12374 Federal Register / Vol. 76, No. 44 / Monday, March 7, 2011 / Notices 

1All entities that currently intend to rely on the 

order are named as applicants. Any other entity that 

relies on the order in the future will comply with 

the terms and conditions of the application. An 

Investing Fund (as defined below) may rely on the 

order only to invest in Funds and not in any other 

registered investment company. Each Fund will 

comply with the disclosure requirements adopted 

by the Commission in Investment Company Act 

Release No. 28584 (Jan. 13, 2009). 

2Neither the Initial Funds nor any Future Fund 

will invest in options contracts, futures contracts or 

swap agreements. 

3 Depositary Receipts are typically issued by a 

financial institution, a ‘‘depositary’’, and evidence 

ownership in a security or pool of securities that 

have been deposited with the depositary. No 

affiliated persons of applicants will serve as the 

depositary bank for any Depositary Receipts held by 

a Fund. 

Environmental Review Branch A, 

Division of Waste Management and 

Environmental Protection, Office of 

Federal and State Materials and 

Environmental Management Programs, 

U.S. Nuclear Regulatory Commission, 

Rockville, Maryland 20852. Telephone: 

301–415–7694; fax number: 301–415– 

5369; e-mail: Johari.Moore@nrc.gov. 

Dated at Rockville, Maryland, this 1st day 

of March 2011. 

For the Nuclear Regulatory Commission. 

Diana Diaz-Toro, 

Acting Deputy Director, Environmental 

Protection and Performance Assessment 

Directorate, Division of Waste Management 

and Environmental Protection, Office of 

Federal and State Materials and 

Environmental Management Programs. 

[FR Doc. 2011–5058 Filed 3–4–11; 8:45 am] 

BILLING CODE 7590–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

29591; 812–13759] 

Eaton Vance Management, et al.; 

Notice of Application 

March 1, 2011. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 6(c) of the 

Investment Company Act of 1940 

(‘‘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 

(a)(2) of the Act, and under section 

12(d)(1)(J) of the Act for an exemption 

from sections 12(d)(1)(A) and (B) of the 

Act. 

APPLICANTS: Eaton Vance Management 

(‘‘EVM’’), Eaton Vance ETF Trust (the 

‘‘Trust’’) and Foreside Fund Services, 

LLC. 

SUMMARY OF APPLICATION: Applicants 

request an order that permits: (a) Series 

of certain actively managed open-end 

management investment companies to 

issue shares (‘‘Shares’’) redeemable in 

large aggregations only (‘‘Creation 

Units’’); (b) secondary market 

transactions in Shares to occur at 

negotiated market prices; (c) certain 

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days from the tender of Shares for 

redemption; (d) certain affiliated 

persons of the series to deposit 

securities into, and receive securities 

from, the series 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 series to acquire Shares. 

DATES: FILING DATES: The application 

was filed on March 5, 2010, and 

amended on August 10, 2010 and 

February 25, 2011. 

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 March 28, 2011, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, 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: EVM and the Trust, 

Two International Place, Boston, MA 

02110; Foreside Fund Services, LLC, 

Three Canal Plaza, Suite 100, Portland, 

ME 04101. 

FOR FURTHER INFORMATION CONTACT: 

Barbara T. Heussler, Senior Counsel, at 

(202) 551–6990 or Jennifer L. Sawin, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Office of Investment Company 

Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site 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. 

Applicants’ Representations 

1. The Trust will be registered as an 

open-end management investment 

company under the Act and is a 

statutory trust organized under the laws 

of Delaware. The Trust will initially 

offer five actively-managed investment 

series: Eaton Vance Enhanced Short 

Maturity ETF, Eaton Vance Government 

Limited Maturity ETF, Eaton Vance 

Intermediate Municipal Bond ETF, 

Eaton Vance Prime Limited Maturity 

ETF and Eaton Vance Short Term 

Municipal Bond ETF (together, the 

‘‘Initial Funds’’). The investment 

objectives of Eaton Vance Enhanced 

Short Maturity ETF, Eaton Vance 

Government Limited Maturity ETF and 

Eaton Vance Prime Limited Maturity 

ETF will be to seek maximum current 

income, consistent with preservation of 

capital and daily liquidity. The 

investment objectives of Eaton Vance 

Intermediate Municipal Bond ETF and 

Eaton Vance Short Term Municipal 

Bond ETF will be to seek attractive taxexempt income, consistent with 

preservation of capital. 

2. Applicants request that the order 

apply to the Initial Funds and any 

future series of the Trust or of other 

open-end management companies that 

may utilize active management 

investment strategies (‘‘Future Funds’’). 

Any Future Fund will (a) advised by 

EVM or an entity controlling, controlled 

by, or under common control with EVM 

(together with EVM, an ‘‘Advisor’’), and 

(b) comply with the terms and 

conditions of the application.1 The 

Initial Funds and Future Funds together 

are the ‘‘Funds’’. Each Fund will consist 

of a portfolio of securities (including 

fixed income securities and/or equity 

securities) and/or currencies (‘‘Portfolio 

Instruments’’).2 Funds may also invest 

in ‘‘Depositary Receipts’’. A Fund will 

not invest in any Depositary Receipts 

that the Advisor deems to be illiquid or 

for which pricing information is not 

readily available.3 Each Fund will 

operate as an actively managed 

exchange-traded fund (‘‘ETF’’). The 

Future Funds might include one or 

more ETFs which invest in other openend and/or closed-end investment 

companies and/or ETFs. 

3. EVM, a Massachusetts corporation, 

will be the investment advisor to the 

Initial Funds. Each Advisor is or will be 

registered as an ‘‘investment adviser’’ 

under the Investment Advisers Act of 

1940 (the ‘‘Advisers Act’’). The Advisor 

may retain investment advisers as subadvisers in connection with the Funds 


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4Applicants state that in determining whether a 

particular Fund will be selling or redeeming 

Creation Units on a cash or in-kind basis, the key 

consideration will be the benefit which would 

accrue to Fund investors. In many cases, 

particularly to the extent the Deposit Instruments 

are less liquid, investors may benefit by the use of 

all cash creations because the Advisor would 

execute trades rather than Market Makers (as 

defined below). Applicants believe that the Advisor 

may be able to obtain better execution in bond 

transactions due to its size, experience and 

potentially stronger relationships in the fixed 

income markets. With respect to redemptions, tax 

considerations may warrant in-kind redemptions 

which do not result in a taxable event for the Fund. 

5On each Business Day (as defined below), prior 

to the opening of trading on the Stock Exchange (as 

defined below), the estimated All-Cash Payment for 

each Fund or a list of the required Deposit 

Instruments to be included in the Creation Deposit 

for each Fund, as applicable, the previous day’s 

Cash Amount, and the estimated Cash Amount for 

the current day, will be made available. The Stock 

Exchange will disseminate every 15 seconds 

throughout the trading day through the facilities of 

the Consolidated Tape Association an amount 

representing, on a per Share basis, the sum of the 

current value of the Portfolio Instruments. 

6Where a Fund permits an in-kind purchaser to 

substitute cash in lieu of depositing one or more 

Deposit Instruments, the purchaser may be assessed 

a higher Transaction Fee to offset the cost to the 

Fund of buying those particular Deposit 

Instruments. 

7 If Shares are listed on NASDAQ, no Specialist 

will be contractually obligated to make a market in 

Shares. Rather, under NASDAQ’s listing 

requirements, two or more Market Makers will be 

registered in Shares and required to make a 

continuous, two-sided market or face regulatory 

sanctions. 

8Shares will be registered in book-entry form 

only. DTC or its nominee will be the record or 

registered owner of all outstanding Shares. 

Beneficial ownership of Shares will be shown on 

the records of DTC or DTC Participants. 

9To the extent consistent with other investment 

limitations, the Funds may invest in mortgage- or 

asset-backed securities, including a ‘‘to-beannounced transaction’’ or ‘‘TBA Transactions’’. 

Each Fund intends to substitute a cash-in-lieu 

amount to replace any Deposit Instrument or 

Redemption Instrument that is a TBA Transaction. 

A TBA Transaction is a method of trading mortgagebacked securities. In a TBA Transaction, the buyer 

and seller agree upon general trade parameters such 

as agency, settlement date, par amount and price. 

The actual pools delivered generally are determined 

two days prior to the settlement date. The amount 

of substituted cash in the case of TBA Transactions 

will be equivalent to the value of the TBA 

Transaction listed as a Deposit Instrument or 

Redemption Instrument. 

10 In accepting Deposit Instruments and satisfying 

redemptions with Redemption Instruments that are 

restricted securities eligible for resale pursuant to 

rule 144A under the Securities Act, the Funds will 

comply with the conditions of Rule 144A. 

(each, a ‘‘Subadvisor’’). Any Subadvisor 

will be registered under the Advisers 

Act. A registered broker-dealer under 

the Securities Exchange Act of 1934 

(‘‘Exchange Act’’), which may be an 

affiliate of the Advisor, will act as the 

distributor and principal underwriter of 

the Funds (‘‘Distributor’’). Foreside Fund 

Services, LLC will serve as the initial 

Distributor. 

4. Applicants anticipate that a 

Creation Unit will consist of at least 

50,000 Shares and that the price of a 

Share will range from $20 to $200. All 

orders to purchase Creation Units must 

be placed with the Distributor by or 

through a party that has entered into a 

participant agreement with the 

Distributor and the transfer agent of the 

Trust (‘‘Authorized Participant’’) with 

respect to the creation and redemption 

of Creation Units. An Authorized 

Participant is either: (a) A broker or 

dealer registered under the Exchange 

Act (‘‘Broker’’) or other participant in the 

Continuous Net Settlement System of 

the National Securities Clearing 

Corporation, a clearing agency 

registered with the Commission and 

affiliated with the Depository Trust 

Company (‘‘DTC’’), or (b) a participant in 

the DTC (such participant, ‘‘DTC 

Participant’’). The Initial Funds and 

certain Future Funds will generally be 

purchased entirely for cash and will 

generally be redeemed in-kind for 

specified Portfolio Instruments 

(‘‘Redemption Instruments’’). However, 

the Trust reserves the right to accept 

and deliver Creation Units of the Initial 

Funds and any Future Fund by means 

of an in-kind tender of specified 

instruments (‘‘Deposit Instruments’’) and 

to permit cash redemptions.4 In-kind 

purchases and in-kind redemptions will 

be accompanied by an amount of cash 

specified by the Advisor (‘‘Cash 

Amount’’). The Deposit Instruments and 

the Cash Amount collectively are 

referred to as the ‘‘Creation Deposit.’’ 

The Cash Amount is a cash payment 

designed to ensure that the net asset 

value of a Creation Deposit is identical 

to the net asset value of the Creation 

Unit it is used to purchase. The Trust 

may permit, in its discretion, with 

respect to one or more Funds, under 

certain circumstances, an in-kind 

purchaser or redeemer to substitute cash 

in lieu of depositing or receiving some 

or all of the requisite Deposit or 

Redemption Instruments.5

5. An investor purchasing or 

redeeming a Creation Unit from a Fund 

may be charged a fee (‘‘Transaction Fee’’) 

to protect existing shareholders of the 

Funds from the dilutive costs associated 

with the purchase and redemption of 

Creation Units.6 All orders to purchase 

Creation Units will be placed with the 

Distributor and the Distributor will 

transmit all purchase orders to the 

relevant Fund. The Distributor will be 

responsible for delivering a prospectus 

(‘‘Prospectus’’) to those persons 

purchasing Creation Units and for 

maintaining records of both the orders 

placed with it and the confirmations of 

acceptance furnished by it. 

6. Shares will be listed and traded at 

negotiated prices on a national 

securities exchange as defined in 

section 2(a)(26) of the Act (the ‘‘Stock 

Exchange’’) and traded in the secondary 

market. Applicants expect that Stock 

Exchange specialists (‘‘Specialists’’) or 

market makers (‘‘Market Makers’’) will 

be assigned to Shares. The price of 

Shares trading on the Stock Exchange 

will be based on a current bid/offer 

market. Transactions involving the 

purchases and sales of Shares on the 

Stock Exchange will be subject to 

customary brokerage commissions and 

charges. 

7. Applicants expect that purchasers 

of Creation Units will include 

arbitrageurs. Specialists or Market 

Makers, acting in their unique role to 

provide a fair and orderly secondary 

market for Shares, also may purchase 

Creation Units for use in their own 

market making activities.7 Applicants 

expect that secondary market 

purchasers of Shares will include both 

institutional and retail investors.8

Applicants expect that arbitrage 

opportunities created by the ability to 

continually purchase or redeem 

Creation Units at their net asset value 

should ensure that the Shares will not 

trade at a material discount or premium 

in relation to net asset value per 

common share (‘‘NAV’’). 

8. Shares may be redeemed only if 

tendered in Creation Units. Redemption 

requests must be placed by or through 

an Authorized Participant. Applicants 

currently contemplate that Creation 

Units of the Initial Funds will be 

redeemed principally in-kind (together 

with a Cash Amount).9 To the extent a 

Fund utilizes in-kind redemptions, 

Shares in Creation Units will be 

redeemable on any Business Day, which 

is defined to include any day that the 

Trust is open for business as required by 

section 22(e) of the Act, for the 

Redemption Instruments, which will be 

the same as the Deposit Instruments 

deposited by investors purchasing 

Creation Units on the same day, except 

for the limited exceptions noted below. 

The redeeming investor will also 

usually pay to the Fund a Transaction 

Fee. 

9. Applicants state that in accepting 

Deposit Instruments and satisfying 

redemptions with Redemption 

Instruments, the Funds must comply 

with the federal securities laws, 

including that the Deposit Instruments 

and Redemption Instruments are sold in 

transactions that would be exempt from 

registration under the Securities Act.10

To the extent in-kind purchases and 

redemptions are utilized, the Deposit 


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11A tradeable round lot for an equity security will 

be the standard unit of trading in that particular 

type of security in its primary market. 

12Applicants note that under accounting 

procedures followed by the Funds, trades made on 

the prior Business Day (‘‘T’’) will be booked and 

reflected in NAV on the current Business Day 

(‘‘T+1’’). Accordingly, the Funds will be able to 

disclose at the beginning of the Business Day the 

portfolio that will form the basis for the NAV 

calculation at the end of the Business Day. 

Instruments and Redemption 

Instruments will correspond pro rata to 

the Fund portfolio, except that there 

may be minor differences between a 

basket of Deposit Instruments or 

Redemption Instruments and a true pro 

rata slice of a Fund’s portfolio solely 

when (A) it is impossible to break up 

bonds beyond certain minimum sizes 

needed for transfer and settlement or, 

(B) in the case of equity securities, 

rounding is necessary to eliminate 

fractional shares or lots that are not 

tradeable round lots.11

10. Neither the Trust nor any Fund 

will be marketed or otherwise held out 

as a ‘‘mutual fund’’. Instead, each Fund 

will be marketed as an ‘‘activelymanaged exchange-traded fund.’’ Any 

advertising material where features of 

obtaining, buying or selling Creation 

Units are described or where there is 

reference to redeemability will 

prominently disclose that Shares are not 

individually redeemable and that 

owners of Shares may acquire Shares 

from a Fund and tender those Shares for 

redemption to a Fund in Creation Units 

only. 

11. The Funds’ Web site, which will 

be publicly available prior to the public 

offering of Shares, will include the 

Prospectus and additional quantitative 

information updated on a daily basis, 

including, on a per Share basis for each 

Fund, the prior Business Day’s NAV and 

the market closing price or mid-point of 

the bid/ask spread at the time of the 

calculation of such NAV (‘‘Bid/Ask 

Price’’), and a calculation of the 

premium or discount of the market 

closing price or Bid/Ask Price against 

such NAV. On each Business Day, 

before commencement of trading in 

Shares on the Stock Exchange, the Fund 

will disclose on its Web site the 

identities and quantities of the Portfolio 

Instruments and other assets held by the 

Fund that will form the basis for the 

Fund’s calculation of NAV at the end of 

the Business Day.12

Applicants’ Legal Analysis 

1. Applicants request an order under 

section 6(c) of 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) of the Act for 

an exemption from sections 12(d)(1)(A) 

and (B) of the Act. 

2. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security or transaction, or any 

class of persons, securities or 

transactions, from any provisions of the 

Act, if and to the extent that 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 17(b) 

of the Act authorizes the Commission to 

exempt a proposed transaction from 

section 17(a) of the Act if evidence 

establishes that the terms of the 

transaction, including the consideration 

to be paid or received, are reasonable 

and fair and do not involve 

overreaching on the part of any person 

concerned, and the proposed 

transaction is consistent with the 

policies of the registered investment 

company and the general 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. 

Sections 5(a)(1) and 2(a)(32) of the Act 

3. Section 5(a)(1) of the Act defines an 

‘‘open-end company’’ as a management 

investment company that is offering for 

sale or has outstanding any redeemable 

security of which it is the issuer. 

Section 2(a)(32) of the Act defines a 

redeemable security as any security, 

other than short-term paper, under the 

terms of which the holder, upon its 

presentation to the issuer, is entitled to 

receive approximately a proportionate 

share of the issuer’s current net assets, 

or the cash equivalent. Because Shares 

will not be individually redeemable, 

applicants request an order that would 

permit the Trust to register as an openend management investment company 

and redeem Shares in Creation Units 

only. Applicants state that investors 

may purchase Shares in Creation Units 

from each Fund and redeem Creation 

Units from each Fund. Applicants 

further state that because the market 

price of Creation Units will be 

disciplined by arbitrage opportunities, 

investors should be able to sell Shares 

in the secondary market at prices that 

do not vary substantially from their 

NAV. 

Section 22(d) of the Act and Rule 

22c–1 Under the Act 

4. Section 22(d) of the Act, among 

other things, prohibits a dealer from 

selling a redeemable security that is 

currently being offered to the public by 

or through a principal underwriter, 

except at a current public offering price 

described in the prospectus. Rule 22c– 

1 under the Act generally requires that 

a dealer selling, redeeming, or 

repurchasing a redeemable security do 

so only at a price based on its NAV. 

Applicants state that secondary market 

trading in Shares will take place at 

negotiated prices, not at a current 

offering price described in the 

Prospectus, and not at a price based on 

NAV. Thus, purchases and sales of 

Shares in the secondary market will not 

comply with section 22(d) of the Act 

and rule 22c–1 under the Act. 

Applicants request an exemption under 

section 6(c) from these provisions. 

5. Applicants assert that the concerns 

sought to be addressed by section 22(d) 

of the Act and rule 22c–1 under the Act 

with respect to pricing are equally 

satisfied by the proposed method of 

pricing Shares. Applicants maintain that 

while there is little legislative history 

regarding section 22(d), its provisions, 

as well as those of rule 22c–1, appear to 

have been designed to (a) prevent 

dilution caused by certain risklesstrading schemes by principal 

underwriters and contract dealers, 

(b) prevent unjust discrimination or 

preferential treatment among buyers 

resulting from sales at different prices, 

and (c) assure an orderly distribution 

system of investment company shares 

by eliminating price competition from 

Brokers offering shares at less than the 

published sales price and repurchasing 

shares at more than the published 

redemption price. 

6. Applicants believe that none of 

these purposes will be thwarted by 

permitting Shares to trade in the 

secondary market at negotiated prices. 

Applicants state that (a) secondary 

market trading in Shares does not 

involve the Funds as parties and cannot 

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 

contend that the proposed distribution 

system will be orderly because arbitrage 

activity should ensure that the 


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13Rule 15c6–1 under the Exchange Act requires 

that most securities transactions be settled within 

three business days of the trade date. Applicants 

acknowledge that no relief obtained from the 

requirements of section 22(e) will affect any 

obligations that they have under rule 15c6–1. 

14Applicants anticipate that there may be 

Investing Funds that are not part of the same group 

of investment companies as the Funds but may be 

subadvised by an Advisor. 

15An ‘‘Investing Fund Affiliate’’ is defined as the 

Investing Fund Advisor, Investing Fund SubAdvisor, Sponsor, promoter and principal 

underwriter of an Investing Fund, and any person 

controlling, controlled by or under common control 

with any of these entities. A ‘‘Fund Affiliate’’ is 

defined as an investment adviser, promoter or 

principal underwriter of a Fund and any person 

controlling, controlled by or under common control 

with any of these entities. 

difference between the market price of 

Shares and their NAV remains narrow. 

Section 22(e) of the Act 

7. Section 22(e) of the Act generally 

prohibits a registered investment 

company from suspending the right of 

redemption or postponing the date of 

payment of redemption proceeds for 

more than seven days after the tender of 

a security for redemption. Applicants 

observe that settlement of redemptions 

of Creation Units of Funds holding nonU.S. investments (‘‘Global Funds’’) is 

contingent not only on the settlement 

cycle of the U.S. securities markets but 

also on the delivery cycles present in 

foreign markets in which those Funds 

invest. Applicants have been advised 

that, under certain circumstances, the 

delivery cycles for transferring Portfolio 

Instruments to redeeming investors, 

coupled with local market holiday 

schedules, will require a delivery 

process of up to 12 calendar days. 

Applicants therefore request relief from 

section 22(e) in order to provide 

payment or satisfaction of redemptions 

within the maximum number of 

calendar days required for such 

payment or satisfaction in the principal 

local markets where transactions in the 

Portfolio Instruments of each Global 

Fund customarily clear and settle, but in 

all cases no later than 12 calendar days 

following the tender of a Creation Unit. 

With respect to Future Funds that are 

Global Funds, applicants seek the same 

relief from section 22(e) only to the 

extent that circumstances exist similar 

to those described in the application. 

Except as disclosed in the SAI for a 

Fund, deliveries of redemption proceeds 

for Global Funds are expected to be 

made within seven days.13

8. Applicants submit that Congress 

adopted section 22(e) to prevent 

unreasonable, undisclosed or 

unforeseen delays in the actual payment 

of redemption proceeds. Applicants 

state that allowing redemption 

payments for Creation Units of a Fund 

to be made within a maximum of 12 

calendar days would not be inconsistent 

with the spirit and intent of section 

22(e). Applicants state the SAI will 

disclose those local holidays (over the 

period of at least one year following the 

date of the SAI), if any, that are 

expected to prevent the delivery of 

redemption proceeds in seven calendar 

days and the maximum number of days 

needed to deliver the proceeds for each 

affected Global Fund. 

9. Applicants are not seeking relief 

from section 22(e) with respect to Global 

Funds that do not effect creations or 

redemptions in-kind. 

Section 12(d)(1) of the Act 

10. Section 12(d)(1)(A) of the Act 

prohibits a registered investment 

company from acquiring shares of an 

investment company if the securities 

represent more than 3% of the total 

outstanding voting stock of the acquired 

company, more than 5% of the total 

assets of the acquiring company, or, 

together with the securities of any other 

investment companies, more than 10% 

of the total assets of the acquiring 

company. Section 12(d)(1)(B) of the Act 

prohibits a registered open-end 

investment company, its principal 

underwriter, or any other broker or 

dealer from selling its shares to another 

investment company if the sale will 

cause the acquiring company to own 

more than 3% of the acquired 

company’s voting stock, or if the sale 

will cause more than 10% of the 

acquired company’s voting stock to be 

owned by investment companies 

generally. 

11. Applicants request relief to permit 

Investing Funds (as defined below) to 

acquire Shares in excess of the limits in 

section 12(d)(l)(A) of the Act and to 

permit the Funds, their principal 

underwriters and any Brokers to sell 

Shares to Investing Funds in excess of 

the limits in section 12(d)(l)(B) of the 

Act. Applicants request that these 

exemptions apply to: (a) Any Fund that 

is currently or subsequently part of the 

same ‘‘group of investment companies’’ 

as the Initial Funds within the meaning 

of section 12(d)(1)(G)(ii) of the Act as 

well as any principal underwriter for 

the Funds and any Brokers selling 

Shares of a Fund to an Investing Fund; 

and (b) each management investment 

company or unit investment trust 

registered under the Act that is not part 

of the same ‘‘group of investment 

companies’’ as the Funds and that enters 

into a FOF Participation Agreement (as 

defined below) with a Fund (such 

management investment companies are 

referred to herein as ‘‘Investing 

Management Companies,’’ such unit 

investment trusts are referred to herein 

as ‘‘Investing Trusts,’’ and Investing 

Management Companies and Investing 

Trusts together are referred to herein as 

‘‘Investing Funds’’).14 Investing Funds 

do not include the Funds. Each 

Investing Trust will have a sponsor 

(‘‘Sponsor’’) and each Investing 

Management Company will have an 

investment adviser within the meaning 

of section 2(a)(20)(A) of the Act 

(‘‘Investing Fund Advisor’’) that does not 

control, is not controlled by or under 

common control with the Advisor. Each 

Investing Management Company may 

also have one or more investment 

advisers within the meaning of section 

2(a)(20)(B) of the Act (each, an 

‘‘Investing Fund Sub-Advisor’’). Each 

Investing Fund Advisor and any 

Investing Fund Sub-Advisor will be 

registered as an investment adviser 

under the Advisers Act. 

12. Applicants submit that the 

proposed conditions to the requested 

relief are designed to address the 

concerns underlying the limits in 

section 12(d)(1), which include 

concerns about undue influence, 

excessive layering of fees and overly 

complex structures. 

13. Applicants propose a condition to 

prohibit an Investing Fund or Investing 

Fund Affiliate 15 from causing an 

investment by an Investing Fund in a 

Fund to influence the terms of services 

or transactions between an Investing 

Fund or an Investing Fund Affiliate and 

the Fund or Fund Affiliate. Applicants 

propose a condition to limit the ability 

of the Investing Fund Advisor, or 

Sponsor, any person controlling, 

controlled by or under common control 

with such Advisor or Sponsor, and any 

investment company or issuer that 

would be an investment company but 

for sections 3(c)(l) or 3(c)(7) of the Act 

that is advised or sponsored by the 

Investing Fund Advisor, the Sponsor, or 

any person controlling, controlled by, or 

under common control with such 

Advisor or Sponsor (‘‘Investing Fund’s 

Advisory Group’’) from (individually or 

in the aggregate) controlling a Fund 

within the meaning of section 2(a)(9) of 

the Act. The same prohibition would 

apply to any Investing Fund SubAdvisor, any person controlling, 

controlled by, or under common control 

with the Investing Fund Sub-Advisor, 

and any investment company or issuer 

that would be an investment company 

but for sections 3(c)(l) or 3(c)(7) of the 

Act (or portion of such investment 

company or issuer) advised or 


srobinson on DSKHWCL6B1PROD with NOTICES
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16Any references to NASD Conduct Rule 2830 

include any successor or replacement rule to NASD 

Conduct Rule that may be adopted by FINRA. 

17Applicants 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 an affiliated person of an 

affiliated person, of an Investing Fund because an 

investment adviser to the Funds is also an 

investment adviser to an Investing Fund. 

18Applicants expect most Investing Funds will 

purchase Shares in the secondary market and will 

not purchase Creation Units directly from a Fund. 

To the extent that purchases and sales of Shares 

occur in the secondary market and not through 

principal transactions directly between an Investing 

Fund and a Fund, relief from section 17(a) would 

not be necessary. However, the requested relief 

would apply to direct sales of Shares in Creation 

Units by a Fund to an Investing Fund and 

redemptions of those Shares. The requested relief 

is intended to cover the in-kind transactions that 

may accompany such sales and redemptions. 

sponsored by the Investing Fund SubAdvisor or any person controlling, 

controlled by or under common control 

with the Investing Fund Sub-Advisor 

(‘‘Investing Fund’s Sub-Advisory 

Group’’). 

14. Applicants propose other 

conditions to limit the potential for an 

Investing Fund and certain affiliates of 

an Investing Fund (including 

Underwriting Affiliates) to exercise 

undue influence over a Fund and 

certain of its affiliates, including that no 

Investing Fund or Investing Fund 

Affiliate (except to the extent it is acting 

in its capacity as an investment adviser 

to a Fund) will cause a Fund to 

purchase a security in an offering of 

securities during the existence of an 

underwriting or selling syndicate of 

which a principal underwriter is an 

Underwriting Affiliate (‘‘Affiliated 

Underwriting’’). An ‘‘Underwriting 

Affiliate’’ is a principal underwriter in 

any underwriting or selling syndicate 

that is an officer, director, member of an 

advisory board, Investing Fund Advisor, 

Investing Fund Sub-Advisor, employee 

or Sponsor of the Investing Fund, or a 

person of which any such officer, 

director, member of an advisory board, 

Investing Fund Advisor or Investing 

Fund Sub-Advisor, employee or 

Sponsor is an affiliated person. An 

Underwriting Affiliate does not include 

any person whose relationship to the 

Fund is covered by section 10(f) of the 

Act. 

15. Applicants propose several 

conditions to address the concerns 

regarding layering of fees and expenses. 

Applicants note that the board of 

directors or trustees of any Investing 

Management Company, including a 

majority of the directors or trustees who 

are not ‘‘interested persons’’ within the 

meaning of section 2(a)(19) of the Act 

(‘‘disinterested directors or trustees’’), 

will be required to find that the advisory 

fees charged under the contract are 

based on services provided that will be 

in addition to, rather than duplicative 

of, services provided under the advisory 

contract of any Fund in which the 

Investing Management Company may 

invest. In addition, an Investing Fund 

Advisor, trustee of an Investing Trust 

(‘‘Trustee’’) or Sponsor, as applicable, 

will waive fees otherwise payable to it 

by the Investing Fund in an amount at 

least equal to any compensation 

(including fees received pursuant to any 

plan adopted by a Fund under rule 12b– 

1 under the Act) received from a Fund 

by the Investing Fund Advisor, Trustee 

or Sponsor or an affiliated person of the 

Investing Fund Advisor, Trustee or 

Sponsor, other than any advisory fees 

paid to the Investing Fund Advisor, 

Trustee or Sponsor or its affiliated 

person by a Fund, in connection with 

the investment by the Investing Fund in 

the Fund. Applicants also propose a 

condition to prevent any sales charges 

or service fees on shares of an Investing 

Fund from exceeding the limits 

applicable to a fund of funds set forth 

in NASD Conduct Rule 2830.16

16. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that a Fund will be 

prohibited from acquiring securities of 

any investment company or company 

relying on sections 3(c)(1) or 3(c)(7) of 

the Act in excess of the limits contained 

in section 12(d)(1)(A) of the Act, except 

to the extent permitted by exemptive 

relief from the Commission permitting 

the Fund to purchase shares of other 

investment companies for short-term 

cash management purposes. 

17. To ensure that the Investing Funds 

understand and comply with the terms 

and conditions of the requested order, 

any Investing Fund that intends to 

invest in a Fund in reliance on the 

requested order will be required to enter 

into a participation agreement (‘‘FOF 

Participation Agreement’’) with the 

Fund. The FOF Participation Agreement 

will include an acknowledgment from 

the Investing Fund that it may rely on 

the order only to invest in the Funds 

and not in any other investment 

company. 

Sections 17(a)(1) and (2) of the Act 

18. Section 17(a) of the Act generally 

prohibits an affiliated person of a 

registered investment company, or an 

affiliated person of such a person 

(‘‘second tier affiliate’’), from selling any 

security to or purchasing any security 

from the company. Section 2(a)(3) of the 

Act defines ‘‘affiliated person’’ to 

include any person directly or indirectly 

owning, controlling, or holding with 

power to vote, 5% or more of the 

outstanding voting securities of the 

other person and any person directly or 

indirectly controlling, controlled by, or 

under common control with, the other 

person. Section 2(a)(9) of the Act 

defines ‘‘control’’ as the power to 

exercise a controlling influence over the 

management or policies of a company 

and provides that a control relationship 

will be presumed where one person 

owns more than 25% of another 

person’s voting securities. Each Fund 

may be deemed to be controlled by an 

Advisor and hence affiliated persons of 

each other. In addition, the Funds may 

be deemed to be under common control 

with any other registered investment 

company (or series thereof) advised by 

an Advisor (an ‘‘Affiliated Fund’’). 

19. Applicants request an exemption 

under sections 6(c) and 17(b) of the Act 

from sections 17(a)(1) and 17(a)(2) of the 

Act to permit in-kind purchases and 

redemptions of Creation Units by 

persons that are affiliated persons or 

second tier affiliates of the Funds solely 

by virtue of one or more of the 

following: (a) Holding 5% or more, or in 

excess of 25% of the outstanding Shares 

of one or more Funds; (b) having an 

affiliation with a person with an 

ownership interest described in (a); or 

(c) holding 5% or more, or more than 

25% of the Shares of one or more 

Affiliated Funds.17 Applicants also 

request an exemption in order to permit 

a Fund to sell its Shares to and redeem 

its Shares from, and engage in the inkind transactions that would 

accompany such sales and redemptions 

with, certain Investing Funds of which 

the Funds are affiliated persons or a 

second-tier affiliates.18

20. Applicants assert that no useful 

purpose would be served by prohibiting 

such affiliated persons from making inkind purchases or in-kind redemptions 

of Shares of a Fund in Creation Units. 

Absent the unusual circumstances 

discussed in the application, the 

Deposit Instruments and Redemption 

Instruments available for a Fund will be 

the same for all purchases and 

redeemers, respectively, and will 

correspond pro rata to the Fund’s 

portfolio instruments. Both the deposit 

procedures for in-kind purchases of 

Creation Units and the redemption 

procedures for in-kind redemptions will 

be effected in exactly the same manner 

for all purchases and redemptions. 

Deposit Instruments and Redemption 

Instruments will be valued in the same 

manner as those Portfolio Instruments 

currently held by the relevant Funds. 

Therefore, applicants state that the inVerDate Mar<15>2010 17:54 Mar 04, 2011 Jkt 223001 PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 E:\FR\FM\07MRN1.SGM 07MRN1

srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 76, No. 44 / Monday, March 7, 2011 / Notices 12379 

19Applicants acknowledge that the receipt of 

compensation by (a) an affiliated person of an 

Investing Fund, or an affiliated person of such 

person, for the purchase by the Investing Fund of 

Shares of the Fund or (b) an affiliated person of a 

Fund, or an affiliated person of such person, for the 

sale by the Fund of its Shares to an Investing Fund, 

may be prohibited by section 17(e)(1) of the Act. 

The FOF Participation Agreement also will include 

this acknowledgment. 

kind purchases and redemptions create 

no opportunity for affiliated persons or 

the Applicants to effect a transaction 

detrimental to other holders of Shares of 

that Fund. Applicants do not believe 

that in-kind purchases and redemptions 

will result in abusive self-dealing or 

overreaching of the Fund. 

21. Applicants also submit that the 

sale of Shares to and redemption of 

Shares from an Investing Fund meets 

the standards for relief under sections 

17(b) and 6(c) of the Act. Applicants 

note that any consideration paid for the 

purchase or redemption of Shares 

directly from a Fund will be based on 

the NAV of the Fund in accordance with 

policies and procedures set forth in the 

Fund’s registration statement.19 Absent 

the unusual circumstances discussed in 

the application, the Deposit Instruments 

and Redemption Instruments available 

for a Fund will be the same for all 

purchases and redeemers, respectively, 

and will correspond pro rata to the 

Fund’s portfolio instruments. 

Applicants also state that the proposed 

transactions are consistent with the 

general purposes of the Act and 

appropriate in the public interest. 

Applicants’ Conditions 

Applicants agree that any order of the 

Commission granting the requested 

relief will be subject to the following 

conditions: 

A. Actively Managed Exchange-Traded 

Fund Relief 

1. As long as a Fund operates in 

reliance on the requested order, the 

Shares of the Fund will be listed on a 

Stock Exchange. 

2. Neither the Trust nor any Fund will 

be advertised or marketed as an openend investment company or a mutual 

fund. Any advertising material that 

describes the purchase or sale of 

Creation Units or refers to redeemability 

will prominently disclose that the 

Shares are not individually redeemable 

and that owners of the Shares may 

acquire those Shares from the Fund and 

tender those Shares for redemption to 

the Fund in Creation Units only. 

3. The Web site for the Funds, which 

is and will be publicly accessible at no 

charge, will contain, on a per Share 

basis, for each Fund the prior Business 

Day’s NAV and the market closing price 

or Bid/Ask Price, and a calculation of 

the premium or discount of the market 

closing price or Bid/Ask Price against 

such NAV. 

4. On each Business Day, before 

commencement of trading in Shares on 

the Stock Exchange, the Fund will 

disclose on its Web site the identities 

and quantities of the Portfolio 

Instruments and other assets held by the 

Fund that will form the basis for the 

Fund’s calculation of NAV at the end of 

the Business Day. 

5. The Advisor or any Subadvisor, 

directly or indirectly, will not cause any 

Authorized Participant (or any investor 

on whose behalf an Authorized 

Participant may transact with the Fund) 

to acquire any Deposit Instrument for 

the Fund through a transaction in which 

the Fund could not engage directly. 

6. The requested relief to permit ETF 

operations will expire on the effective 

date of any Commission rule under the 

Act that provides relief permitting the 

operation of actively-managed 

exchange-traded funds. 

B. Section 12(d)(1) Relief 

1. The members of the Investing 

Fund’s Advisory Group will not control 

(individually or in the aggregate) a Fund 

within the meaning of section 2(a)(9) of 

the Act. The members of the Investing 

Fund’s Sub-Advisory Group will not 

control (individually or in the aggregate) 

a Fund within the meaning of section 

2(a)(9) of the Act. If, as a result of a 

decrease in the outstanding voting 

securities of a Fund, the Investing 

Fund’s Advisory Group or the Investing 

Fund’s Sub-Advisory Group, each in the 

aggregate, becomes a holder of more 

than 25 percent of the outstanding 

voting securities of a Fund, it will vote 

its Shares of the Fund in the same 

proportion as the vote of all other 

holders of the Fund’s Shares. This 

condition does not apply to the 

Investing Fund’s Sub-Advisory Group 

with respect to a Fund for which the 

Investing Fund Sub-Advisor or a person 

controlling, controlled by or under 

common control with the Investing 

Fund Sub-Advisor acts as the 

investment adviser within the meaning 

of section 2(a)(20)(A) of the Act. 

2. No Investing Fund or Investing 

Fund Affiliate will cause any existing or 

potential investment by the Investing 

Fund in a Fund to influence the terms 

of any services or transactions between 

the Investing Fund or an Investing Fund 

Affiliate and the Fund or a Fund 

Affiliate. 

3. The board of directors or trustees of 

an Investing Management Company, 

including a majority of the disinterested 

directors or trustees, will adopt 

procedures reasonably designed to 

assure that the Investing Fund Advisor 

and any Investing Fund Sub-Advisor are 

conducting the investment program of 

the Investing Management Company 

without taking into account any 

consideration received by the Investing 

Management Company or an Investing 

Fund Affiliate from a Fund or a Fund 

Affiliate in connection with any services 

or transactions. 

4. Once an investment by an Investing 

Fund in Shares of a Fund exceeds the 

limit in section 12(d)(1)(A)(i) of the Act, 

the Board of a Fund, including a 

majority of the disinterested Board 

members, will determine that any 

consideration paid by the Fund to the 

Investing Fund or an Investing Fund 

Affiliate in connection with any services 

or transactions: (i) Is fair and reasonable 

in relation to the nature and quality of 

the services and benefits received by the 

Fund; (ii) is within the range of 

consideration that the Fund would be 

required to pay to another unaffiliated 

entity in connection with the same 

services or transactions; and (iii) does 

not involve overreaching on the part of 

any person concerned. This condition 

does not apply with respect to any 

services or transactions between a Fund 

and its investment adviser(s), or any 

person controlling, controlled by or 

under common control with such 

investment adviser(s). 

5. The Investing Fund Advisor, or 

Trustee or Sponsor, as applicable, will 

waive fees otherwise payable to it by the 

Investing Fund in an amount at least 

equal to any compensation (including 

fees received pursuant to any plan 

adopted by a Fund under rule 12b–1 

under the Act) received from a Fund by 

the Investing Fund Advisor, or Trustee 

or Sponsor, or an affiliated person of the 

Investing Fund Advisor, or Trustee or 

Sponsor, other than any advisory fees 

paid to the Investing Fund Advisor, or 

Trustee, or Sponsor, or its affiliated 

person by the Fund, in connection with 

the investment by the Investing Fund in 

the Fund. Any Investing Fund SubAdvisor will waive fees otherwise 

payable to the Investing Fund SubAdvisor, directly or indirectly, by the 

Investing Management Company in an 

amount at least equal to any 

compensation received from a Fund by 

the Investing Fund Sub-Advisor, or an 

affiliated person of the Investing Fund 

Sub-Advisor, other than any advisory 

fees paid to the Investing Fund SubAdvisor or its affiliated person by the 

Fund, in connection with the 

investment by the Investing 

Management Company in the Fund 

made at the direction of the Investing 

Fund Sub-Advisor. In the event that the 


srobinson on DSKHWCL6B1PROD with NOTICES
12380 Federal Register / Vol. 76, No. 44 / Monday, March 7, 2011 / Notices 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 63375 (November 

24, 2010), 75 FR 74759 (December 1, 2010) (Notice 

of Filing of Proposed Rule Change; File No. SR– 

FINRA–2010–061) (‘‘Notice’’). 

4See Letter from D. Grant Vingoe, Arnold & 

Porter LLP (‘‘Arnold & Porter’’), to Elizabeth M. 

Murphy, Secretary, SEC, dated December 22, 2010 

(available at http://www.sec.gov/comments/sr-finra2010–061/finra2010061.shtml). 

5See Amendment No. 1 dated February 24, 2011 

(‘‘Amendment No. 1’’) and FINRA’s response to 

comments, dated February 24, 2011 (‘‘Response to 

Comments’’), which are available on FINRA’s Web 

site at http://www.finra.org, at the principal office 

of FINRA, and on the Commission’s Web site at 

http://www.sec.gov/rules/sro.shtml. 

Investing Fund Sub-Advisor waives 

fees, the benefit of the waiver will be 

passed through to the Investing 

Management Company. 

6. No Investing Fund or Investing 

Fund Affiliate (except to the extent it is 

acting in its capacity as an investment 

adviser to a Fund) will cause a Fund to 

purchase a security in an Affiliated 

Underwriting. 

7. The Board of the Fund, including 

a majority of the disinterested Board 

members, will adopt procedures 

reasonably designed to monitor any 

purchases of securities by the Fund in 

an Affiliated Underwriting, once an 

investment by an Investing Fund in the 

securities of the Fund exceeds the limit 

of section 12(d)(1)(A)(i) of the Act, 

including any purchases made directly 

from an Underwriting Affiliate. The 

Board will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

purchases were influenced by the 

investment by the Investing Fund in the 

Fund. The Board will consider, among 

other things: (i) Whether the purchases 

were consistent with the investment 

objectives and policies of the Fund; 

(ii) how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and 

(iii) whether the amount of securities 

purchased by the Fund in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board will take any appropriate actions 

based on its review, including, if 

appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interest of 

shareholders. 

8. Each Fund will maintain and 

preserve permanently in an easily 

accessible place a written copy of the 

procedures described in the preceding 

condition, and any modifications to 

such procedures, and will maintain and 

preserve for a period of not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in Affiliated Underwritings 

once an investment by an Investing 

Fund in the securities of the Fund 

exceeds the limit of section 

12(d)(1)(A)(i) of the Act, setting forth 

from whom the securities were 

acquired, the identity of the 

underwriting syndicate’s members, the 

terms of the purchase, and the 

information or materials upon which 

the Board’s determinations were made. 

9. Before investing in a Fund in 

excess of the limits in section 

12(d)(1)(A), an Investing Fund will 

execute a FOF Participation Agreement 

with the Fund stating that their 

respective boards of directors or trustees 

and their investment advisers, or 

Trustee and Sponsor, as applicable, 

understand the terms and conditions of 

the order, and agree to fulfill their 

responsibilities under the order. At the 

time of its investment in shares of a 

Fund in excess of the limit in section 

12(d)(1)(A)(i), an Investing Fund will 

notify the Fund of the investment. At 

such time, the Investing Fund will also 

transmit to the Fund a list of the names 

of each Investing Fund Affiliate and 

Underwriting Affiliate. The Investing 

Fund will notify the Fund of any 

changes to the list as soon as reasonably 

practicable after a change occurs. The 

Fund and the Investing Fund will 

maintain and preserve a copy of the 

order, the FOF Participation Agreement, 

and the list with any updated 

information for the duration of the 

investment and for a period of not less 

than six years thereafter, the first two 

years in an easily accessible place. 

10. Before approving any advisory 

contract under section 15 of the Act, the 

board of directors or trustees of each 

Investing Management Company, 

including a majority of the disinterested 

directors or trustees, will find that the 

advisory fees charged under such 

contract are based on services provided 

that will be in addition to, rather than 

duplicative of, the services provided 

under the advisory contract(s) of any 

Fund in which the Investing 

Management Company may invest. 

These findings and their basis will be 

recorded fully in the minute books of 

the appropriate Investing Management 

Company. 

11. Any sales charges and/or service 

fees charged with respect to shares of an 

Investing Fund will not exceed the 

limits applicable to a fund of funds as 

set forth in NASD Conduct Rule 2830. 

12. No Fund relying on this section 

12(d)(1) relief will acquire securities of 

any investment company or company 

relying on section 3(c)(1) or 3(c)(7) of 

the Act in excess of the limits contained 

in section 12(d)(1)(A) of the Act, except 

to the extent permitted by exemptive 

relief from the Commission permitting 

the Fund to purchase shares of other 

investment companies for short-term 

cash management purposes. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–5064 Filed 3–4–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–63999; File No. SR–FINRA– 

2010–061] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Amendment No. 1 and Order Granting 

Accelerated Approval of a Proposed 

Rule Change Adopting, as Modified by 

Amendment No. 1, Rules Governing 

Guarantees, Carrying Agreements, 

Security Counts and Supervision of 

General Ledger Accounts in the 

Consolidated FINRA Rulebook 

March 1, 2011. 

I. Introduction 

On November 12, 2010, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) filed with the Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Exchange Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change to adopt rules governing 

guarantees, carrying agreements, 

security counts and supervision of 

general ledger accounts in the 

consolidated FINRA Rulebook. The 

proposed rule change was published for 

comment in the Federal Register on 

November 24, 2010.3 The Commission 

received one comment letter on the 

proposed rule change.4 On February 24, 

2011, FINRA responded to the 

comments and filed Amendment No. 1 

to the proposed rule change.5 The 

Commission is publishing this notice 

and order to solicit comments on 

Amendment No. 1 and to approve the 


srobinson on DSKHWCL6B1PROD with NOTICES