Entity Group Fee Discount
1. Purpose set forth in Section 902.02 of the
amozie on DSK3GDR082PROD with NOTICES1
The Exchange proposes to amend Manual. The Investment Management
certain of its listing fees set forth in Entity Group Fee Discount is currently
for, and the requested relief will not apply to,
Chapter 9 of the Manual, in each case based on all annual and listing fees paid
transactions where a Fund could be deemed an
Affiliated Person, or a Second-Tier Affiliate, of a
by the Investment Management Entity
Fund of Funds because an investment adviser to the 1 15 U.S.C. 78s(b)(1). and its Eligible Portfolio Companies in
Funds is also an investment adviser to a Fund of 2 15 U.S.C. 78a. the applicable calendar year. The
Funds. 3 17 CFR 240.19b–4. Exchange proposes to amend the
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Document Created: 2018-12-14 03:49:59
Document Modified: 2018-12-14 03:49:59
| 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 July 24, 2018 and amended on November 21, 2018. | |
| Contact | Christine Y. Greenlees, Senior Counsel, at (202) 551-6879, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office). | |
| FR Citation | 83 FR 64389 |
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