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1 77 FR 2798 (January 19, 2012). 2 For purposes of this exemption, references to

ERISA section 406 should be read to refer as well to the corresponding provisions of Code section 4975 and FERSA section 8477(c). 3 49 FR 9494 (Mar. 13, 1984), as amended, 70 FR 49305 (Aug. 23, 2005), and as amended, 75 FR 38837 (July 6, 2010).

4 Solely for purposes of Section II.A.2. and Section II.A.3. of this exemption, no BlackRock Entity will be deemed to be an affiliate of an MPS. The Department is not making herein a determination as to whether any BlackRock Entity

is an affiliate of an MPS under ERISA. **DEPARTMENT OF LABOR**

**Employee Benefits Security**

**Administration**

**[Prohibited Transaction Exemption 2012– 09; Exemption Application No. D–11673]** 

**Grant of Individual Exemption Involving BlackRock, Inc. and Its**  **Investment Advisory, Investment Management and Broker-Dealer** 
**Affiliates and Their Successor Located in New York, NY** 

**AGENCY :**  Employee Benefits Security Administration, U.S. Department of
Labor.

**ACTION :**  Grant of individual exemption.

**SUMMARY :**  This document contains an individual exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974, as amended (ERISA), the Federal Employees’ Retirement System Act of 1986, as amended (FERSA), and the Internal Revenue Code of 1986, as amended (the Code). The transactions involve BlackRock, Inc. and its investment advisory, investment management and broker-dealer affiliates
and their successors. The individual exemption affects plans for which BlackRock, Inc. and its investment advisory, investment management and
broker-dealer affiliates and their successors serve as fiduciaries, and the participants and beneficiaries of such plans.

**DATES :**  Effective Date: The individual exemption will be effective March 31, 2012, except that, with respect to
Covered Transactions described in
Section III.K. and S. of the individual exemption, the individual exemption will be effective October 1, 2011.

**SUPPLEMENTARY INFORMATION :**  On January 19, 2012, the Department of Labor (the Department) published a notice of proposed individual exemption from the restrictions of ERISA sections 406(a)(1) and 406(b), FERSA sections 8477(c)(1) and (c)(2) and the sanctions resulting from the application of Code section 4975, by reason of Code section 4975(c)(1) (the Proposed Exemption). 1 The Proposed Exemption was requested by BlackRock, Inc. and its investment advisory,investment management and brokerdealer affiliates and their successors pursuant to ERISA section 408(a), Code section 4975(c)(2) and FERSA section 8477(c)(3), and in accordance with the procedures set forth in 29 CFR Part 2570, Subpart B (76 FR 66637, October 27, 2011). Effective December 31, 1978, section 102 of the Reorganization Plan No. 4 of 1978, (43 FR 47713, October 17, 1978) transferred the authority of the Secretary of the Treasury to issue exemptions of the type requested to the Secretary of Labor. Accordingly, this final individual exemption is being issued solely by the Department.

For further information regarding the individual exemption, interested persons are encouraged to obtain copies of the exemption application file (Exemption Application No. D–11673) that the Department maintains with respect to the individual exemption. The complete application file, as well as supplemental submissions received by the Department, is made available for public inspection in the Public Documents room of the Employee Benefits Security Administration, Room N–1513, U.S. Department of Labor, 200 Constitution Ave. NW., Washington, DC

20210.

For a more complete statement of the facts and representations supporting the Department’s decision to grant the individual exemption, refer to the notice of proposed exemption published on January 19, 2012, at 77 FR 2798.

**FOR FURTHER INFORMATION CONTACT :**  Brian Shiker, Office of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor, telephone (202)

693–8552.

Exemption

Section I: Covered Transactions Generally

Effective March 31, 2012 (or, in the
case of Covered Transactions described
in Section III.K or Section III.S. of this exemption, October 1, 2011), the restrictions of ERISA sections 406(a)(1) and 406(b), FERSA section 8477(c)(1) and (2), and the sanctions resulting from the application of Code section 4975, by reason of Code section 4975(c)(1), 2 shall not apply to the Covered Transactions
set forth in Section III and entered into
on behalf of or with the assets of a Client Plan; provided, that (x) the generally applicable conditions of Section II of this exemption are satisfied, and, as applicable, the transaction-specific conditions set forth
below in Sections III and IV of this exemption are satisfied, or (y) the Special Correction Procedure set forth in Section V of this exemption is
satisfied. Section II: Generally Applicable
Conditions

A. Compliance With the QPAM Exemption

The following conditions of Part I of Prohibited Transaction Exemption 84– 14, as amended (PTE 84–14 or the QPAM Exemption), 3 must be satisfied with respect to each Covered

Transaction:

1. The BlackRock Manager engaging
in the Covered Transaction is a Qualified Professional Asset Manager;

2. Except as set forth in Section III of this exemption, at the time of the Covered Transaction (as determined under Section VI(i) of the QPAM Exemption) with or involving an MPS, such MPS, or its affiliate (within the meaning of Section VI(c) of the QPAM Exemption), 4 does not have the authority to:

(a) Appoint or terminate the BlackRock Manager as a manager of the
Client Plan assets involved in the Covered Transaction, or

(b) negotiate on behalf of the Client Plan the terms of the management agreement with the BlackRock Manager (including renewals or modifications thereof) with respect to the Client Plan
assets involved in the Covered
Transaction;

3.(a) Notwithstanding the foregoing, in the case of an investment fund (as defined in Section VI(b) of the QPAM Exemption) in which two or more unrelated Client Plans have an interest, and which is a Pooled Fund, a Covered
Transaction with an MPS will be deemed to satisfy the requirements of Section II.A.2. of this exemption if the
assets of a Client Plan on behalf of which the MPS or its affiliate possesses the authority set forth in Section II.A.2.(a) and/or (b) above, and which are managed by the BlackRock Manager in the investment fund, when combined
with the assets of other Client Plans established or maintained by the same employer (or an affiliate thereof described in Section VI(c)(1) of the QPAM Exemption) or by the same employee organization, on behalf of
which the same MPS and/or its affiliates possess such authority and which are managed by the BlackRock Manager in the same investment fund, represent less than ten percent (10%) of the assets of the investment fund; and


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5 For the avoidance of doubt, all MPSs are

excluded from the term ‘‘affiliate’’ for these

purposes.

6 For the avoidance of doubt, all MPSs are excluded from the term ‘‘owner’’ for these purposes.

(b) The conditions set forth in Subsections 14. and 15. of Section III.H., Subsections 2(e) and 3. of Section III.K., Section III.L.2.(b) and Subsections 1. and 2. of Section III.S. of this exemption shall be deemed satisfied if, with respect to the Covered Transaction in question, Section II.A.2. of this exemption is satisfied by reason of Section II.A.3.(a) of this exemption.

4. The terms of the Covered Transaction are negotiated on behalf of the investment fund by, or under the authority and general direction of, the BlackRock Manager and either the BlackRock Manager or (so long as the BlackRock Manager retains full fiduciary responsibility with respect to the Covered Transaction) a property manager acting in accordance with written guidelines established and administered by the BlackRock Manager, makes the decision on behalf
of the investment fund to enter into the Covered Transaction, provided that the Covered Transaction is not part of an
agreement, arrangement or understanding designed to benefit the
MPS;

5. The Covered Transaction is not
entered into with an MPS which is a party in interest or disqualified person with respect to any Client Plan whose assets managed by the BlackRock Manager, when combined with the
assets of other Client Plans established or maintained by the same employer (or
affiliate thereof described in Section VI(c)(1) of the QPAM Exemption) or by the same employee organization, and managed by the BlackRock Manager, represent more than twenty percent (20%) of the total client assets managed by the BlackRock Manager at the time of the Covered Transaction;

6. At the time the Covered Transaction is entered into, and at the time of any subsequent renewal or modification thereof that requires the consent of the BlackRock Manager, the
terms of the Covered Transaction are at
least as favorable to the investment fund as the terms generally available in arm’s length transactions between unrelated parties; and

7. Neither the BlackRock Manager nor any affiliate thereof (as defined in Section VI(d) of the QPAM Exemption), 5 nor any owner, direct or indirect, of a five percent (5%) or more interest in the BlackRock Manager 6 is a person who within the ten (10) years immediately preceding the Covered Transaction has been either convicted or released from imprisonment, whichever is later, as a result of: any felony involving abuse or misuse of such person’s employee benefit plan position or employment, or position or employment with a labor organization; any felony arising out of the conduct of the business of a broker, dealer, investment adviser, bank, insurance company or fiduciary; income tax evasion; any felony involving the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities; conspiracy or attempt to commit any such crimes or a crime in which any of the foregoing crimes is an element; or any other crime
described in ERISA section 411. For purposes of this section, a person shall
be deemed to have been ‘‘convicted’’ from the date of the judgment of the trial court, regardless of whether that judgment remains under appeal.

B. Compensation

None of the employees of a BlackRock Manager receives any compensation that is based on any Covered Transaction having taken place between Client Plans and any of the MPSs (as opposed to
with another institution that is not an MPS). The fact that a specific Covered
Transaction occurred with an MPS as opposed to a non-MPS counterparty is ignored by BlackRock and BlackRock Managers for compensation purposes. None of the employees of BlackRock or a BlackRock Manager receive any compensation from BlackRock or a BlackRock Manager which consists of equity Securities issued by an MPS,
which fluctuates in value based on changes in the value of equity Securities issued by an MPS, or which is otherwise based on the financial performance of an MPS independent of BlackRock’s performance, provided that this
condition shall not fail to be met because the compensation of an employee of a BlackRock Managerfluctuates with the value of a broadlybased index which includes equity Securities issued by an MPS.

C. Exemption Policies and Procedures

BlackRock adopts and implements Exemption Policies and Procedures (EPPs) which address each of the types
of Covered Transactions and which are designed to achieve the goals of: (1) Compliance with the terms of the exemption, (2) ensuring BlackRock’s decision-making with respect to the
Covered Transactions on behalf of
Client Plans with MPSs or BlackRock
Entities is done in the interests of the Client Plans and their participants and beneficiaries, and (3) to the extent possible, verifying that the terms of such
Covered Transactions are at least as
favorable to the Client Plans as the terms generally available in arm’s length transactions with unrelated parties. The EPPs are developed with the cooperation of both the Exemption Compliance Officer (ECO) and the Independent Monitor (IM), and such EPPs are subject to the approval of the
IM. The EPPs need not address
transactions which are not within the
definition of the term Covered

Transactions.

Transgressions of the EPPs which do not result in Violations require correction only if the amount involved in the transgression and the extent of deviation from the EPPs is material, taking into account the amount of Client Plan assets affected by such transgressions (EPP Corrections). The
ECO will make a written determination as to whether such transgressions require EPP Correction, and, if the ECO
determines an EPP Correction is required, the ECO will provide written
notice to the IM of the EPP Correction. The ECO will provide summaries for the IM of any such EPP Corrections as part of the quarterly report referenced in

Section II.D.11.

D. Exemption Compliance Officer

BlackRock appoints an Exemption Compliance Officer (ECO) with respect
to the Covered Transactions. If the ECO resigns or is removed, BlackRock shall appoint a successor ECO within a reasonable period of time, not to exceed thirty (30) days, which successor shall be subject to the affirmative written approval of the IM. With respect to the ECO, the following conditions shall be

met:

1. The ECO is a legal professional with at least ten years of experience and extensive knowledge of the regulation of financial services and products, including under ERISA and FERSA;

2. A committee made up exclusively
of members of the BlackRock Board of Directors (the Board) who are independent of BlackRock and the
MPSs determines the ECO’s compensation package, with input from the general counsel of BlackRock; the ECO’s compensation is not set by BlackRock business unit heads, and there is no direct or indirect input regarding the identity or compensation of the ECO from any MPS;

3. The ECO’s compensation is not based on performance of any BlackRock Entity or MPS, although a portion of the ECO’s compensation may be provided
in the form of BlackRock stock or stock equivalents;


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4. The ECO can be terminated by BlackRock only with the approval of the
IM;

5. The EPPs prohibit any officer, director or employee of BlackRock or any MPS or any person acting under such person’s direction from directly or indirectly taking any action to coerce, manipulate, mislead, or fraudulently influence the ECO or any member of the ECO Function in the performance of his or her duties;

6. The ECO is responsible for monitoring Covered Transactions and
shall determine whether Violations have occurred, and the appropriate correction thereof, consistent with the requirements of Section V of this exemption;

7. If the ECO determines a Violation has occurred, the ECO must determine why it occurred and what steps should
be taken to avoid such a Violation in the future (e.g., additional training, additional procedures, additional monitoring, or additional and/or changed processes or systems);

8. The ECO is responsible for monitoring and overseeing the implementation of the EPPs and carrying out such other responsibilities stipulated or described in Section III of this exemption. The ECO may delegate such responsibilities to the ECO Function, but the ECO will remain responsible for monitoring and overseeing the ECO Function’s implementation of the EPPs. When appropriate, the ECO will recommend changes to the EPPs to BlackRock and
the IM. The ECO will consult with the IM regarding the need for, timing, and form of EPP Corrections;

9. The ECO, with the assistance of the ECO Function, carries out the responsibilities required of the ECO described in: (a) the definition of ‘‘Index’’ in this exemption and (b) with respect to loans of Securities to an MPS in Section III.L. of this exemption;

10. The ECO, with the assistance of the ECO Function, monitors Covered Transactions and situations resulting
from Covered Transactions with or involving an MPS with respect to which, because of the investment of the MPS in BlackRock, an action or inaction on the part of a BlackRock Manager might be thought to be motivated by an interest which may affect the exercise of such BlackRock Manager’s best judgment as a fiduciary. If a situation is identified by the ECO which poses the potential for a conflict, as specified in Section III of this exemption, the ECO shall consult with the IM, or refer decision-making to the discretion of the
IM; 11. The ECO provides a quarterly report to the IM summarizing the
material activities of the ECO for the preceding quarter and setting forth any Violations discovered during the quarter
and actions taken to correct such Violations. With respect to Violations, the ECO report details changes to process put in place to guard against a substantially similar Violation occurring again, and recommendations for additional training, additional procedures, additional monitoring, or additional and/or changed processes or systems or training changes and BlackRock management’s actions on
such recommendations. In connection with providing the quarterly report for the second quarter and fourth quarter of each year, upon the request of the IM, the ECO and the IM shall meet in person to review the content of the report.
Other members of the ECO Function may attend such meetings at the request of either the ECO or the IM;

12. In each quarterly report, the ECO certifies in writing to his or her knowledge that (a) the quarterly report is accurate; (b) BlackRock’s compliance program is working in a manner which is reasonably designed to prevent Violations; (c) any Violations discovered during the quarter and the related
corrections taken to date have been identified in the report; and (d) BlackRock has complied with the EPPs in all material respects;

13. No less frequently than annually,
the ECO certifies to the IM as to whether BlackRock has provided the ECO with adequate resources, including, but not limited to, adequate staffing of the ECO Function, and, in connection with the quarterly report for the fourth quarter of each year, the ECO shall identify to the IM those BlackRock Managers that relied upon this exemption during the prior year and those that the ECO reasonably anticipates relying on this exemption during the current year; and

14. The ECO or ECO Function provides any further information regarding Covered Transactions that is reasonably requested by the IM.

E. Independent Monitor

BlackRock retains an Independent Monitor (IM) with respect to the Covered Transactions. If the IM resigns or is removed, BlackRock shall appoint
a successor IM within a reasonable period of time, not to exceed thirty (30) days. The IM:

1. Agrees in writing to serve as IM, and he or she is independent within meaning of Section VI.TT.;

2. Approves the ECO selected by BlackRock, and as part of the approval process and annually thereafter approves in general terms the
reasonableness of the ECO’s compensation, taking into account such information as the IM may request of
BlackRock and which BlackRock must supply, and approves any termination of the ECO by BlackRock;

3. Assists in the development of, and the granting of written approval of, the EPPs and any material alterations of the EPPs by determining that they are reasonably designed to achieve the goals of (a) compliance with the terms of the exemption, (b) ensuring BlackRock’s decision-making with respect to
Covered Transactions on behalf of
Client Plans with MPSs or BlackRock
Entities is done in the interests of the Client Plans and their respective participants and beneficiaries and, (c) requiring, to the extent possible,
verification that the terms of such
Covered Transactions are at least as
favorable to the Client Plans as the terms generally available in comparable arm’s length transactions with unrelated parties;

4. Consults with the ECO regarding the need for, timing and form of any
EPP Corrections. The IM has the responsibilities with respect to corrections of Violations, as set forth in Section V of this exemption. In response to EPP Corrections or Violations, the IM considers whether, and must have the authority, to require further sampling, testing or corrective action if necessary;

5. Exercises discretion for Client Plans in situations specified in Section III of this exemption where BlackRock Managers may be thought to have conflicts;

6. Performs certain monitoring functions described in Section III, and carries out the responsibilities required of the IM, as set forth in the definition of ‘‘Index’’ in this exemption, and with respect to loans of Securities to an MPS
as set forth in Section III.L. of this exemption, and carries out such other responsibilities stipulated in Section III of this exemption;

7. Reviews the quarterly reports of the ECO, obtains and reviews representative samples of the data underlying the quarterly reports of the ECO, and, if the IM deems it appropriate, obtains
additional factual information on either an ad hoc basis or on a systematic basis;

8. Reviews the certifications of the ECO as to whether (a) the quarterly report is accurate; (b) BlackRock’s compliance program is working in a manner which is reasonably designed to prevent Violations; (c) any Violations discovered during the quarter and the
related corrections taken to date have been identified in the report; (d) BlackRock has complied with the EPPs


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in all material respects; and (e) BlackRock has provided the ECO with adequate resources, including, but not limited to, adequate staffing of the ECO
Function;

9. Determines, on the basis of the information supplied to the IM by
BlackRock and the ECO or the ECO Function, whether there has occurred a pattern or practice of insufficient diligence in adhering to the EPPs and/ or the conditions of the exemption, and if such a determination is made, reports the same to the Department, and informs BlackRock and the ECO of any such report;

10. Determines whether the purchases of equity Securities issued by an MPS
on behalf of Client Plans that are Other Accounts or Funds by a BlackRock Manager has had a positive material impact on the market price for such Securities, notwithstanding any volume limitations imposed by Section III.R. of the exemption and/or imposed by the IM with respect to such equity
Securities. The IM makes this determination based upon its review of the relevant monthly reports required by the exemption with respect to such Covered Transactions provided by the ECO and publicly available information materially related to the trading of the Securities of an MPS on its primary listing exchange (or market);

11. Issues an annual compliance report, to be timely delivered to (i) the Chairman of the Board, (ii) the Chief Executive Officer of BlackRock and (iii)
the General Counsel of BlackRock. The annual compliance report shall be based on a review of the EPPs, the quarterly reports provided by the ECO, any transactions reviewed by the IM as well as any additional information the IM requests from BlackRock, and certifying to each of the following (or describing any exceptions thereto) that:

(a) The EPPs are reasonably designed to achieve the goals of (i) compliance with the terms of the exemption, (ii) ensuring BlackRock’s decision-making with respect to Covered Transactions on
behalf of Client Plans with MPSs or
BlackRock Entities is done in the
interests of the Client Plans and the respective participants and beneficiaries, and (iii) requiring to the extent possible, verification that the terms of any Covered Transaction are at
least as favorable to Client Plans as the terms generally available in comparable arm’s length transactions with unrelated parties;

(b) The EPPs and the other terms of the exemption were complied with, with any material exceptions duly noted; (c) The IM has made the
determination referred to in Section
II.E.9. and the results of that determination;

(d) BlackRock has provided the ECO with adequate resources, including but not limited to adequate staffing of the ECO Function; and

(e) The compensation package for the ECO for the prior year is reasonable;

12. The annual compliance report of the IM, as described in Section II.E.11., shall contain a summary of Violations and a summary of any corrections of Violations required by the IM and/or the ECO at any time during the prior year. In addition, the IM further certifies that BlackRock correctly implemented the prescribed corrections, based in part on certification from the ECO; and

13. The annual compliance report of the IM shall also be timely delivered by the IM to the chief executive officer, the general counsel and the members of the
board of directors of each of the BlackRock Managers identified to the IM by the ECO or ECO Function as having relied upon this exemption during the prior year and those that the ECO reasonably anticipates will be relying on this exemption during the current year. The copies of the compliance report described in this Section II.E.13. shall be accompanied by a cover letter from the IM calling the attention of the recipients to any Violations, material exceptions to compliance with the EPPs, or other shortfalls in compliance with the exemption to assist such officers and directors in carrying out their respective responsibilities

.
Section III: Covered Transactions

A. Purchases and Holdings by BlackRock Managers of Fixed Income Obligations Issued by an MPS in an Underwriting on Behalf of Client Plans Invested in an Index Account or Fund,
or in a Model-Driven Account or Fund

Relief under Section I of this exemption is available for a purchase and holding by BlackRock Managers of Fixed Income Obligations issued by an MPS in an underwriting on behalf of
Client Plans for an Index Account or Fund, or a Model-Driven Account or Fund, provided that:

1. Such purchase is for the sole purpose of maintaining quantitative conformity with the weight of such Securities prescribed by the relevant Index, for Index Accounts or Funds, or the weight of such Securities prescribed by the relevant Model, for Model-Driven Accounts or Funds; and such purchase is reasonably calculated not to exceed the purchase amount necessary for such Model or quantitative conformity by more than a de minimis amount;

2. Such purchase is not made from any MPS;

3. No BlackRock Entity is in the selling syndicate;

4. After purchase, the responsible BlackRock Manager notifies the ECO if
circumstances arise in which an action or inaction on the part of the BlackRock Manager regarding an MPS Fixed Income Obligation so acquired might be thought to be motivated by an interest which may affect the exercise of such BlackRock Manager’s best judgment as a fiduciary, and complies with decisions of the ECO regarding the taking, or the refraining from taking, of actions in such circumstances; and

5. After purchase, any decision regarding conversion of an MPS Fixed Income Obligation into equity in the MPS is made by the IM.

B. Purchase and Holding by BlackRock Managers of Fixed Income Obligations Issued by an MPS in an Underwriting on Behalf of Client Plans Invested in an
Other Account or Fund

Relief under Section I of this exemption is available for a purchase and holding by BlackRock Managers of Fixed Income Obligations issued by an MPS in an underwriting on behalf of
Client Plans invested in an Other Account or Fund provided that:

1. The conditions of Section IV.A. of this exemption are satisfied, except that for purposes of Section IV.A.4.(a) and Section IV.A.5.(c), the MPS-issued Fixed Income Obligations at the time of purchase must be rated in one of the three highest rating categories by a Rating Organization and none of the Rating Organizations may rate the Fixed Income Obligations lower than in the third highest rating category;

2. Such purchase is not made from an
MPS;

3. No BlackRock Entity is in the selling syndicate;

4. After purchase, the responsible BlackRock Manager notifies the ECO if
circumstances arise in which an action or inaction on the part of the BlackRock Manager regarding an MPS Fixed Income Obligation so acquired might be thought to be motivated by an interest which may affect the exercise of such BlackRock Manager’s best judgment as a fiduciary, and complies with decisions of the ECO regarding the taking, or the refraining from taking, of actions in such circumstances; and

5. After purchase, any decision regarding conversion of an MPS Fixed Income Obligation into equity in the MPS is made by the IM.


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C. Certain Transactions in the Secondary Market by BlackRock Managers of Fixed Income Obligations including Fixed Income Obligations Issued by and/or Traded With an MPS,
and/or Under Which an MPS Has Either an Ongoing Function or Can Potentially Incur Liability

Relief under Section I of this exemption is available for a purchase or sale in the secondary market or the holding by BlackRock Managers on behalf of Client Plans of (i) Fixed Income Obligations issued by an MPS, (ii) Fixed Income Obligations issued by a third party or an MPS and purchased from or sold to an MPS, and/or (iii) Fixed Income Obligations under which an MPS has either an ongoing function or can potentially incur liability, provided that:

1. If the Fixed Income Obligations are purchased from or sold to an MPS, it is as a result of the Three Quote Process.

2. With respect to Fixed Income Obligations that are issued by an MPS and are purchased and held by a BlackRock Manager for a Client Plan—

(a) After purchase, the responsible BlackRock Manager notifies the ECO if
circumstances arise in which an action or inaction on the part of the BlackRock Manager regarding an MPS Fixed Income Obligation so acquired might be thought to be motivated by an interest which may affect the exercise of such BlackRock Manager’s best judgment as a fiduciary, and complies with the decisions of the ECO regarding the taking, or the refraining from taking, of actions in such circumstances;

(b) After purchase, any decision regarding conversion of an MPS Fixed Income Obligation into equity in the MPS is made by the IM; and

(c) If purchased for an Index Account or Fund, or a Model-Driven Account or Fund, such purchase is for the sole purpose of maintaining quantitative conformity with the weight of such Securities prescribed by the relevant Index, for Index Accounts or Funds, or the weight of such Securities prescribed by the relevant Model, for Model-Driven Accounts or Funds and such purchase is reasonably calculated not to exceed the purchase amount necessary for such Model or quantitative conformity by
more than a de minimis amount.

3. With respect to Fixed Income Obligations (whether or not issued by an MPS) held by a BlackRock Manager for
a Client Plan under which an MPS has an ongoing function, such as servicing of collateral for asset-backed debt, or the potential for liability, such as under representations or warranties made by an MPS with respect to collateral for such asset-backed debt which the MPS originated, the taking of or refraining from taking any action by the responsible BlackRock Manager which could have a material positive or negative effect upon the MPS is decided upon by the ECO.

4. With respect to any Fixed Income Obligation acquired under this Section III.C. which is a guaranteed governmental mortgage pool certificate within the meaning of 29 CFR 2510.3– 101(i) which is accompanied by an implicit U.S. Government guarantee as opposed to an explicit U.S. Government guarantee, (a) the BlackRock Manager initiating a purchase of such Securities
makes a determination that such Securities are of substantially similar credit quality as guaranteed governmental mortgage pool certificates accompanied by an explicit U.S. Government guarantee, (b) the ECO (in regular consultation with and under the supervision of the IM) monitors the credit spread between such implicitly and explicitly guaranteed certificates, and (c) each of the ECO and the IM (independently) has the authority and responsibility to determine whether purchases of implicitly guaranteed certificates should not be permitted due to such credit spread, and such authority and responsibility is reflected
in the EPPs.

5. For purposes of this Section III.C.,
Asset-Backed Securities are not Fixed Income Obligations.

D. Purchase in an Underwriting and Holding by BlackRock Managers of Fixed Income Obligations Issued by a Third Party When an MPS Is Underwriter, in Either a Manager or a Member Capacity, and/or Under Which an MPS Has Either an Ongoing Function or Can Potentially Incur Liability

Relief under Section I of this exemption is available for the purchase and holding by BlackRock Managers of Fixed Income Obligations issued by third parties in an underwriting when an MPS is an underwriter, in either a manager or a member capacity, and/or Fixed Income Obligations under which an MPS has either an ongoing function or can potentially incur liability, provided that:

1. The conditions of Section IV.A. are
satisfied.

2. Such purchase is not made from an

MPS.

3. No BlackRock Entity is in the selling syndicate.

4. With respect to Fixed Income Obligations under which an MPS has either an ongoing function, such as debttrustee, servicer of collateral for assetbacked debt, or the potential for liability, such as under representations or warranties made by an MPS withrespect to collateral for such assetbacked debt which the MPS originated, the taking of or refraining from taking any action by the responsible BlackRock Manager which could have a material positive or negative effect upon the MPS is decided upon by the ECO.

5. With respect to any Fixed Income Obligation acquired under this Section III.D. which is a guaranteed governmental mortgage pool certificate within the meaning of 29 CFR 2510.3– 101(i) which is accompanied by an implicit U.S. Government guarantee as opposed to an explicit U.S. Government guarantee, (a) the BlackRock Manager initiating a purchase of such Securities
makes a determination that such Securities are of substantially similar credit quality as guaranteed governmental mortgage pool certificates accompanied by an explicit U.S. Government guarantee, (b) the ECO (in regular consultation with and under the supervision of the IM) monitors the credit spread between such implicitly and explicitly guaranteed certificates, and (c) each of the ECO and the IM (independently) has the authority and responsibility to determine whether purchases of implicitly guaranteed certificates should not be permitted due to such credit spread, and such authority and responsibility is reflected
in the EPPs.

6. For purposes of this Section III.D.,
Asset-Backed Securities are not Fixed Income Obligations.

E. Purchase in an Underwriting and Holding by BlackRock Managers of Asset-Backed Securities, When an MPS Is an Underwriter, in the Capacity as Either a Manager or a Member of the Selling Syndicate, Trustee, or, in the Case of Asset-Backed Securities Which
Are CMBS, Servicer

Relief under Section I of this exemption is available for the purchase and holding by BlackRock Managers of
Asset-Backed Securities issued in an underwriting where an MPS is (i) an underwriter, in the capacity as either a manager or a member of the selling syndicate, (ii) trustee, or (iii) solely in
the case of Asset-Backed Securities which are CMBS, serves as servicer of a trust that issued such CMBS, provided
that:

1. The conditions of Section IV.A. are satisfied, except that (a) for purposes of Section IV.A.4.(a), the Asset-Backed Securities at the time of purchase must be rated in one of the three highest rating categories by a Rating Organization and none of the RatingOrganizations may rate the AssetVerDate Mar<15>2010 19:25 Mar 30, 2012 Jkt 226001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4703 E:\FR\FM\02APN2.SGM 02APN2TKELLEY on DSK3SPTVN1PROD with NOTICES2

### 19841 Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Notices

Backed Securities lower than the third highest rating category, (b) in the case of
Asset-Backed Securities which are
CMBS and for which the MPS is servicer, the conditions of Section IV.B.
are satisfied instead of the conditions of Section IV.A., and (c) if an MPS is an
underwriter and an MPS is a servicer as described in clause (b), the conditions of both Section IV.A., as modified by Section III.E.1.(a), and Section IV.B. must be satisfied;

2. Such purchase is not made from an
MPS;

3. No BlackRock Entity is in the selling syndicate;

4. In the case of Asset-Backed Securities with respect to which an MPS has either an ongoing function, such as trustee, servicer of collateral for CMBS, or the potential for liability, such as under representations or warranties made by an MPS with respect to
collateral for CMBS which collateral the MPS originated, the taking of or refraining from taking of any action by a responsible BlackRock Manager which could have a material positive or negative effect upon the MPS is decided upon by the ECO; and

5. The purchase meets the conditions of an applicable Underwriter Exemption.

F. Purchase and Holding by BlackRock Managers of Equity Securities Issued by an Entity Which Is Not an MPS and Is Not a BlackRock Entity, in an Underwriting When an MPS Is an Underwriter, in Either a Manager or a Member Capacity

Relief under Section I of this exemption is available for the purchase and holding by BlackRock Managers of equity Securities issued by an entity
which is not an MPS and which is not a BlackRock Entity in an underwriting when an MPS is an underwriter, in either a manager or a member capacity, provided that:

1. The conditions of Section IV.A. are satisfied;

2. Such purchase is not made from an
MPS;

3. No BlackRock Entity is in the selling syndicate; and

4. The Securities are not Asset-Backed

Securities.

G. Purchase and Sale by BlackRock Managers of Asset-Backed Securities in the Secondary Market, From or to an MPS, and/or When an MPS Is Sponsor, Servicer, Originator, Swap Counterparty, Liquidity Provider, Trustee or Insurer, and the Holding Thereof

Relief under Section I of this exemption is available for a sale of Asset-Backed Securities by a BlackRock Manager to an MPS, or the purchase of Asset-Backed Securities by BlackRock Managers from an MPS and the holding thereof, and/or any such purchase or sale in the secondary market or holding when an MPS is a sponsor, a servicer, an originator, a swap counterparty, a liquidity provider, a trustee or an insurer, provided that:

1. If the Asset-Backed Securities are purchased from or sold to an MPS, the purchase or sale is as a result of the Three Quote Process.

2. Regardless of from whom the BlackRock Manager purchases the Asset-Backed Securities, the purchase and holding of the Asset-Backed Security otherwise meets the conditions of an applicable Underwriter Exemption.

3. Regardless of from whom the BlackRock Manager purchased the Asset-Backed Securities, if an MPS is, with respect to such Asset-Backed Securities, a sponsor, servicer, originator, swap counterparty, liquidity provider, insurer or trustee, as those
terms are utilized or defined in the Underwriter Exemptions, and circumstances arise in which the taking of or refraining from taking of any action by the responsible BlackRock Manager could have a material positive or negative effect upon the MPS, the taking of or refraining from taking of any such action is decided upon by the ECO.

H. Repurchase Agreements When an
MPS Is the Seller

Section I of this exemption applies to an investment by a BlackRock Manager
of Client Plan assets which involves the purchase or other acquisition, holding, sale, exchange or redemption by or on behalf of a Client Plan of a repurchase agreement (or Securities or other instruments under cover of a repurchase agreement) in which the seller of the underlying Securities or other
instruments is an MPS which is a bank supervised by the United States or a State, a broker-dealer registered under the 1934 Act, or a dealer who makes primary markets in Securities of the United States government or any agency thereof, or in banker’s acceptances, and reports daily to the Federal Reserve Bank of New York its positions with respect to these obligations, provided that each of the following conditions are
satisfied:

1. The repurchase agreement is embodied in, or is entered into pursuant to a written agreement, and such written agreement is a standardized industry form;

2. The repurchase agreement has a term of one year or less; 3. The Client Plan receives interest no
less than that which it would receive in a comparable arm’s length transaction with an unrelated party;

4. The Client Plan receives Securities, banker’s acceptances, commercial paper or certificates of deposit having a market value equal to not less than one hundred percent (100%) of the purchase price paid by the Client Plan;

5. Upon expiration of the repurchase agreement and return of the Securities or other instruments to the seller, the
seller transfers to the Client Plan an amount equal to the purchase price plus the appropriate interest;

6. The Securities, banker’s acceptances, commercial paper or certificates of deposit received by the
Client Plan:

(a) Could be acquired directly by the
Client Plan in a transaction not covered by this Section III.H. without violating ERISA sections 406(a)(1)(E), 406(a)(2) or 407(a); and,

(b) If the Securities are subject to the provisions of the 1933 Act, they are obligations that are not ‘‘restricted securities’’ within the meaning of Rule
144 under the 1933 Act.

7. If the market value of the underlying Securities or other instruments falls below the purchase price at any time during the term of the agreement, the Client Plan may, under the written agreement required by Section III.H.1., require the MPS seller to deliver, by the close of business on the following business day (as such term is defined for purposes of the relevant written agreement), additional
Securities or other instruments the market value of which, together with the
market value of Securities or other instruments previously delivered or
sold to the Client Plan under the repurchase agreement, equals at least one hundred percent (100%) of the purchase price paid by the Client Plan.

8. If the MPS seller does not deliver
additional Securities or other instruments as required above, the Client Plan may terminate the agreement, and, if upon termination or expiration of the agreement, the amount owing is not paid to the Client Plan, the Client Plan may sell the Securities or other instruments and apply the proceeds against the obligations of the MPS seller under the agreement, and against any expenses associated with
the sale.

9. The MPS seller agrees to furnish
the Client Plan with the most recent
available audited statement of its
financial condition as well as its most recent available unaudited statement, agrees to furnish additional audited and
unaudited statements of its financial


### 19842 Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Notices

condition as they are issued and either: (a) Agrees that each repurchase agreement transaction pursuant to the agreement shall constitute a representation by the MPS seller that
there has been no material adverse change in its financial condition since
the date of the last statement furnished
that has not been disclosed to the Client Plan with whom such written agreement is made; or (b) prior to each repurchase agreement transaction, the MPS seller represents that, as of the time the transaction is negotiated, there has been no material adverse change in its
financial condition since the date of the
last statement furnished that has not
been disclosed to the Client Plan with whom such written agreement is made.

10. In the event of termination and sale as described in Section III.H.9., the MPS seller pays to the Client Plan the amount of any remaining obligations and expenses not covered by the sale of the Securities or other instruments, plus
interest at a reasonable rate.

11. If an MPS seller involved in a repurchase agreement covered by this exemption fails to comply with any condition of this exemption in the course of engaging in the repurchase agreement, the BlackRock Manager who caused the plan to engage in such repurchase agreement shall not be deemed to have caused the plan to engage in a transaction prohibited by ERISA sections 406(a)(1)(A) through (D) or ERISA section 406(b), Code section 4975, or FERSA section 8477(c) solely by reason of the MPS seller’s failure to comply with the conditions of the exemption.

12. In the event of any dispute between a BlackRock Manager and an MPS seller involving a Covered Transaction under this Section III.H., the IM has the responsibility to decide whether, and if so how, BlackRock is to pursue relief on behalf of the Client Plan(s) against the MPS seller.

13. At time of entry into or renewal
of each Covered Transaction under this Section III.H., including both term repurchase transactions and daily renewals for ‘‘open’’ or ‘‘overnight’’ transactions, either (a) each Covered Transaction under this Section III.H., is as a result of the Three Quote Process, or, (b) the BlackRock Manager determines that the yield on the proposed transaction, or the renewal thereof, is at least as favorable to the Client Plans as the yield of the Client Plan on two (2) other available transactions which are comparable in terms of size, collateral type, credit quality of the counterparty, term and rate. The methodology employed for purposes of the comparison in (b) above must (c) be approved in advance by the ECO Function and (d), to the extent possible, refer to objective external data points, such as the Eurodollar overnight time deposit bid rate, the rate for repurchase agreements with U.S. government Securities, or rates for commercial paper issuances or agency
discount note issuances sourced from Bloomberg, or another third party pricing service or market data provider (which providers may use different terminology to refer to these same external data points). The applicable BlackRock Manager must record a description of the comparable transactions, if reliance is placed upon same, and such data must be periodically reviewed by the ECO Function. The procedures described in this Section III.H.13. must be designed to ensure that BlackRock Managers determine to only enter into Covered
Transactions with MPS sellers which are in the interests of Plan Clients, and such procedures must be reviewed and may be commented on by the IM.

14. Neither the MPS Seller nor a member of the same MPS Group as the MPS Seller has discretionary authority or control with respect to the
investment of Client Plan assets
involved in a Covered Transaction under this Section III.H; provided that,
this condition will be deemed met if a
Client Plan meets the condition of Section II.A.2. by reason of Section II.A.3. of this exemption.

15. The Client Plan is not an MPS
Plan of the MPS with whom the purchase or sale takes place, or an MPS
Plan of another MPS member of the same MPS Group as such MPS; provided that, this condition will be
deemed met if a Client Plan meets the condition of Section II.A.2. by reason of Section II.A.3. of this exemption.

I. Responding to Tender Offers and Exchange Offers Solicited by an MPS

Relief under Section I of this exemption is available for participation by BlackRock Managers on behalf of Client Plans in tender offers or exchange
offers or similar transactions where an MPS acts as agent for the entity (which entity may not be an MPS) making the offer, provided that:

1. The Client Plan pays no fees to the
MPS in connection with this Covered
Transaction;

2. The BlackRock Manager submits to the ECO in advance of participation a written explanation of the reasons for such participation; and

3. The ECO Function determines that the reasons for participation by the BlackRock Manager in the Covered Transaction are appropriate from the vantage point of the Client Plans, with such determination affirmatively made in writing prior to the BlackRock Manager participating in the Covered
Transactions under this Section III.I.

J. Purchase in Underwritings of Securities Issued by an Entity Which Is
not an MPS When the Proceeds Are Used To Repay a Debt to an MPS

Relief under Section I of this exemption is available for the purchase by BlackRock Managers of Securities in underwritings issued by an entity which is not an MPS, but where the proceeds of the offering are used to repay a debt owed to an MPS, and the payment of such proceeds to the MPS, provided that the BlackRock Manager does not know that the proceeds will be applied to the repayment of debt owed to an MPS. If the BlackRock Manager does know that proceeds of the offering will be applied to the repayment of debt owed to an MPS, the purchase of the Securities and the payment of the proceeds to the MPS are exempt under Section I of this exemption provided that no more than twenty percent (20%) of the offering is purchased by BlackRock Managers for Client Plans, and no more than fifty percent (50%) of the offering in the aggregate is purchased by BlackRock, BlackRock Managers and other BlackRock Entities for Client Plans, other clients of BlackRock Managers, or as proprietary investments.

K. Bank Deposits and Commercial Paper

Relief under Section I of this exemption is available for an investment by a BlackRock Manager of Client Plan assets which involves the purchase or other acquisition, holding, sale, exchange or redemption by or on behalf of a Client Plan of certificates of deposit, time deposits or other bank deposits at an MPS and/or placed by an MPS and/ or sold to or purchased from an MPS, or in commercial paper issued by an MPS or with respect to which an MPS acts in some continuing capacity such as placement agent or administrator and/or which is sold to or purchased from an MPS, provided that:

1. With respect to bank deposits,
either:

(a)(i) The bank is supervised by the United States or a State, and at the
outset of the Covered Transaction or renewal thereof of, such bank has a credit rating in one of the top two (2) categories by at least one of the Rating Organizations; and (ii) such deposit bears a reasonable interest rate, or —

(b) The BlackRock Manager and the MPS comply with ERISA section 408(b)(4).

2. With respect to commercial paper:


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7 For this purpose, MPS plans of Barclays MPSs and PNC MPSs are separately aggregated. (a) The Client Plan is not an MPS Plan of the MPS issuing the commercial paper, provided that, this condition will
be deemed to be met if such a Client
Plan meets the conditions of Section II.A.2. and II.A.3. of this exemption;

(b) The commercial paper has a stated maturity date of nine (9) months or less from the date of issue, exclusive of days of grace, or is a renewal of an issue of commercial paper the maturity of which is likewise limited;

(c) At the time it is acquired, the commercial paper is ranked in one of the two (2) highest rating categories by at least one of the Rating Organizations;

(d) If the seller or purchaser of the commercial paper is an MPS, purchases and sales are made pursuant to the Three Quote Process, provided that for purposes of this Section III.K.2., firm quotes on comparable short-term money
market instruments rated in the same category may be used for purposes of the Three Quote Process; and

(e)(i) the Client Plan is not an MPS
Plan of the MPS with whom the purchase or sale takes place, or an MPS
Plan of another MPS member of the same MPS Group as such MPS; and (ii)
the Client Plan is not an MPS Plan of an MPS which is acting in a continuing capacity, or an MPS Plan of another member of the same MPS Group as such MPS, provided that, the conditions set forth in clauses (i) and (ii) of this Section III.K.2.(e). will be deemed met
if a Client Plan meets the condition of Section II.A.2. by reason of Section II.A.3. of this exemption.

3. Neither the MPS involved in the Covered Transaction nor any member of the same MPS Group as the MPS
involved in the Covered Transaction has discretionary authority or control with respect to the investment of Client Plan
assets involved in the Covered Transaction under this Section III.K.; provided that, this condition will be
deemed met if a Client Plan meets the condition of Section II.A.2. by reason of Section II.A.3. of this exemption.

4. For purposes of the Covered
Transactions set forth in this Section III.K. no BlackRock Entity shall be regarded as an affiliate of an MPS bank at which a deposit is made of Client Plan assets, nor of an MPS issuer of commercial paper in which a BlackRock Manager invests Client Plan assets.

L. Securities Lending to an MPS

1. Relief under Section I of this exemption is available for:

(a) The lending of Securities by a BlackRock Manager that are assets of an
Index Account or Fund or a ModelDriven Account or Fund to an MPS
which is a U.S. Broker-Dealer or a U.S. Bank provided that the conditions set forth in Section III.L.2. are met;

(b) the lending of Securities by a BlackRock Manager that are assets of an
Index Account or Fund or a ModelDriven Account or Fund to an MPS which is a Foreign Broker-Dealer or Foreign Bank; provided that, the
conditions set forth in Section III.L.2. and Section III.L.3. below are met; and

(c) the payment to a BlackRock Manager of compensation for services
rendered in connection with loans of
assets of an Index Account or Fund or
a Model-Driven Account or Fund that are Securities to an MPS; provided that,
the conditions set forth in Section
III.L.4. below are met.

2. General Conditions for Covered
Transactions Described in Sections III.L.1.(a) and (b).

(a) The length of a Securities loan to an MPS does not exceed one year in

term.

(b) Neither the MPS borrower nor any
MPS which is a member of the same MPS Group as the MPS borrower has or exercises discretionary authority or control with respect to the investment of
the Client Plan assets involved in the transaction. This Section III.L.2.(b) shall be deemed satisfied notwithstanding the
investment of the assets of an MPS Plan
of the MPS which is the borrower under such Securities lending transaction in a
Pooled Fund as of the date of the Acquisition, which Pooled Fund is a
bank-maintained common or collective trust, provided that such assets when aggregated with the assets of all other MPS Plans of the same MPS Group as
that of the MPS borrower and invested in such Pooled Fund, at all times since the date of the Acquisition, constitute less than ten percent (10%) of the assets of such Pooled Fund; provided that, this Subsection III.L.2.(b) will be deemed
met if a Client Plan meets the condition of Section II.A.2. by reason of Section II.A.3. of this exemption. 7

(c) The Client Plan receives from the MPS borrower by the close of the BlackRock Manager’s business on the day in which the Securities lent are delivered to the MPS,

(i) U.S. Collateral having, as of the close of business on the preceding business day, a market value, or, in the case of bank letters of credit, a stated amount, equal to not less than one hundred percent (100%) of the then market value of the Securities lent; or

(ii) Foreign Collateral having as of the close of business on the preceding business day, a market value, or, in the case of bank letters of credit, a stated amount, equal to not less than:

(x) One hundred two percent (102%)
of the then market value of the
Securities lent as valued on a Recognized Securities Exchange or an Automated Trading System on which the Securities are primarily traded if the collateral posted is denominated in the same currency as the Securities lent, or

(y) One hundred five percent (105%)
of the then market value of the
Securities lent as valued on a Recognized Securities Exchange or an Automated Trading System on which the Securities are primarily traded if the collateral posted is denominated in a different currency than the Securities
lent.

(d) Notwithstanding the foregoing, if the BlackRock Manager is a U.S. Bank, a Registered Investment Advisor, or a U.S. Broker-Dealer, and such BlackRock Manager indemnifies the Client Plan with respect to the difference, if any, between the replacement cost of the
borrowed Securities and the market
value of the collateral on the date of a borrower default, the Client Plan receives from the MPS borrower by the close of the BlackRock Manager’s business on the day in which the
Securities lent are delivered to the borrower, Foreign Collateral having as of the close of business on the preceding business day, a market value, or, in the case of bank letters of credit, a stated amount, equal to not less than:

(i) One hundred percent (100%) of the
then market value of the Securities lent as valued on a Recognized Securities Exchange or an Automated Trading System on which the Securities are primarily traded if the collateral posted is denominated in the same currency as the Securities lent; or

(ii) One hundred one percent (101%)
of the then market value of the
Securities lent as valued on a Recognized Securities Exchange or an Automated Trading System on which the Securities are primarily traded if the collateral posted is denominated in a different currency than the Securities lent and such currency is denominated in Euros, British pounds, Japanese yen, Swiss francs or Canadian dollars; or

(iii) One hundred five percent (105%)
of the then market value of the
Securities lent as valued on a Recognized Securities Exchange or an Automated Trading System if the collateral posted is denominated in a different currency than the Securities lent and such currency is other than those specified above.

(e)(i) If the MPS borrower is a U.S. Bank or U.S. Broker-Dealer, the Client
Plan receives such U.S. Collateral or


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Foreign Collateral from the MPS borrower by the close of the BlackRock Manager’s business on the day in which
the Securities are delivered to the MPS borrower. Such collateral is received by the Client Plan either by physical delivery, wire transfer or by book entry in a Securities depository located in the United States, or

(ii) If the MPS borrower is a Foreign Bank or Foreign Broker-Dealer, the
Client Plan receives U.S. Collateral or Foreign Collateral from the MPS borrower by the close of the BlackRock Manager’s business on the day in which
the Securities are delivered to the borrower. Such collateral is received by the Client Plan either by physical delivery, wire transfer or by book entry in a Securities depository located in the
United States or held on behalf of the Client Plan at an Eligible Securities Depository. The indicia of ownership of
such collateral shall be maintained in accordance with ERISA section 404(b)
and 29 CFR 2550.404b–1.

(f) Prior to making of any such loan,
the MPS borrower shall have furnished the BlackRock Manager with:

(i) The most recent available audited
statement of the MPS borrower’s financial condition, as audited by a United States certified public accounting firm or in the case of an MPS borrower that is a Foreign Broker-Dealer or Foreign Bank, a firm which is eligible
or authorized to issue audited financial statements in conformity with accounting principles generally accepted in the primary jurisdiction that governs the borrowing MPS Foreign Broker-Dealer or Foreign Bank;

(ii) The most recent available
unaudited statement of its financial condition (if the unaudited statement is
more recent than such audited financial statement); and

(iii) A representation that, at the time the loan is negotiated, there has been no material adverse change in its financial
condition since the date of the most
recent financial statement furnished to the BlackRock Manager that has not
been disclosed to the BlackRock Manager. Such representations may be made by the MPS borrower’s agreement
that each loan shall constitute a representation by the MPS borrower that
there has been no such material adverse change.

(g) The loan is made pursuant to a written loan agreement, the terms of
which are at least as favorable to the Client Plan as an arm’s-length transaction with an unrelated party would be. Such loan agreement states that the Client Plan has a continuing security interest in, title to, or the rights of secured creditor with respect to the collateral. Such agreement may be in the form of a master agreement covering a series of Securities lending transactions.

(h) The written loan agreement must be a standardized industry form; provided, that, with the approval of the
ECO on or about the date of the Acquisition, written loan agreements
with an MPS borrower that were in effect as of the date of the Acquisition may continue to be used until there is a material modification of the same, at which time standardized industry forms must be adopted.

(i) In return for lending Securities, the
Client Plan:

(i) Receives a reasonable fee (in connection with the Securities lending transaction), and/or

(ii) Has the opportunity to derive compensation through the investment of the currency collateral. Where the Client Plan has that opportunity, the Client Plan may pay a loan rebate or similar fee to the MPS borrower, if such fee is not greater than the Client Plan would pay in a comparable transaction with an unrelated party.

(j) All fees and other consideration received by the Client Plan in
connection with the loan of Securities are reasonable. The identity of the currency in which the payment of fees
and rebates will be made is set forth in either the written loan agreement or the loan confirmation as agreed to by the
MPS borrower and the BlackRock Manager prior to the making of the loan.

(i) Pricing of a loan to an MPS borrower is based on (i) rates for comparable loans of the same Securityto non-MPS borrowers and (ii) thirdparty market data:

(x) For loans of liquid Securities (sometimes referred to as general collateral loans), an automatic system may be used to price loans so long as the resulting rate the Client Plan
receives from the MPS borrower is at
least as favorable to the Client Plan as the rate the BlackRock Managers are receiving for Client Plans or other
clients from non-MPS borrowers of the same Security;

(y) For purposes of pricing loans of less liquid Securities (sometimes referred to as ‘‘special loans’’), and for purposes of determining whether to
terminate or continue a loan which does not have a set term, pricing may also be
based on a BlackRock trader determination that continuing the loan
is in the interest of the Client Plan based on all relevant factors, including price (provided that price is within the range of prices of other loans of the same Security to comparable non-MPS borrowers by BlackRock Managers for Client Plans or other clients) and potential adverse consequences to the Client Plan of terminating the loan, provided that the pricing data used in making these decisions is retained and made available for possible review by
the ECO.

(ii) Automatic pricing mechanisms and pricing decisions by traders are subject to ongoing periodic review by the ECO Function, and the results of such review are included in reports by the ECO to the IM. Specifically, the quarterly reports by the ECO to the IM must address the lending patterns of illiquid Securities to the MPS borrowers from all Client Plans, including the percentage that loans of such Securities to the MPSs represent of all loans of
such Securities from all Client Plans.

(k) The Client Plan receives the equivalent of all distributions made to
holders of the borrowed Securities during the term of the loan including, but not limited to, dividends, interest payments, shares of stock as a result of stock splits and rights to purchase additional Securities;

(l) If the market value of the collateral at the close of trading on a business day is less than the applicable percentage of
the market value of the borrowed Securities at the close of trading on that day (as described in this Section III.L.2.(c) of this exemption), then the MPS borrower shall deliver, by the close of business on the following business day, an additional amount of U.S. Collateral or Foreign Collateral the market value of which, together with the market value of all previously delivered collateral, equals at least the applicable percentage of the market value of all the
borrowed Securities as of such preceding day.

Notwithstanding the foregoing, part of the U.S. Collateral or Foreign Collateral may be returned to the MPS borrower if
the market value of the collateral exceeds the applicable percentage (described in this Section III.L.2.(c) of this exemption) of the market value of the borrowed Securities, as long as the market value of the remaining U.S. Collateral or Foreign Collateral equals at least the applicable percentage of the
market value of the borrowed Securities.

(m) The loan may be terminated by the Client Plan at any time, whereupon
the MPS borrower shall deliver
certificates for Securities identical to the borrowed Securities (or the equivalent thereof in the event of reorganization, recapitalization or merger of the issuer of the borrowed Securities) to the Client
Plan within the lesser of:

(i) The customary delivery period for such Securities,

(ii) Five business days, or


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(iii) The time negotiated for such delivery by the BlackRock Manager for the Client Plan, and the borrower.

(n) In the event that the loan is terminated, and the MPS borrower fails
to return the borrowed Securities or the equivalent thereof within the applicable time described in Section III.M.2.(m), the BlackRock Manager for the Client Plan may, under the terms of the loan
agreement:

(i) Purchase Securities identical to the borrowed Securities (or their equivalent as described above) and may apply the collateral to the payment of the purchase price, any other obligations of the borrower under the agreement, and any expenses associated with the sale and/or purchase, and

(ii) The MPS borrower is obligated, under the terms of the loan agreement, to pay, and does pay to the Client Plan the amount of any remaining obligations and expenses not covered by the collateral, including reasonable attorney’s fees incurred by the Client Plan for legal action arising out of default on the loans, plus interest at a
reasonable rate.

Notwithstanding the foregoing, the MPS borrower may, in the event the
MPS borrower fails to return borrowed Securities as described above, replace collateral, other than U.S. currency, with an amount of U.S. currency that is
not less than the then current market value of the collateral, provided such replacement is approved by the BlackRock Manager.

(o) If the MPS borrower fails to comply with any provision of a loan agreement which requires compliance with this exemption, the BlackRock Manager who caused the Client Plan to engage in such transaction shall not be
deemed to have caused the Client Plan to engage in a transaction prohibited by ERISA sections 406(a)(1)(A) through (D) or ERISA section 406(b) or FERSA section 8477(c) solely by reason of the borrower’s failure to comply with the conditions of the exemption.

(p) If the Securities being loaned to an MPS borrower are managed in an Index Account or Fund, or a Model-Driven
Account or Fund where the Index or the Model are created or maintained by the MPS borrower, the ECO Function periodically performs a review, no less frequently than quarterly, of the use of such MPS-sponsored Index or Model,
and the Securities loaned from such an account or fund to the MPS, which review is designed to enable a reasonable judgment as to whether the use of such Index or Model, or any changes thereto, were for the purpose of benefitting BlackRock or the MPS through the Securities lending activity described in this Section III.L. If the ECO forms a reasonable judgment that the use of such Index or Model, or any changes thereto, were for the purpose of benefitting BlackRock or the MPS, the ECO shall promptly inform the IM.

(q) In the event of any dispute between the BlackRock Manager on
behalf of a Client Plan and an MPS borrower involving a Covered Transaction under this Section III.L., the IM shall decide whether, and if so, how the BlackRock Manager is to pursue relief on behalf of the Client Plan(s) against the MPS borrower.

(r) Sophistication of Authorizing Fiduciary. Only Client Plans with total assets having an aggregate market value of a least $50 million are permitted to lend Securities to an MPS except as provided in clauses (1)–(3) below.

(1) Master Trusts. In the case of two
or more Client Plans which are maintained by the same employer, controlled group of corporations or employee organization, whose assets are commingled for investment purposes in a single master trust or any other entity the assets of which are ‘‘plan assets’’ under 29 CFR 2510.3–101, which entity is engaged in Securities lending arrangements with a BlackRock Manager, the foregoing $50 million requirement shall be deemed satisfied if such trust or other entity has aggregate assets which are in excess of $50 million; provided that if the fiduciary responsible for making the investment
decision on behalf of such master trust or other entity is not the employer or an affiliate of the employer, such fiduciary has total assets under its management and control, exclusive of the $50 million threshold amount attributable to plan investment in the commingled entity, which are in excess of $100 million.

(2) Single Authorizing Fiduciary for Multiple Unaffiliated Client Plans. In
the case of two or more Client Plans which are not maintained by the same employer, controlled group of corporations or employee organization, whose assets are commingled for investment purposes in a group trust or any other form of entity the assets of which are ‘‘plan assets’’ under 29 CFR 2510.3–101, which entity is engaged in Securities lending arrangements with such BlackRock Manager as securities lending agent, the foregoing $50 million requirement is satisfied if such trust or other entity has aggregate assets which are in excess of $50 million (excluding the assets of any Client Plan with respect to which the fiduciary responsible for making the investment decision on behalf of such group trust or other entity or any member of the controlled group of corporations including such fiduciary is the employer maintaining such Plan or an employee organization whose members are covered by such Plan). However, the fiduciary responsible for making the
investment decision on behalf of such group trust or other entity:

(A) Has full investment responsibility with respect to plan assets invested therein; and

(B) Has total assets under its management and control, exclusive of the $50 million threshold amount attributable to plan investment in the commingled entity, which are in excess of $100 million; and

(3) Pooled Funds. In the case of two
or more Client Plans invested in a Pooled Fund, whether or not through an entity described in paragraphs (r)(1) or (r)(2), the $50 million requirement shall be deemed satisfied if 50 percent or
more of the units of beneficial interest in such Pooled Fund are held by investors each having total net assets of at least $50 million. Such investors may include Client Plans, entities described in paragraphs(r)(1) or (r)(2), or other investors that are not employee benefit plans covered by section 406 of ERISA, section 4975 of the Code, or section
8477 of FERSA.

In addition, none of the entities described in this Section III.L.2.(r) are formed for the sole purpose of making
loans of Securities.

(s) With respect to any calendar quarter, at least 50 percent or more of the outstanding dollar value of Securities loans negotiated on behalf of
Client Plans will be to borrowers
unrelated to MPSs.

3. Specific Conditions for
Transactions Described in Section III.L.1.(b).

(a) The BlackRock Manager maintains
the written documentation for the loan agreement at a site within the jurisdiction of the courts of the United

States.

(b) Prior to entering into a transaction involving an MPS Foreign Broker-Dealer that is described in Section VI.PP.(1) or (2) or an MPS Foreign Bank that is described in Section VI.OO.(1) either:

(i) The MPS Foreign Broker-Dealer or Foreign Bank agrees to submit to the jurisdiction of the United States; agrees to appoint an agent for service of process in the United States, which may be an affiliate (a Process Agent); consents to service of process on the Process Agent; and agrees that any enforcement by a Client Plan of its rights under the Securities lending agreement will, as the option of the Client Plan, occur exclusively in the United States courts; or


### 19846 Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Notices

(ii) The BlackRock Manager, if a U.S. Bank, a Registered Investment Advisor, or U.S. Broker-Dealer, agrees to indemnify the Client Plan with respect to the difference, if any, between the replacement cost of the borrowed
Securities and the market value of the
collateral on the date of an MPS borrower default plus interest and any transaction costs incurred (including attorney’s fees of such Client Plan arising out of the default on the loans or the failure to indemnify properly under this provision) which the Client Plan may incur or suffer directly arising out of a borrower default by the MPS Foreign Broker-Dealer or Foreign Bank.

(c) In the case of a Securities lending transaction involving an MPS Foreign
Broker-Dealer that is described in Section VI.PP.(3) or an MPS Foreign
Bank that is described in Section VI.OO.(2), the BlackRock Manager must be a U.S. Bank, a Registered Investment Advisor, or U.S. Broker-Dealer, and prior to entering into the loan transaction, such BlackRock Manager must agree to indemnify the Client Plan with respect to the difference, if any, between the replacement cost of the
borrowed Securities and the market
value of the collateral on the date of an MPS borrower default plus interest and any transaction costs incurred (including attorney’s fees of such plan arising out of the default on the loans or the failure to indemnify properly under this provision) which the Client Plan may incur or suffer directly arising out of a borrower default by the MPS Foreign Broker-Dealer or Foreign Bank.

4. Specific Conditions for Covered
Transactions Described in Section III.L.1.(c):

(a) The loan of Securities is not prohibited by section 406(a) of ERISA or
otherwise satisfies the conditions of this exemption.

(b) The BlackRock Manager is authorized to engage in Securities lending transactions on behalf of the
Client Plan.

(c) The compensation, the terms of
which are at least as favorable to the Client Plan as an arm’s length transaction with an unrelated party, is reasonable and is paid in accordance with the terms of a written instrument, which may be in the form of a master agreement covering a series of Securities lending transactions.

(d) Except as otherwise provided in Section III.L.4.(f), the arrangement under which the compensation is paid:

(i) Is subject to the prior written authorization of a fiduciary of a Client Plan (the authorizing fiduciary), who is (other than in the case of an In-House Plan) independent of the BlackRock Manager, provided that for purposes of this Section III.L.4.(d) a fiduciary of an MPS Plan acting as the authorizing fiduciary shall be deemed independent of the BlackRock Manager so long as such fiduciary, as of the date of the authorization, is not a BlackRock Entity,
and

(ii) May be terminated by the authorizing fiduciary within:

(x) The time negotiated for such notice of termination by the Client Plan and the BlackRock Manager, or

(y) Five business days, whichever is less, in either case without penalty to
the Client Plan.

(e) No such authorization is made or renewed unless the BlackRock Manager shall have furnished the authorizing fiduciary with any reasonably available
information which the BlackRock Manager reasonably believes to be necessary to determine whether such
authorization should be made or renewed, and any other reasonably available information regarding the matter that the authorizing fiduciary may reasonably request.

(f) Special Rule for Commingled
Investment Funds. In the case of a pooled separate account maintained by an insurance company qualified to do
business in a State or a common or collective trust fund maintained by a bank or trust company supervised by a State or Federal agency, the requirements of Section III.L.4.(d) of this exemption shall not apply, provided
that:

(i) The information described in Section III.L.4.(e) (including information with respect to any material change in the arrangement) shall be furnished by the BlackRock Manager to the authorizing fiduciary described in Section III.L.4.(d) with respect to each
Client Plan whose assets are invested in the account or fund, not less than 30 days prior to implementation of the arrangement or material change thereto, and, where requested, upon the reasonable request of the authorizing fiduciary;

(ii) In the event any such authorizing fiduciary submits a notice in writing to the BlackRock Manager objecting to the implementation of, material change in, or continuation of the arrangement, the
Client Plan on whose behalf the objection was tendered is given the opportunity to terminate its investment in the account or fund, without penalty to the Client Plan, within such time as may be necessary to effect such withdrawal in an orderly manner that is equitable to all withdrawing plans and to the non-withdrawing plans. In the
case of a Client Plan that elects to withdraw pursuant to the foregoing, such withdrawal shall be effected prior to the implementation of, or material change in, the arrangement; but an existing arrangement need not be discontinued by reason of a Client Plan electing to withdraw; and

(iii) In the case of a Client Plan whose assets are proposed to be invested in the account or fund subsequent to the implementation of the compensation arrangement and which has not authorized the arrangement in the
manner described in Sections III.L.4.(f)(i) and (ii), the Client Plan’s
investment in the account or fund shall
be authorized in the manner described in Section III.L.4.(d)(i).

M. To-Be-Announced Trades (TBAs) of GNMA, FHLMC, FarmerMac or FNMA Mortgage-Backed Securities With an MPS Counterparty

Relief under Section I of this exemption is available for trades (purchases and sales) on a principal basis of mortgage-backed Securities issued by FHLMC, FNMA, FarmerMac or guaranteed by GNMA and meeting the definition of ‘‘guaranteed governmental mortgage pool certificate’’ in 29 CFR 2510.3–101(i) with an MPS on a TBA basis, including, when applicable, delivery of the underlying Securities to a Client Plan, provided
that:

1. The Covered Transactions under
this Section III.M. are a result of the Three Quote Process; provided that, solely for purposes of this Section III.M.1., firm quotes under the Three Quote Process may be obtained on ‘‘comparable Securities,’’ as described below, when firm quotes with respect to the applicable TBA transactions are not reasonably obtainable;

2. With regard to purchases of FHLMC, FarmerMac and FNMA mortgage-backed Securities on a TBA basis, (i) the BlackRock Manager makes
a determination that such Securities are of substantially similar credit quality as GNMA guaranteed governmental mortgage pool certificates, (ii) the ECO (in regular consultation with and under the supervision of the IM) monitors the credit spread between GNMA andFHLMC/FNMA/FarmerMac mortgagebacked Securities, and (iii) each of the ECO and the IM (independently) has the authority and responsibility to determine whether purchases of FHLMC, FarmerMac and/or FNMA mortgage-backed Securities on a TBA basis should not be permitted due to such credit spread, and such authority and responsibility is reflected in the EPPs; and

3. With regard to possible delivery of underlying Securities to Client Plans, as


### 19847 Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Notices

8 51 FR 41686 (Nov. 18, 1986), as amended, 67 FR 64137 (Oct. 17, 2002). opposed to cash settlement, the ECO Function approves any such delivery in
advance.

For purposes of Section III.M.1., ‘‘comparable Securities’’ are Securities that: (a) Are issued and/or guaranteed by the same agency, (b) have the same coupon, (c) have a principal amount at least equal to but no more than two percent (2%) greater than the Security purchased or sold, (d) are of the same program or class, and (e) either (i) have an aggregate weighted average monthly maturity within a 12-month variance of the Security purchased or sold, but in
no case can the variance be more than ten percent (10%) of such aggregate weighted average maturity of the Securities purchased or sold, or (ii) meet some other comparable objective standard containing a range of variance that is no greater than that described in (i) above and that assures that the aging of the Securities is properly taken into

account.

N. Foreign Exchange Transactions With an MPS Counterparty

Relief under Section I of this exemption is available for a Foreign Exchange Transaction by a BlackRock Manager on behalf of Client Plans with an MPS as counterparty provided that:

1. (a) The Foreign Exchange
Transaction is as a result of the Three Quote Process; or (b) if the total net amount of the Foreign Exchange Transaction on behalf of Client Plans by BlackRock Managers is greater than $1 million, the exchange rate is within
0.5% above or below the Interbank Rate as represented to the BlackRock Managers by the MPS;

2. The Foreign Exchange Transactions with an MPS counterparty only involve
currencies of countries that are classified as ‘‘developed’’ or ‘‘emerging’’ markets by a third party Index provider
that divides national economies into ‘‘developed,’’ ‘‘emerging’’ and ‘‘frontier’’ markets. The Index provider shall be selected by BlackRock, provided, however, the IM shall have the right to reject the Index provider in its sole discretion at any time; and

3. Each Foreign Exchange Transaction complying with Section III.N.1.(b) must be set forth in the applicable quarterly reports of the ECO to the IM.

O. Agency Execution of Equity and
Fixed Income Securities Trades and Related Clearing as Described in PTE 86–128, Including Agency Cross Trades,
When the Broker Is an MPS

Relief under Section I of this exemption is available for transactions
in Securities described in Section II of Prohibited Transaction Exemption 86– 128, as amended 8 (PTE 86–128), as ifBlackRock Managers and MPS brokerdealers were ‘‘affiliates’’ as defined in Section I.(b) of PTE 86–128, provided the following conditions are satisfied:

1. The MPS is selected to perform Securities brokerage services for Client Plans pursuant to the normal brokerage placement practices, policies and procedures of the BlackRock Manager designed to ensure best execution.

2. The conditions of PTE 86–128 set forth in the following sections of that exemption must be complied with: Section III(e); Section III(f); Section III(g)(2); and Section III(h); provided, however, that, for purposes of Section III(e), Section III(f) and Section III(g)(2) of PTE 86–128, the ECO Function is the ‘‘authorizing fiduciary’’ referred to therein; and the ECO has the authority
to terminate the use of the MPS as broker-dealer without penalty to Client Plans at any time; and provided further that the first sentence of Section III(h) of PTE 86–128 is amended for purposes of this Section III.O.2. to provide as follows: ‘‘A trustee (other than a nondiscretionary trustee) may only engage in a covered transaction with a plan that has total net assets with a value of at least $50 million and in the case of a Pooled Fund, the $50 million requirement will be met if fifty percent (50%) or more of the units of beneficial interest in such Pooled Fund are held by investors having total net assets with a value of at least $50 million.’’

3. With respect to agency cross transactions described in Section III(g) of PTE 86–128 that are being effected or executed by an MPS broker, (i) neither the MPS broker effecting or executing the agency cross transaction nor any member of the same MPS Group as the MPS broker effecting or executing the agency cross transaction may have discretionary authority to act on behalf of, and/or provide investment advice to another party to the agency cross
transaction which is a seller when the Client Plan is a buyer, or which is a buyer, when the Client Plan is a seller (Another Party), and (ii), neither the BlackRock Manager nor the trader for the BlackRock Manager instituting the transaction for the Client Plan may have knowledge that a BlackRock Entity has discretionary authority and/or provides investment advice to Another Party to the agency cross transaction.

4. The exceptions in Sections IV(a), (b), and (c) of PTE 86–128 are applicable to this exemption. P. Use by BlackRock Managers of Exchanges and Automated Trading Systems on Behalf of Client Plans

Relief under Section I of this exemption is available for the direct or indirect use by, or directing of trades to, U.S. and non-U.S. exchanges or U.S. Automated Trading Systems (ATS) in
which one or more MPSs have an ownership interest by BlackRock Managers for Client Plans, if either:

1. No one MPS (together with other members of the same MPS Group) has (i) a greater than ten percent (10%) ownership interest in the exchange or ATS or (ii) the BlackRock Managers do not know the level of such ownership
interest; or

2. If a BlackRock Manager knows that an MPS (together with other members of the same MPS Group) has an ownership interest that is greater than ten percent (10%) but not greater than twenty percent (20%) in the exchange or ATS,

(a) The ECO makes a determination, summarized in the ECO quarterly report, that there is no reason for a BlackRock Manager or all BlackRock Managers to discontinue such direct or indirect use of or the directing of trades to any such exchange or ATS on the
basis that the amount of use or the
volume of trades is unwarranted or not
in the interests of the Client Plans and their participants and beneficiaries, and
does not make a determination that a BlackRock Manager or all BlackRock Managers must discontinue such direct or indirect use of or the directing of trades to any such exchange or ATS on
the basis that the amount of use or the
volume of trades is unwarranted or not
in the interests of the Client Plans and their participants and beneficiaries. The IM may request any additional information relating to any such
determination summarized in the ECO quarterly report and may, after consultation with the ECO, make a determination that a BlackRock Manager or all BlackRock Managers must
discontinue such direct or indirect use of or the directing of trades to any such exchange or ATS on the basis that the
amount of use or the volume of trades
is unwarranted or not in the interests of the Client Plans and their participants and beneficiaries;

(b) The price and compensation associated with any purchases or sales utilizing such exchange or ATS are not greater than the price and compensation associated with an arm’s length transaction with an unrelated party; and

(c) All such exchanges and ATSs shall be situated within the jurisdiction of the U.S. District Courts and regulated by a U.S. federal regulatory body or a U.S.


### 19848 Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Notices

9 For example, if two or more portfolio managers send their purchase orders to the same trading desk and the traders on that trading desk coordinate the purchases of the same MPS equity Securities, the limitations apply to the trading desk; if two or more portfolio managers or two or more trading desks are coordinating purchases of MPS equity Securities, the limitations are applied across the group of portfolio managers or traders who are coordinating the purchase orders. federally approved self-regulatory body, provided that this condition shall not apply to the direct or indirect use of or the directing of trades to an exchange in a country other than the United States which is regulated by a governmentregulator or a government approved selfregulatory body in such country and which involves trading in Securities (including the lending of Securities) or
futures contracts.

Q. Purchases in the Secondary Market of Common and Preferred Stock Issued by an MPS by BlackRock Managers for
Client Plans Invested in an Index Account or Fund, or a Model-Driven
Account or Fund

Relief under Section I of this exemption is available for the purchase in the secondary market of common or preferred stock issued by an MPS by BlackRock Managers for Client Plans invested in an Index Account or Fund,
or a Model-Driven Account or Fund provided that:

1. Such purchase is for the sole purpose of maintaining quantitative conformity with the weight of such Securities prescribed by the relevant Index, for Index Accounts or Funds, or the weight of such Securities prescribed by the relevant Model, for Model-Driven Accounts or Funds, and such purchase is reasonably calculated not to exceed the purchase amount necessary for such Model or quantitative conformity by
more than a de minimis amount.

2. Such purchase is not made from the issuing MPS.

3. Notwithstanding Section III.Q.2., BlackRock Managers may rely on other exemptive relief when acquiring stock of an MPS for Client Plans through an MPS broker, including the issuing MPS.

R. Purchase in the Secondary Market of Common and Preferred Stock Issued by an MPS by BlackRock Managers for
Client Plans Invested in an Other
Account or Fund

Relief under Section I of this exemption is available for the purchase in the secondary market of common or preferred stock issued by an MPS by BlackRock Managers for Client Plans
invested in an Other Account or Fund provided that:

1. Such purchase is not made from the issuing MPS.

2. Notwithstanding Section III.R.1., BlackRock Managers may rely on other exemptive relief when acquiring stock
of an MPS for Client Plans under this Section III.R. through an MPS broker, including the issuing MPS.

3. As a consequence of a purchase of MPS stock, the class of stock purchased
does not constitute more than five percent (5%) of the Other Account or Fund. In the case of a Pooled Fund, the class of stock purchased and attributed
to each Client Plan does not exceed five percent (5%) of such Client Plan’s proportionate interest in the Pooled
Fund.

4. Aggregate daily purchases of a class
of MPS stock for Client Plans do not exceed the greater of (i) fifteen percent (15%) of the aggregate average daily trading volume (ADTV) for the previous ten (10) trading days, or (ii) fifteen percent (15%) of trading volume on the date of the purchase. These volume limitations must be met on a portfolio manager by portfolio manager basis unless purchases are coordinated among portfolio managers, in which case the limitations are applied to the coordinated purchase. 9 Any coordinated purchases of the same class of MPS stock in the secondary market for Index
Accounts or Funds or for Model-Driven
Accounts or Funds must be taken into account when applying these ADTV limitations on purchases for an Other Account or Fund; provided, however, if coordinated purchases for Index Accounts or Funds, or for Model-Driven Accounts or Funds, would cause the fifteen percent (15%) limitation to be exceeded, BlackRock Managers can nonetheless acquire for Other Accounts or Funds up to the greater of five percent (5%) of ADTV for the previous ten (10) trading days or five percent (5%) of trading volume on the day of the Covered Transaction. For purposes of this Section III.R.4., cross trades of MPS equity Securities which comply with an applicable statutory or administrative prohibited transaction exemption are
not taken into account.

5. The ECO Function monitors the volume limits on purchases of MPS
stock described in Section III.R.4. and provides a monthly report to the IM with respect to such purchases and limits. The IM shall impose lower
volume limitations and take other appropriate action with respect to such purchases if the IM determines on the basis of these reports by the ECO and publicly available information materially related to the trading of the Securities of an MPS on its primary listing exchange (or market) that the purchases described have a material positive impact on the market price for
such Securities.

S. Purchases, Sales and Holdings by BlackRock Managers for Client Plans of Commercial Paper Issued by ABCP Conduits, When an MPS Has One or
More Roles

Relief under Section I of this exemption is available for the purchase and sale, including purchases from or sales to an MPS, and the holding by BlackRock Managers acting on behalf of Client Plans of commercial paper issued by an ABCP Conduit with respect to which an MPS acts as seller, placement agent, and/or in some continuing capacity such as program administrator, provider of liquidity or provider of credit support, provided that:

1. (a) The Client Plan is not an MPS
Plan of the MPS with whom the purchase or sale takes place, or an MPS
Plan of another MPS member of the same MPS Group as such MPS; and (b)
the Client Plan is not an MPS Plan of an MPS which is acting in a continuing capacity, or an MPS Plan of another MPS member of the same MPS Group as such MPS; provided that, the conditions set forth in clauses (a) and (b) of this
Section III.S.1. will be deemed met if a
Client Plan meets the condition of Section II.A.2. by reason of Section II.A.3. of this exemption;

2. Neither the MPS involved in the Covered Transaction nor any member of the same MPS Group as the MPS
involved in such Covered Transaction has discretionary authority or control with respect to Client Plan assets
involved in the Covered Transaction under this Section III.S.; provided that,
this condition will be deemed met if a
Client Plan meets the condition of Section II.A.2. by reason of Section II.A.3. of this exemption;

3. The commercial paper has a stated maturity date of nine months or less from the date of issue, exclusive of days of grace, or is a renewal of an issue of commercial paper the maturity of which is likewise limited;

4. At the time it is acquired, the commercial paper is ranked in the highest rating category by at least one of the Rating Organizations;

5. If the seller or purchaser of the ABCP commercial paper is an MPS, purchases and sales are made pursuant to the Three Quote Process, provided that, for purposes of this Section III.S.5., firm quotes on comparable short-term money market instruments rated in the same category may be used for purposes of the Three Quote Process; and

6. If an MPS performs a continuing role and there is a default, the taking or refraining from taking of any action by


### 19849 Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Notices

10 BlackRock requested such relief for the avoidance of any issue about the necessity for such relief in particular circumstances; the Department is not opining on the need for such relief herein. the responsible BlackRock Manager which could have a material positive or negative effect upon the MPS is decided upon by the IM.

No BlackRock Entity is to be regarded as an affiliate of any MPS for purposes
of the Covered Transactions set forth in
this Section III.S.

T. Purchase, Holding and Disposition by BlackRock Managers for Client Plans of Shares of Exchange-Traded Open-End Investment Companies Registered Under the 1940 Act (ETF) Managed by BlackRock Managers

Relief under Section I of this exemption is available for the purchase, holding and disposition by BlackRock Managers for Client Plans of shares of an ETF managed by a BlackRock Manager provided that:

1. The BlackRock Manager purchases such ETF shares from or through a person other than an MPS or a BlackRock Entity; and

2. No purchase is exempt under Section I of this exemption if the BlackRock Manager portfolio manager acting for the Client Plan knows or
should know that the shares to be acquired for Client Plans are Creation Shares, or that the purchase for Client
Plans will result in new Creation
Shares.

U. Purchase, Holding and/or Disposition of BlackRock Equity Securities in the Secondary Market by BlackRock Managers for an Index Account or Fund, or a Model-Driven Account or Fund, Including Buy-Ups 10

Relief under Section I of this exemption is available for the purchase, holding and disposition of common or preferred stock issued by BlackRock in the secondary market by BlackRock Managers for Client Plans in an Index Account or Fund, or in a Model-Driven Account or Fund provided that:

1. The acquisition, holding and disposition of the BlackRock Securities is for the sole purpose of maintaining quantitative conformity with the weight of such Securities prescribed by the relevant Index, for Index Accounts or Funds, or the weight of such Securities prescribed by the relevant Model, for Model-Driven Accounts or Funds, and such purchase is reasonably calculated not to exceed the purchase amount necessary for such Model or quantitative conformity by more than a de minimis

amount.

2. Any acquisition of BlackRock Securities does not involve any agreement, arrangement or understanding regarding the design or operation of the account or fund acquiring the BlackRock Securities
which is intended to benefit BlackRock or any party in which BlackRock may
have an interest.

3. With respect to an acquisition of BlackRock Securities by such an
account or fund which constitutes a Buy-Up:

(a) The acquisition is made on a singletrading day from or through one brokerdealer, which broker-dealer is not an MPS or a BlackRock Entity; provided, however, that if the volume limitation in Section III.U.3.(d) below cannot be satisfied in a single trading day, the acquisition will be completed in as few trading days as possible in compliance
with such volume limitation and such trades will be reviewed by the ECO and reported to the IM;

(b) Based upon the best available information, the acquisition is not the opening transaction of a trading day and
is not made in the last half hour before the close of the trading day;

(c) The price paid by the BlackRock Manager is not higher than the lowest current independent offer quotation,
determined on the basis of reasonable inquiry from broker-dealers who are not MPSs or BlackRock Entities;

(d) Aggregate daily purchases do not exceed fifteen percent (15%) of aggregate average daily trading volume for the Security, as determined by the greater of (i) the trading volume for the Security occurring on the applicable Recognized Securities Exchange and/or Automated Trading System on the date of the transactions, or (ii) the aggregate average daily trading volume for the Security occurring on the applicable Recognized Securities Exchange and/or Automated Trading System for the previous ten (10) trading days, both
based on the best information reasonably available at the time of the
transaction. These volume limitations are applied on a portfolio manager by portfolio manager basis unless purchases of BlackRock Securities are coordinated by the portfolio managers or trading desks, in which case the limitations are aggregated for the coordinating portfolio managers or trading desks. Provided further, if BlackRock, without Client Plan direction or consent, initiates a new
Index Account or Fund or Model-Driven Account or Fund on its own accord,
with BlackRock Securities included therein, the volume restrictions for such
new account or fund shall be determined by aggregating all portfolio managers purchasing for such new
account of fund. Cross trades of BlackRock Securities which comply with an applicable statutory or administrative prohibited transaction exemption are not included in the amount of aggregate daily purchases to
which the limitations of this Section III.U. apply;

(e) All purchases and sales of BlackRock Securities occur either (i) on a Recognized Securities Exchange, (ii) through an Automated Trading System operated by a broker-dealer that is not a BlackRock Entity and is either registered under the 1934 Act, and thereby subject to regulation by the Securities and Exchange Commission, or subject to regulation and supervision by the Securities and Futures Authority of the UK or another applicable regulatory authority, which provides a
mechanism for customer orders to be matched on an anonymous basiswithout the participation of a brokerdealer, or (iii) through an Automated Trading System that is operated by a Recognized Securities Exchange, pursuant to the applicable securities laws, and provides a mechanism for
customer orders to be matched on an anonymous basis without the participation of a broker-dealer; and

(f) The ECO designs acquisition procedures for BlackRock Managers to follow in Buy-Ups, which the IM approves in advance of the commencement of any Buy-Up, and the
ECO Function monitors BlackRock Manager’s compliance with such procedures.

V. Acquisition by BlackRock Managers of Financial Guarantees, Indemnities and Similar Protections for Client Plans from MPSs

Relief under Section I of this exemption is available for the provision by an MPS of a financial guarantee, indemnification arrangement or similar instrument or arrangement providing protection to a Client Plan against possible losses or risks provided that:

1. The terms of the arrangement (including the identity of the provider) are approved by a fiduciary of the Client Plan which is independent of the MPS providing such protection and of BlackRock;

2. The compensation owed the MPS under the arrangement is paid by a BlackRock Entity and not paid out of the assets of the Client Plan;

3. In the event a Client Plan or the
ECO concludes an event has occurred which should trigger the obligations of the MPS under the arrangement, and the MPS disagrees to any material extent, the IM determines the steps the BlackRock Manager must take to protect the interests of the Client Plan; and


### 19850 Federal Register / Vol. 77, No. 63 / Monday, April 2, 2012 / Notices

11 Proceeds of the Assigned Loan may be used by the relevant borrower to repay a debt owed to an MPS, provided that the conditions set forth in Section III.J. of this exemption are satisfied (for these purposes and for purposes of such conditions the Assigned Loan shall be deemed to be a Security).

4. The MPS providing the arrangement is capable of being sued in United States courts, has contractually agreed to be subject to litigation in the United States with respect to any matter relating to this Section III.V., and has
sufficient assets in the United States to
honor its commitments under the
arrangement.

W. Purchase of a Portion or All of a Loan to an Entity Which Is Not an MPS and Is Not a BlackRock Entity From an MPS or Other Arranger and the Holding Thereof by BlackRock Managers Where an MPS Is an Arranger, and/or an MPS Has an Ongoing Function Regarding
Such Loan

Relief under Section I of this exemption is available for the purchase from an MPS or other Arranger by BlackRock Managers on behalf of Client Plans of all or a portion of a Loan and the holding thereof, where an MPS is an Arranger and/or an MPS has an ongoing function in relation to the Loan, provided that:

1. The BlackRock Manager obtains an assignment of the Loan or portion thereof on behalf of the Client Plan, which assignment provides for the
Client Plan to become the lender of record, and the transfer of title, voting rights and all other applicable rights to such Client Plan (the Loan or the portion thereof, an ‘‘Assigned Loan’’);

2. The borrower under the Assigned
Loan is not an MPS or a BlackRock Entity; 11

3. The Assigned Loan is purchased prior to the end of the first day on which any sales are made pursuant to that offering, at a price that is not more than the price paid by each other purchaser of Assigned Loans in that offering or in any concurrent offering of the Assigned Loans, except that Assigned Loans may be purchased at a price that is not more than the price paid by each other purchaser of the Assigned Loans in that offering or in any concurrent offering of the Assigned Loans and may be purchased on a day subsequent to the end of the first day on which any sales are made, pursuant to that offering, provided that the interest rates, as of the date of such purchase, on comparable Assigned Loans offered subsequent to the end of the first day on which any sales are made and prior to the purchase date are less than the interest rate of the Assigned Loans being purchased;

4. The Assigned Loan is offered pursuant to a selling agreement or arrangement under which the Arrangers
are committed to make the full amount of the loan commitment to the borrower;

5. The borrower under the Assigned Loan to be purchased pursuant to this exemption must have been in continuous operation for not less than three (3) years, including the operation of any predecessors, unless:

(a) The Assigned Loan has a Facility Rating in one of the four highest rating categories by a Rating Organization; provided that none of the Rating Organizations provides a Facility Rating in a category lower than the fourth highest rating category with respect to the Assigned Loan; provided further that if the Assigned Loan lacks a Facility Rating, the Assigned Loan shall have a Borrower Rating that meets the ratings standards set forth in this subsection; or

(b) The Assigned Loan is fully guaranteed by a guarantor that has been in continuous operation for not less than three (3) years, including the operation of any predecessors, provided that such guarantor has issued Securities registered under the 1933 Act; or if such guarantor has issued Securities which are exempt from such registration requirement, such guarantor has been in continuous operation for not less than three (3) years, including the operation of any predecessors, and such guarantor is:

(i) A bank, (ii) An issuer of Securities which are exempt from such registration requirement, pursuant to a Federal statute other than the 1933 Act; or

(iii) An issuer of Securities that are the subject of a distribution and are of a class which is required to be registered under Section 12 of the 1934 Act, and are issued by an issuer that has been subject to the reporting requirements of Section 13 of the 1934 Act for a period of at least ninety (90) days immediately preceding the sale of such Loans and that has filed all reports required to be filed hereunder with the SEC during the preceding twelve (12) months.

6. The aggregate amount of an Assigned Loan being purchased in a Loan Offering pursuant to this exemption by the BlackRock Manager with: (i) The assets of all Client Plans; and (ii) the assets, calculated on a pro rata basis, of all Client Plans investing in Pooled Funds managed by the BlackRock Manager; and (iii) the assets of plans to which the BlackRock Manager renders investment advice within the meaning of 29 CFR 2510.3– 21(c) does not exceed: (a) Thirty five percent (35%) of the total amount of the Assigned Loan being purchased in the Loan Offering, if the Facility Rating of such Assigned Loan is, or, if such Assigned Loan does not have a Facility Rating, the borrower thereunder has a Borrower Rating, in one of the four highest rating categories by at least one of the Rating Organizations; provided that none of the Rating Organizations provides a Facility Rating for such Assigned Loan or, if such Assigned Loan does not have a Facility Rating, a Borrower Rating, in a category lower than the fourth highest rating category; or

(b) Twenty five percent (25%) of the total amount of the Assigned Loan being purchased in the Loan Offering, if the Facility Rating of such Assigned Loan is, or, if such Assigned Loan does not have a Facility Rating, the borrower thereunder has a Borrower Rating, in the fifth or sixth highest rating categories by at least one of the Rating Organizations; provided that none of the Rating Organizations provides a Facility Rating for such Assigned Loan or, if such Assigned Loan does not have a Facility Rating, a Borrower Rating, in a category lower than the sixth highest rating category; and provided that

(c) The assets of any single Client Plan (and the assets of any Client Plans investing in Pooled Funds) may not be used to purchase any Assigned Loan if the Facility Rating of such Assigned Loan is, or, if such Assigned Loan does not have a Facility Rating, the borrower thereunder has a Borrower Rating that is lower than the sixth highest rating category by any of the Rating Organizations.

7. Notwithstanding the percentage of a Loan Offering permitted to be acquired, as set forth in Subsections 6(a) or (b) of this Section III.W., the amount of Assigned Loans in a Loan Offering purchased pursuant to this exemption by the BlackRock Manager on behalf of any single Client Plan, either individually or through investment, calculated on a pro rata basis, in a Pooled Fund may not exceed three percent (3%) of the total amount of such Assigned Loans being offered in suchLoan Offering, provided that a SubAdvised Pooled Fund as a whole may purchase up to three percent (3%) of a Loan Offering.

8. The aggregate amount to be paid by any single Client Plan in purchasing any Assigned Loans which are the subject of this exemption, including any amounts paid by any Client Plan in purchasing such Assigned Loans through a Pooled Fund, calculated on a pro rata basis, does not exceed three percent (3%) of
the fair market value of the net assets of


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such Client Plan, as of the last day of the most recent fiscal quarter of such Client Plan prior to such transaction, provided
that a Sub-Advised Pooled Fund as a whole may pay up to one percent (1%)
of fair market value of its net assets in purchasing such Assigned Loans.

9. The BlackRock Manager has an opportunity to review the material terms of the Assigned Loan prior to agreeing to acquire the Assigned Loan, as well as
review information which informationmay be obtained from one or more webbased sites (e.g., Intralinks) maintained for potential investors and lenders for this purpose. Information available to be
reviewed shall include information regarding the borrower and draft loan documents (e.g., credit agreement, confidential information statement).

10. The Covered Transactions in this Section III.W. are not part of an
agreement, arrangement, or understanding designed to benefit any BlackRock Entity or MPS.

11. Each Client Plan engaging in Covered Transactions pursuant to this
Section III.W. shall have total net assets of at least $100 million in Securities of
issuers that are not affiliated with such Client Plan (the $100 Million Net Asset Requirement).

For purposes of a Pooled Fund engaging in the purchase of an Assigned Loan which is the subject of this exemption, each Client Plan in such
Pooled Fund other than a Sub-Advised
Pooled Fund shall have total net assets of at least $100 million in Securities of
issuers that are not affiliated with such Client Plan. Notwithstanding the foregoing, if each Client Plan in such
Pooled Fund other than a Sub-Advised
Pooled Fund does not have total net assets of at least $100 million in
Securities of issuers that are not affiliated with such Client Plan, the $100 Million Net Asset Requirement will be met if 50 percent (50%) or more
of the units of beneficial interest in such Pooled Fund are held by investors, each
of which have total net assets of at least $100 million in Securities of issuers that are not affiliated with such investor, and the Pooled Fund itself qualifies as a QIB.

For purposes of the net asset requirements described in this Section III.W., where a group of Client Plans is maintained by a single employer or controlled group of employers, as defined in ERISA section 407(d)(7), the $100 Million Net Asset Requirement may be met by aggregating the assets of such Client Plans, if the assets of such Client Plans are pooled for investment purposes in a single master trust.

12. No more than twenty percent (20%) of the assets of a Pooled Fund, at the time of a Covered Transaction, are comprised of assets of In-House Plans for which the BlackRock Manager, or a BlackRock Entity exercises investment
discretion.

13. The BlackRock Manager must be a QPAM, and, in addition to satisfying the requirements for a QPAM under section VI(a) of PTE 84–14, the BlackRock Manager must also have total client assets under its management and control in excess of $5 billion, as of the last day of its most recent fiscal year and shareholders’ or partners’ equity in excess of $1 million.

14. The conditions of Subsections
IV.A.11. and 12. are satisfied with respect to the Covered Transactions
described in this Section III.W.

15. With respect to any Assigned Loan under which an MPS has an ongoing function, such as an administrative agent or collateral agent, the taking of or refraining from taking of any action by the responsible BlackRock Manager which could have a material positive or negative effect upon the MPS is decided upon by the IM.

Section IV: Affiliated Underwritings and Affilliated Servicing

A. Affiliated Underwritings

1. The Securities to be purchased are
either:

(a) Part of an issue registered under the 1933 Act, or, if Securities to be purchased are part of an issue that is exempt from such registration requirement, such Securities:

(i) Are issued or guaranteed by the United States or by any person controlled or supervised by and acting as an instrumentality of the United States pursuant to authority granted by the Congress of the United States,

(ii) Are issued by a bank, (iii) Are exempt from such registration requirement pursuant to a federal statute other than the 1933 Act, or

(iv) Are the subject of a distribution and are of a class which is required to be registered under section 12 of the 1934 Act, and are issued by an issuer that has been subject to the reporting requirements of section 13 of the 1934 Act for a period of at least ninety (90) days immediately preceding the sale of
such Securities and that has filed all reports required to be filed thereunder with the SEC during the preceding twelve (12) months; or

(b) Part of an issue that is an Eligible Rule 144A Offering. Where the Eligible Rule 144A Offering of the Securities is of equity Securities, the offering syndicate shall obtain a legal opinion regarding the adequacy of the disclosure in the offering memorandum; or (c) Municipal bonds taxable by the United States, including Build America
Bonds created under section 54AA of the Code or successor thereto, under which the United States pays a subsidy to the state or local government issuer, but not including Build America Bonds which provide a tax credit to investors.

2. The Securities to be purchased are purchased prior to the end of the first day on which any sales are made, pursuant to that offering, at a price that is not more than the price paid by each other purchaser of the Securities in that offering or in any concurrent offering of the Securities, except that:

(a) If such Securities are offered for subscription upon exercise of rights, they may be purchased on or before the fourth day preceding the day on which the rights offering terminates; or

(b) If such Securities are debt Securities, they may be purchased at a price that is not more than the price paid by each other purchaser of the Securities in that offering or in any concurrent offering of the Securities and may be purchased on a day subsequent to the end of the first day on which any sales are made, pursuant to that offering, provided that the interest rates, as of the date of such purchase, on comparable debt Securities offered to the public subsequent to the end of the first day on which any sales are made and prior to the purchase date are less than the interest rate of the debt Securities being purchased; and

3. The Securities to be purchased are offered pursuant to an underwriting or selling agreement under which the members of the syndicate are committed to purchase all of the Securities being offered, except if:

(a) Such Securities are purchased by others pursuant to a rights offering; or

(b) Such Securities are offered pursuant to an over-allotment option.

4. The issuer of the Securities to be purchased pursuant to this exemption must have been in continuous operation for not less than three (3) years, including the operation of any predecessors, unless the Securities to be purchased:

(a) Are non-convertible debt
Securities rated in one of the four highest rating categories by a Rating Organization; provided that none of the Rating Organizations rates such Securities in a category lower than the fourth highest rating category; or

(b)(i) Are debt Securities issued or fully guaranteed by the United States or by any person controlled or supervised by and acting as an instrumentality of the United States pursuant to authority granted by the Congress of the United
States; or


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(ii) Are municipal bonds taxable by the United States, including Build
America Bonds created under section 54AA of the Code or successor thereto, under which the United States pays a subsidy to the state or local government issuer, but not including Build America Bonds which provide a tax credit to
investors; or

(c) Are debt Securities which are fully guaranteed by a guarantor that has been in continuous operation for not less than three (3) years, including the operation of any predecessors, provided that such guarantor has issued other Securities registered under the 1933 Act; or if such guarantor has issued other Securities which are exempt from such registration requirement, such guarantor has been in continuous operation for not less than three (3) years, including the operation of any predecessors, and such guarantor is:

(i) A bank; (ii) An issuer of Securities which are exempt from such registration requirement, pursuant to a Federal statute other than the 1933 Act; or

(iii) An issuer of Securities that are the subject of a distribution and are of a class which is required to be registered under section 12 of the 1934 Act, and are issued by an issuer that has been subject to the reporting requirements of section 13 of the 1934 Act for a period of at least ninety (90) days immediately preceding the sale of such Securities and that has filed all reports required to be filed hereunder with the SEC during the preceding twelve (12) months.

5. The aggregate amount of Securities of an issue purchased, pursuant to this exemption, by the BlackRock Manager with: (i) The assets of all Client Plans; and (ii) the assets, calculated on a pro
rata basis, of all Client Plans investing in Pooled Funds managed by the BlackRock Manager; and (iii) the assets of plans to which the BlackRock Manager renders investment advice within the meaning of 29 CFR 2510.3 21(c) does not exceed:

(a) Ten percent (10%) of the total amount of the Securities being offered in an issue, if such Securities are equity
Securities;

(b) Thirty five percent (35%) of the total amount of the Securities being offered in an issue, if such Securities are
Asset-Backed Securities rated in one of the three highest rating categories by at least one of the Rating Organizations; provided that none of the Rating Organizations rates such Securities in a category lower than the third highest rating category;

(c) Thirty five percent (35%) of the total amount of the Securities being offered in an issue, if such Securities are debt Securities rated in one of the four highest rating categories by at least one of the Rating Organizations; provided that none of the Rating Organizations rates such Securities in a category lower than the fourth highest rating category;

or (d) Twenty five percent (25%) of the total amount of the Securities being offered in an issue, if such Securities are debt Securities (excluding Asset-Backed Securities) rated in the fifth or sixth highest rating categories by at least one of the Rating Organizations; provided that none of the Rating Organizations rates such Securities in a category lower than the sixth highest rating category;
and

(e) The assets of any single Client Plan (and the assets of any Client Plans investing in Pooled Funds) may not be used to purchase any Securities being offered, if such Securities are debt
Securities rated lower than the sixth highest rating category by any of the Rating Organizations;

(f) Notwithstanding the percentage of Securities of an issue permitted to be acquired, as set forth in Subsections A.5.(a)–(d) of this Section IV., the amount of Securities in any issue (whether equity or debt Securities or Asset-Backed Securities) purchased, pursuant to this exemption, by the BlackRock Manager on behalf of any single Client Plan, either individually or through investment, calculated on a pro
rata basis, in a Pooled Fund may not exceed three percent (3%) of the total amount of such Securities being offeredin such issue, provided that a SubAdvised Pooled Fund as a whole may purchase up to three percent (3%) of an issue; and

(g) If purchased in an Eligible Rule 144A Offering, the total amount of the Securities being offered for purposes of determining the percentages, described, above, in Section IV.A.5.(a)–(d) and (f),
is the total of:

(i) The principal amount of the offering of such class of Securities sold by underwriters or members of the selling syndicate to QIBs; plus

(ii) The principal amount of the offering of such class of Securities in any concurrent public offering.

6. The aggregate amount to be paid by any single Client Plan in purchasing any Securities which are the subject of this exemption, including any amounts paid by any Client Plan in purchasing such Securities through a Pooled Fund,
calculated on a pro rata basis, does not exceed three percent (3%) of the fair
market value of the net assets of such Client Plan, as of the last day of the most recent fiscal quarter of such Client Plan prior to such transaction, provided that a Sub-Advised Pooled Fund as a whole may pay up to one percent (1%) of fair
market value of its net assets in purchasing such Securities.

7. The Covered Transactions are not part of an agreement, arrangement, or understanding designed to benefit any BlackRock Entity or MPS.

8. Each Client Plan shall have total net assets with a value of at least $50 million (the $50 Million Net Asset Requirement). For purposes of engaging in Covered Transactions involving an Eligible Rule 144A Offering, each Client
Plan shall have total net assets of at least $100 million in Securities of issuers that
are not affiliated with such Client Plan (the $100 Million Net Asset Requirement).

For purposes of a Pooled Fund engaging in an Affiliated Underwriting,
each Client Plan in such Pooled Fund
other than a Sub-Advised Pooled Fund
shall have total net assets with a value of at least $50 million. Notwithstanding the foregoing, if each such Client Plan
in a Pooled Fund other than a SubAdvised Pooled Fund does not have
total net assets with a value of at least $50 million, the $50 Million Net Asset Requirement will be met, if fifty percent (50%) or more of the units of beneficial interest in such Pooled Fund are held by investors, each of which has total net assets with a value of at least $50
million.

For purposes of a Pooled Fund engaging in an Affiliated Underwriting involving an Eligible Rule 144A Offering, each Client Plan in such
Pooled Fund other than a Sub-Advised
Pooled Fund shall have total net assets of at least $100 million in Securities of
issuers that are not affiliated with such Client Plan. Notwithstanding the foregoing, if each such Client Plan in
such Pooled Fund other than a SubAdvised Pooled Fund does not have total net assets of at least $100 million
in Securities of issuers that are not affiliated with such Client Plan, the $100 Million Net Asset Requirement will be met if fifty percent (50%) or
more of the units of beneficial interest in such Pooled Fund are held by investors, each of which have total net assets of at least $100 million in
Securities of issuers that are not affiliated with such investor, and the Pooled Fund itself qualifies as a QIB.

For purposes of the net asset requirements described, above in Section IV.A.8., where a group of Client Plans is maintained by a single employer or controlled group of employers, as defined in ERISA section 407(d)(7), the $50 Million Net Asset Requirement (or in the case of an Eligible Rule 144A Offering, the $100


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Million Net Asset Requirement) may be met by aggregating the assets of such Client Plans, if the assets of such Client Plans are pooled for investment purposes in a single master trust.

9. No more than twenty percent (20%) of the assets of a Pooled Fund, at the time of a Covered Transaction, are comprised of assets of In-House Plans for which the BlackRock Manager, or a BlackRock Entity exercises investment
discretion.

10. The BlackRock Manager must be a QPAM, and, in addition to satisfying the requirements for a QPAM under section VI(a) of PTE 84–14, the BlackRock Manager must also have total client assets under its management and control in excess of $5 billion, as of the last day of its most recent fiscal year and shareholders’ or partners’ equity in excess of $1 million.

11. The BlackRock Manager maintains, or causes to be maintained, for a period of six (6) years from the date of any Covered Transaction such records as are necessary to enable the persons described below in Section IV.A.12.(a) to determine whether the conditions of this exemption have been met, except that:

(a) No party in interest with respect to a plan which engages in the Covered Transactions, other than the BlackRock Manager, shall be subject to a civil penalty under ERISA section 502(i) or the taxes imposed by Code sections 4975(a) and (b), if such records are not maintained, or not available for examination as required below by Section IV.A.12.(a); and

(b) A separate prohibited transaction
shall not be considered to have occurred if, due to circumstances beyond the control of the BlackRock Manager, such records are lost or destroyed prior to the end of the six-year period.

12. (a) Except as provided below, in Section IV.A.12.(b), and notwithstanding the provisions of subsections (a)(2) and (b) of ERISA section 504, the records referred to, above, in Section IV.A.11. are unconditionally available at their customary location for examination during normal business hours by:

(i) Any duly authorized employee or representative of the Department, the Internal Revenue Service, or the SEC;

(ii) Any fiduciary of any Client Plan that engages in the Covered Transactions, or any duly authorized employee or representative of such fiduciary;

(iii) Any employer of participants and beneficiaries and any employee organization whose members are covered by a Client Plan that engages in the Covered Transactions, or any authorized employee or representative of these entities; or

(iv) Any participant or beneficiary of a Client Plan that engages in the Covered Transactions, or duly authorized employee or representative of such participant or beneficiary;

(b) None of the persons described in Section IV.A.12.(a)(ii) through (iv) shall
be authorized to examine trade secrets of the BlackRock Manager, or
commercial or financial information which is privileged or confidential; and

(c) Should the BlackRock Manager
refuse to disclose information on the basis that such information is exempt from disclosure, pursuant to Section IV.A.12.(b), the BlackRock Manager shall, by the close of the thirtieth (30th) day following the request, provide a written notice advising that person of
the reasons for the refusal and that the Department may request such
information.

B. Affiliated Servicing

1. The Securities are CMBS that are rated in one of the three highest rating categories by a Rating Organization; provided that none of the Rating Organizations rates such Securities in a category lower than the third highest rating category.

2. The purchase of the CMBS meets the conditions of an applicable Underwriter Exemption.

3. (a) The aggregate amount of CMBS of an issue purchased, pursuant to this exemption, by the BlackRock Manager
with:

(i) The assets of all Client Plans; and (ii) The assets, calculated on a pro rata basis, of all Client Plans and In-House Plans investing in Pooled Funds managed by the BlackRock Manager;
and

(iii) The assets of plans to which the BlackRock Manager renders investment advice, within the meaning of 29 CFR Sec. 2510.3–21(c), does not exceed thirty five percent (35%) of the total amount of the CMBS being offered in an

issue.

(b) Notwithstanding the percentage of CMBS of an issue permitted to be acquired, as set forth in Section IV.B.3.(a) of this exemption, the amount of CMBS in any issue purchased, pursuant to this exemption, by the BlackRock Manager on behalf of any single Client Plan, either individually or through investment, calculated on a pro rata basis, in a Pooled Fund may not exceed three percent (3%) of the total amount of such CMBS being offered in such issue, and;

(c) If purchased in an Eligible Rule 144A Offering, the total amount of the CMBS being offered for purposes of determining the percentages described in Section IV.B.3.(a), is the total of:

(i) The principal amount of the offering of such class of CMBS sold by underwriters or members of the selling syndicate to QIBs; plus

(ii) The principal amount of the offering of such class of CMBS in any concurrent public offering.

4. The aggregate amount to be paid by any single Client Plan in purchasing any CMBS which are the subject of this exemption, including any amounts paid by any Client Plan in purchasing such CMBS through a Pooled Fund, calculated on a pro rata basis, does not exceed three percent (3%) of the fair
market value of the net assets of such Client Plan, as of the last day of the most recent fiscal quarter of such Client Plan prior to such transaction.

5. The Covered Transactions under this Section IV.B. are not part of an
agreement, arrangement, or understanding designed to benefit any

MPS.

6. The requirements of Sections IV.A.8. through 12. are met.

Section V: Correction Procedures

A. 1. The ECO shall monitor Covered
Transactions and shall determine whether a particular Covered
Transaction constitutes a Violation. The ECO shall notify the IM within five (5) business days following the discovery of any Violation.

2. The ECO shall make an initial
determination as to how to correct a Violation and place the conclusion of such determination in writing, with
such conclusion disclosed to the IM within five (5) business days of the placing of the conclusion of such determination in writing. Following the initial determination, the ECO must keep the IM apprised on a current basis of the process of correction and must consult with the IM regarding each Violation and the appropriate form of correction. The ECO shall report the
correction of the Violation to the IM within five (5) business days following completion of the correction. For purposes of this Section V.A.2.,
‘‘correction’’ must be consistent with ERISA section 502(i) and Code section 4975(f)(5).

3. The IM shall determinate whether it agrees that the correction of a Violation by the ECO is adequate and shall place the conclusion of such determination in writing, and, if the IM does not agree with the adequacy of the correction, the IM shall have the authority to require additional corrective actions by BlackRock.

4. A summary of Violations and
corrections of Violations will be in the


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12 PTE 2002–51, 67 FR 70623 (November 25, 2002), as amended, 71 FR 20135 (April 19, 2006).

13 The definition of terms herein shall apply equally to the singular and plural forms of the terms defined. Section headings are for convenience only. IM’s annual compliance report as
described in Section II.E.12.

B. Special Correction Procedure

1. If a Covered Transaction which
would otherwise constitute a Violation is corrected under this ‘‘Special Correction Procedure,’’ such Covered Transaction shall continue to be exempt under Section I of this exemption.

2. (a) The Special Correction Procedure is a complete correction of the Violation no later than fourteen (14) business days following the date on which the ECO submits the quarterly report to the IM for the quarter in which
the Covered Transaction first would become a non-exempt prohibited transaction by reason of constituting a
Violation if not for this Section V.B.

(b) Solely for purposes of the Special Correction Procedure, ‘‘correction’’ of a
Covered Transaction which would
otherwise be a Violation means either:

(i) Restoring the Client Plan to the position it would have been in had the conditions of the exemption been complied with;

(ii) correction consistent with ERISA section 502(i) and Code section 4975(f)(5); or

(iii) correction consistent with the Voluntary Fiduciary Correction Program. 12

(c) Other than with respect to the definition of ‘‘correction’’ specified above, when utilizing the Special
Correction Procedure the ECO and the IM shall comply with Section V.A.

Section VI: Definitions 13

A. ‘‘1933 Act’’ means the Securities Act of 1933, as amended.

B. ‘‘1934 Act’’ or ‘‘Exchange Act’’ means the Securities Exchange Act of 1934, as amended.

C. ‘‘1940 Act’’ means the Investment Company Act of 1940, as amended.

D. ‘‘$50 Million Net Asset Requirement’’ shall have the meaning
set forth in Section IV.A.8. of this exemption.

E. ‘‘$100 Million Net Asset Requirement’’ shall have the meaning
set forth in Section IV.A.8. of this exemption.

F. ‘‘ABCP Conduit’’ means a special purpose vehicle that acquires assets from one or more originators and issues commercial paper to provide funding to the originator(s). Such vehicles are typically administered by a bank, but is not required to be administered by a bank, which provides liquidity support (standing ready to purchase the conduit’s commercial paper if it cannot be rolled over) and/or credit support (committing to cover losses in the event of default). The program administrator also typically acts as placement agent for the commercial paper, sometimes together with one or more other placement agents. Commercial paper issued by such a conduit may be purchased directly from the program administrator or other placement agent, or traded on the secondary market with another broker-dealer making a market
in the Securities.

G. ‘‘Acquisition’’ means the acquisition by BlackRock of Barclays Global Investors UK Holdings, Ltd. and its subsidiaries on December 1, 2009.

H. ‘‘Affiliate’’ of another person

means:

(1) Any person directly or indirectly, through one or more intermediaries, controlling, controlled by, or under common control with such person;

(2) Any officer, director, partner, employee, or relative (as defined in section 3(15) of ERISA) of such other person; and

(3) Any corporation or partnership of which such other person is an officer, director, partner or employee.

I. ‘‘Arranger’’ means a sophisticated financial institution, such as a commercial or investment bank, regularly engaged in structuring
commercial loans.

J. ‘‘Asset-Backed Securities’’ means Securities which are pass-through
certificates or trust certificates characterized as equity pursuant to 29 CFR 2510.3–101 that represent a beneficial ownership interest in the assets of an issuer which is a trust, with any such trust limited to (1) a single or multi-family residential or commercial mortgage investment trust, or (2) a
motor vehicle receivable investment trust, and which entitles the holder to payments of principal, interest and/or other payments made with respect to the assets of the trust, the corpus or assets of which consist solely or primarily of secured obligations that bear interest or are purchased at a discount. For purposes of Section IV.A. of this exemption, excluding Section IV.A.5., Asset-Backed Securities are
treated as debt Securities.

K. ‘‘Assigned Loan’’ has the meaning
set forth in Section III.W.1. of this exemption.

L. ‘‘Authorizing fiduciary’’ has the meaning set forth in Section III.M.4(d)(i) of this exemption.

M. ‘‘Automated Trading System’’ or ‘‘ATS’’ means an electronic trading system, ECN or electronic clearing
network or similar venue that functions in a manner intended to simulate a Securities exchange by electronically matching orders from multiple buyers and sellers, such as an ‘‘alternative trading system’’ within the meaning of the SEC’s Reg. ATS (17 CFR part 242.300), as such definition may be amended from time to time, or an ‘‘automated quotation system’’ as described in Section 3(a)(51)(A)(ii) of
the 1934 Act.

N. ‘‘BlackRock’’ means BlackRock, Inc. and any successors thereof.

O. ‘‘BlackRock Entity’’ means BlackRock and any entity directly or indirectly, through one or more intermediaries, under the control of BlackRock, and any other entity which subsequently becomes directly or indirectly, through one or more intermediaries, under the control of BlackRock, and successors of the foregoing.

P. ‘‘BlackRock Manager’’ means any bank, investment advisor, investment manager directly or indirectly, through one or more intermediaries, under the control of BlackRock, and any other bank, investment advisor, or investment manager which subsequently becomes directly or indirectly, through one or more intermediaries, under the control of BlackRock, and successors of the foregoing, including but not limited to BlackRock Advisors, LLC, BlackRock Financial Management, Inc., BlackRock Capital Management, Inc., BlackRock Institutional Management Corporation, BlackRock International, Ltd., BlackRock Realty Advisors, Inc., BlackRock Investment Management, LLC, BlackRock Fund Advisors, and BlackRock Institutional Trust Company, N.A. and any of the investment advisors and investment manager it controls.

Q. ‘‘Board’’ means the Board of
Directors of BlackRock.

R. ‘‘Borrower Rating’’ means, solely for purposes of Section III.W. of this exemption, a rating assigned by a Rating Organization to a borrowing entity reflecting such borrower’s overall capacity and willingness to meet its financial obligations. More specifically, a Borrower’s Rating generally refers to the borrower’s ability and willingness to meet senior, unsecured obligations.

S. ‘‘Buy-Up’’ means an initial acquisition of Securities issued by BlackRock by a BlackRock Manager, if such acquisition exceeds one percent (1%) of the aggregate daily trading volume for such Security, for an Index Account or Fund, or a Model-Driven Account or Fund which is necessary to bring the fund’s or account’s holdings of
such Securities either to its capitalization-weighted or other specified composition in the relevant


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Index, as determined by the organization maintaining such Index, or to its correct weighting as determined by the Model.

T. ‘‘Client Plan’’ means any plan subject to ERISA section 406, Code section 4975 or FERSA section 8477(c) for which a BlackRock Manager is a fiduciary as described in ERISA section 3(21), including, but not limited to, any Pooled Fund, MPS Plan, Index Account or Fund, Model-Driven Account orFund, Other Account or Fund, or InHouse Plan, except where specified to the contrary.

U. ‘‘CMBS’’ means an Asset-Backed Security with respect to which the assets or corpus of the issuer consist solely or primarily of obligations secured by commercial real property (including obligations secured by
leasehold interests on commercial real property).

V. ‘‘Code’’ means the Internal Revenue Code of 1986, as amended.

W. ‘‘Control’’ means the power to exercise a controlling influence over the management or policies of a person
other than an individual.

X. ‘‘Covered Transaction’’ means each transaction set forth in Section III by a BlackRock Manager for a Client Plan with, affecting or involving, directly or indirectly, an MPS and/or a BlackRock Entity.

Y. ‘‘Creation Shares’’ means new shares in an ETF created by an exchange of a specified basket of Securities and/
or cash to the ETF for such new shares
of the ETF.

Z. ‘‘ECO Function’’ means the ECO and such other BlackRock Entity employees in legal and compliance roles working under the supervision of the
ECO in connection with the Covered
Transactions. The list of BlackRock Entity employees shall be shared with the IM from time to time, not less than quarterly, and such employees will be
made available to discuss the relevant
Covered Transactions with the IM to the
extent the IM or the ECO deem it reasonably prudent.

AA. ‘‘Electronic Communications
Network’’ or ‘‘ECN’’ means an electronic system described in Rule 600(b)(23) of Regulation NMS under the 1934 Act.

BB. ‘‘Eligible Rule 144A Offering’’ shall have the same meaning as definedin SEC Rule 10f-3(a)(4) (17 CFR 270.10f3(a)(4)) under the 1940 Act.

CC. ‘‘Eligible Securities Depository’’ means an eligible securities depository
as that term is defined under Rule 17f7 of the 1940 Act, as such definition may be amended from time to time.

DD. ‘‘EPP Correction’’ has the meaning set forth in Section II.C. of this exemption. EE. ‘‘ERISA’’ means the Employee Retirement Income Security Act of 1974,
as amended.

FF. ‘‘ETF’’ means an exchange-traded open-end investment company registered under the 1940 Act.

GG. ‘‘Exemption Compliance Officer’’
or ‘‘ECO’’ means an officer of BlackRock or of a BlackRock Entity appointed by BlackRock or such BlackRock Entity, subject to the approval of the IM, who is responsible for compliance with the exemption. The ECO, unless otherwise stated in this exemption, will be responsible for: monitoring all Covered Transactions and reviewing compliance
with all of the conditions of the exemption applicable thereto; approving
certain Covered Transactions in advance as required by the terms of the exemption; reviewing reports of
Covered Transactions and the results of sampling of Covered Transactions; and determining when Covered Transactions transgress the EPPs and/or constitute a
Violation.

HH. ‘‘Exemption Polices and
Procedures’’ or ‘‘EPPs’’ means the written policy adopted and implemented by BlackRock for BlackRock Entities that is reasonably designed to ensure compliance with the terms of the exemption. The EPPs must reflect the specific requirements of the exemption, but must also be designed to
ensure that the decisions to enter into
Covered Transactions on behalf of
Client Plans with the MPSs are in the
interests of Client Plans and their participants and beneficiaries, including by ensuring to the extent possible that
the terms of each Covered Transaction
are at least as favorable to the Client Plan as the terms generally available in comparable arm’s length transactions with unrelated parties.

II. ‘‘Facility Rating’’ means, solely for purposes of Section III.W. of this exemption, a rating assigned by a Rating Organization to a specific loan, note or other financial obligation, a specific class of financial obligations, or a specific financial program within a borrower’s capital structure. The rating on a specific loan facility or other issue may reflect positive or negative adjustments relative to the borrower’s rating for (1) the presence of collateral, (2) explicit subordination, or (3) any other factors that affect the payment priority, expected recovery, or credit stability of the specific issue.

JJ. ‘‘FarmerMac’’ means the Federal Agricultural Mortgage Corporation.

KK. ‘‘FERSA’’ means the Federal Employees’ Retirement System Act of 1986, as amended.

LL. ‘‘FHLMC’’ means the Federal Home Loan Mortgage Corporation. MM. ‘‘Fixed Income Obligations’’ means: (1) Fixed income obligations including structured debt or other
instruments characterized as debt pursuant to 29 CFR 2510.3–101, including, but not limited to, debt convertible into equity, certificates of deposit and loans (other than loans described in Section III.W. with respect to which an MPS is an Arranger) and (2) guaranteed governmental mortgage pool certificates within the meaning of 29 CFR 2510.3–101(i). Asset-Backed
Securities are not Fixed Income Obligations for purposes of this exemption.

NN. ‘‘FNMA’’ means the Federal National Mortgage Association.

OO. ‘‘Foreign Bank’’ means an institution that has substantially similar powers to a bank as defined in section 202(a)(2) of the Investment Advisers Act, as amended, has as of the last day of its most recent fiscal year, equity capital which is the equivalent of no less than $200 million, and is subject to:

(1)(a) Registration and regulation, as applicable, under the laws of the United Kingdom, or (b)(i) registration and regulation by a securities commission of
a Province of Canada that is a member
of the Canadian Securities Administration, and (ii) is subject to the oversight of a Canadian self-regulatory authority; or

(2) Regulation by the relevant governmental banking agency(ies) of a country other than the United States and the regulation and oversight of these banking agencies were applicable to a bank that received: (a) An individual exemption, granted by the Department under section 408(a) of ERISA, involving the loan of Securities by a plan to a bank or (b) a final authorization by the Department to engage in an otherwise prohibited transaction pursuant to PTE 96–62, as amended, involving the loan of Securities by a plan to a bank. On the date this exemption becomes effective, the following countries shall qualify for purposes of this clause (2): United Kingdom, Canada, Germany, Japan, Australia, Switzerland, France, the
Netherlands and Sweden.

PP. ‘‘Foreign Broker-Dealer’’ means a broker-dealer that has, as of the last day of its most recent fiscal year, equity capital that is the equivalent of no less than $200 million and is:

(1) Registered and regulated under the laws of the United Kingdom;

(2) Registered and regulated by a
securities commission of a Province of
Canada that is a member of the Canadian Securities Administration, and is subject to the oversight of a Canadian self-regulatory authority; or


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(3) Registered and regulated under the
relevant Securities laws of a governmental entity of a country other
than the United States and such Securities laws and regulation were applicable to a broker-dealer that received: (a) An individual exemption, granted by the Department under section 408(a) of ERISA, involving theloan of Securities by a plan to a brokerdealer or (b) a final authorization by the Department to engage in an otherwise prohibited transaction pursuant to PTE 96–62, as amended, involving the loanof Securities by a plan to a brokerdealer. On the date this exemption becomes effective, the following countries shall qualify for purposes of this clause (2): United Kingdom, Canada, Germany, Japan, Australia, Switzerland, France, the Netherlands
and Sweden.

QQ. ‘‘Foreign Collateral’’ means: (1) Securities issued by or guaranteed as to principal and interest by the following Multilateral Development Banks, the obligations of which are backed by the participating countries, including the United States: The
International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the European Bank for Reconstruction and Development
and the International Finance Corporation;

(2) Foreign sovereign debt Securities provided that at least one nationally recognized statistical rating organization has rated in one of its two highest categories either the issue, the issuer or
guarantor;

(3) The British pound, the Canadian dollar, the Swiss franc, the Japanese yen or the Euro;

(4) Irrevocable letters of credit issued by a Foreign Bank, other than the borrower or an affiliate thereof, which has a counterparty rating of investment grade or better as determined by a nationally recognized statistical rating organization; or

(5) Any type of collateral described in
Rule 15c3–3 of the 1934 Act as amended from time to time provided that the lending fiduciary is a U.S. Bank or U.S. Broker-Dealer and such fiduciary indemnifies the plan with respect to the difference, if any, between the replacement cost of the borrowed
Securities and the market value of the
collateral on the date of a borrower default plus interest and any transaction costs which a plan may incur or suffer directly arising out of a borrower default. Notwithstanding the foregoing, collateral described in any of the categories enumerated in section V(e) of Prohibited Transaction Exemption
2006–16 will be considered U.S. Collateral for purposes of the exemption.

RR. ‘‘Foreign Exchange Transaction’’ means the exchange of the currency of one nation for the currency of another nation, or a contract for such an exchange. The term Foreign Exchange Transaction includes option contracts on foreign exchange transactions. Foreign Exchange Transactions may be either ‘‘spot’’, ‘‘forward’’ or ‘‘split’’ depending on the settlement date of the

transaction.

SS. ‘‘GNMA’’ means the Government National Mortgage Association.

TT. ‘‘Independent Monitor’’ or ‘‘IM’’ means an individual or entity appointed by BlackRock to carry out certain functions set forth in Sections II, III and V of the exemption and who (or which), given the number of types of Covered
Transactions and the number of actual
individual Covered Transactions potentially covered by the exemption, must be knowledgeable and experienced with respect to each Covered
Transaction and able to demonstrate sophistication in relevant markets, instruments and trading techniques relative thereto, and, in addition, must understand and accept in writing its duties and responsibilities under ERISA and the exemption with respect to the
Client Plans. The IM must be independent of and unrelated to BlackRock and any MPS. For purposes of this exemption, such individual or entity will not be deemed to be independent of and unrelated to
BlackRock and the MPSs if:

(1) Such individual or entity directly or indirectly controls, is controlled by,
or is under common control with BlackRock or an MPS;

(2) Such individual or entity, or any employee thereof performing services in connection with this exemption, or an officer, director, partner, or highly compensated employee (as defined in Code section 4975(e)(2)(H)) thereof, is an officer, director, partner or highly compensated employee (as defined in Code section 4975(e)(2)(H)) of BlackRock or an MPS; or any member of the business segment performing
services in connection with this exemption is a relative of an officer, director, partner or highly compensated employee (as defined in Code section 4975(e)(2)(H)) of BlackRock or an MPS.

However, if an individual is a director of the IM and an officer, director, partner or highly compensated employee (as defined in Code section 4975(e)(2)(H)) of BlackRock or an MPS,
and if he or she abstains from participation in any of the services performed by the IM under this exemption, then this Section VI.OO.(2) shall not apply.

For purposes of this Subsection, the term officer means a president, any senior vice president in charge of a principal business unit, division or function (such as sales, administration, or finance), or any other officer who performs a policy-making function for the IM, BlackRock, or an MPS.

(3) The IM directly or indirectly receives any compensation or other consideration for the IM’s personal account in connection with any Covered Transaction, except that the IM may receive compensation from BlackRock for acting as IM as contemplated herein if the amount or payment of such compensation is reasonable and not contingent upon or in any way affected by any decision made by the IM while acting as IM; or

(4) The annual gross revenue received by the IM, during any year of its engagement, from the MPSs and
BlackRock Entities for all services exceeds the greater of (a) five percent (5%) of the IM’s annual gross revenue from all sources for its prior tax year, or, (b) one percent (1%) of the annual gross revenue of the IM and its majority
shareholder from all sources for their prior tax year.

UU. ‘‘Index’’ means an equity or debt
Securities or commodities index that represents the investment performance of a specific segment of the market for equity or debt Securities or commodities
in the United States and/or an individual foreign country or any collection of foreign countries, but only

if—

(1) The organization creating and maintaining the index is:

(a) Engaged in the business of providing financial information, evaluation, advice or Securities brokerage services to institutional clients,

(b) A publisher of financial news or information, or

(c) A public Securities exchange or association of Securities dealers; and

(2) The index is created and maintained by an organization independent of all BlackRock Entities. For purposes of this definition of ‘‘Index,’’ every BlackRock Entity is deemed to be independent of every

MPS.

(3) The index is a generally accepted
standardized index of Securities or commodities which is not specifically
tailored for the use of a BlackRock Manager(s).

(4) If the organization creating, providing or maintaining the Index is an

MPS:


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(a) Such Index must be widely-used in the market by independent
institutional investors other than pursuant to an investment management or advisory relationship with a BlackRock Manager, and must be prepared or applied by such MPS in the
same manner as for customers other than a BlackRock Manager(s);

(b) BlackRock must certify to the ECO whether, in its reasonable judgment, such Index is widely-used in the market. In making this determination,
BlackRock shall take into consideration factors such as (i) publication of summary Index information by the MPS providing the Index, Bloomberg, Reuters, or a similar institution involved
in the dissemination of financial information, and (ii) delivery of Index information including but not limited to Index component information by such
MPS to clients or other subscribers including by electronic means including via the Internet;

(c) BlackRock must notify the ECO if it becomes aware that: (i) Such Index is operated other than in accordance with objective rules, in the ordinary course of business, (ii) manipulation of any such Index has occurred for the purpose of benefiting BlackRock, or (iii) in the event that any rule change occurred in connection with the rules underlying such Index, such rule change was made by the MPS for the purpose of benefiting BlackRock; provided, however, this Subsection (c)(iii) expressly excludes instances where the rule changes were made in response to requests from clients/prospective clients of BlackRock even if BlackRock is ultimately hired to manage such a portfolio (e.g., if plan sponsor X requests a ‘‘Global ex-Sudan Fixed Income Index’’, an MPS decides to sponsor such index and plan sponsor X approaches BlackRock or otherwise issues a ‘‘Request for Proposal’’ for investment managers who could manage an index portfolio benchmarked to the Global ex-Sudan Fixed Income Index).

(d) BlackRock must certify to the ECO annually that it is not aware of the occurrence of any of the events described in Section VI.PP.(4)(c), and if BlackRock cannot so certify, or if BlackRock provides the ECO with the notice described Section VI.PP.(4)(c), the ECO shall notify the IM, and the IM must take appropriate remedial action which may include, but need not be limited to, instructions for relevant BlackRock Managers to cease using such
Index.

VV. ‘‘Index Account or Fund’’ means any investment fund, account or portfolio sponsored, maintained, trusteed, or managed by a BlackRock Manager or a BlackRock Entity, in which one or more Client Plans invest,
and—

(1) Which is designed to track the rate of return, risk profile and other characteristics of an Index by either (i) replicating the same combination of
Securities or commodities which compose such Index or (ii) sampling the
Securities or commodities which compose such Index based on objective criteria and data;

(2) For which the BlackRock Manager does not use its discretion, or data within its control, to affect the identity
or amount of Securities or commodities to be purchased or sold;

(3) That contains ‘‘plan assets’’ subject to either ERISA section 406, Code section 4975 or FERSA section 8477(c); and,

(4) That involves no agreement, arrangement, or understanding regarding the design or operation of the
Index Account or Fund which is intended to benefit a BlackRock Entity or an MPS, or any party in which a BlackRock Entity or an MPS may have

an interest.

For purposes of this definition of ‘‘Index Account or Fund’’, every BlackRock Entity is deemed to be independent of each MPS.

WW. ‘‘In-House Plan’’ means an employee benefit plan that is subject to
ERISA section 406 and/or Code section 4975, and that is sponsored by a BlackRock Entity for its employees.

XX. ‘‘Interbank Rate’’ means the interbank bid and asked rate for foreign exchange transactions of comparable size and maturity at the time of the transaction as quoted on a nationally recognized service for facilitating foreign currency trades between large
commercial banks and Securities
dealers.

YY. ‘‘Know’’ means to have actual knowledge. BlackRock Managers will be deemed to have actual knowledge of
information set forth in a written agreement or offering document as of the date the BlackRock Manager receives such agreement or document.

ZZ. ‘‘Lead Arranger’’ means, with respect to any Loan Offering involving more than one Arranger, the Arranger designated as such by all of such Arrangers.

AAA. ‘‘Loan’’ means, solely for purposes of Section III.W. of this exemption, a delivery by a lender and receipt by a commercial borrower of a sum of money to fund current and ongoing operations or a specific transaction upon agreement that such borrower is to repay it upon agreed terms. For the avoidance of doubt, this term does not include any Fixed Income Obligations which are covered separately under Section IV.A. of this exemption.

BBB. ‘‘Loan Offering’’ means, with respect to the aggregate principal amount of any Loan extended to a commercial borrower in any single transaction, the process of structuring, marketing and offering to banks, insurance companies, investment funds
and other institutional investors the opportunity to purchase interests in
such Loan.

CCC. ‘‘Model’’ means a computer model that is based on prescribed objective criteria using independent
data not within the control of a BlackRock Entity to transform an Index.

DDD. ‘‘Model-Driven Account or Fund’’ means any investment fund, account or portfolio sponsored, maintained, trusteed, or managed by a BlackRock Manager or a BlackRock Entity in which one or more Client Plans invest, and—

(1) Which is composed of Securities or commodities the identity of which and the amount of which are selected by a Model;

(2) That contains ‘‘plan assets’’ subject to either ERISA section 406, Code section 4975 or FERSA section 8477(c);
and

(3) That involves no agreement, arrangement, or understanding regarding the design or operation of the
Model-Driven Account or Fund or the utilization of any specific objective
criteria which is intended to benefit a BlackRock Entity or an MPS, or any party in which a BlackRock Entity or an MPS may have an interest.

For purposes of this definition of ‘‘Model-Driven Account or Fund,’’ every BlackRock Entity is deemed to be independent of each MPS.

EEE. ‘‘MPS’’ or ‘‘Minority Passive Shareholder’’ means any of (1) Barclays PLC, (2) The PNC Financial Services Group, Inc., or (3) each entity directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with one or more of Barclays PLC (Barclays MPSs) or The PNC Financial Services Group, Inc., (PNC MPSs) (each of the PNC MPSs and the Barclays MPSs, an MPS Group) but excluding any and all
BlackRock Entities.

FFF. ‘‘MPS Group’’ shall have the meaning set forth in the definition of

MPS.

GGG. ‘‘MPS Plans’’ means an employee benefit plan(s) that is subject
to ERISA section 406 and/or Code section 4975, and that is sponsored by an MPS for its employees.

HHH. ‘‘Other Account or Fund’’ means any investment fund, account or portfolio sponsored, maintained,


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trusteed, or managed by a BlackRock Manager or a BlackRock Entity in which one or more Client Plans invest, and—

(1) Which is not an Index Account or
Fund or a Model-Driven Account or Fund; and

(2) That contains ‘‘plan assets’’ subject to either ERISA section 406, Code section 4975 or FERSA section 8477(c).

III. ‘‘Pooled Fund’’ means a common or collective trust fund or other pooled
investment fund:

(1) In which Client Plan(s) invest; (2) For which a BlackRock Manager exercises discretionary authority or discretionary control respecting the management or disposition of the assets of such fund(s); and

(3) That contains ‘‘plan assets’’ subject to either ERISA section 406, Code section 4975 or FERSA section 8477(c).

Solely for purposes of Section IV of this exemption, ‘‘Pooled Fund(s)’’ shall only include funds or trusts which
otherwise meet this definition but which also are either (i) maintained by a BlackRock Entity or (ii) maintained by a person which is not a BlackRock Entity but is sub-advised by a BlackRock Manager, provided that with respect to a Pooled Fund described in (ii), (A) the
fund or trust is either a bank-maintained
common or collective trust fund or an insurance company pooled separate account that holds assets of at least $250 million, (B) the bank or insurance company sponsoring the Pooled Fund
has total client assets under its management or control in excess of $5 billion as of the last day of its most recent fiscal year, and shareholders’ or partners’ equity in excess of $1 million, and (C) the decision to invest the Client
Plan into the bank-maintained common or collective trust or insurance company pooled separate account and to maintain such investment is made by a Client Plan fiduciary which is not a BlackRock Entity. Such sub-advised Pooled Funds
are sometimes referred to herein as
‘‘Sub-Advised Pooled Funds’’.

JJJ. ‘‘Qualified Institutional Buyer’’ or ‘‘QIB’’ shall have the same meaning as defined in SEC Rule 144A (17 CFR 230.144A(a)(1)) under the 1933 Act.

KKK. ‘‘QPAM Exemption’’ or ‘‘PTE
84–14’’ means Prohibited Transaction Exemption 84–14, as amended.

LLL. ‘‘Qualified Professional Asset Manager’’ or ‘‘QPAM’’ shall have the meaning set forth in Section VI(a) of the QPAM Exemption.

MMM. ‘‘Rating Organizations’’ means Standard & Poor’s Rating Services, Moody’s Investors Service, Inc., Fitch Ratings Inc., DBRS Limited, DBRS, Inc., or any similar agency subsequently recognized by the Department as a Rating Organization or any successors
thereto.

NNN. ‘‘Recognized Securities Exchange’’ means a U.S. securities exchange that is registered as a ‘‘national securities exchange’’ under section 6 of the 1934 Act, or a designated offshore securities market, as defined in Regulation S of the SEC (17 CFR part 230.902(b)), as such definition may be amended from time to time, which performs with respect to Securities the functions commonly performed by a stock exchange within the meaning of definitions under the applicable Securities laws (e.g., 17 CFR part 240.3b–16).

OOO. ‘‘Registered Investment
Advisor’’ means an investment advisor registered under the Investment Advisors Act of 1940, as amended, that
has total client assets under its management or control in excess of $5 billion as of the last day of its most recent fiscal year and shareholders’ or partners’ equity in excess of $1 million,
as shown in the most recent balance sheet prepared within the two years immediately preceding a Covered Transaction, in accordance with generally accepted accounting principles.

PPP. ‘‘SEC’’ means the United States Securities and Exchange Commission.

QQQ. ‘‘Securities’’ shall have the same meaning as defined in section 2(a)(36) of the 1940 Act. For purposes of Section IV of this exemption, except aswhere specifically identified, AssetBacked Securities are treated as debt

Securities.

RRR. ‘‘Three Quote Process’’ means three bids or offers (either of which being sometimes referred to as quotes) are received by a trader for a BlackRock Manager each of which such quotes such trader reasonably believes is an indication that the dealer presenting the bid or offer is willing to transact the trade at the stipulated volume under discussion, and all material terms (including volume) under discussion are materially similar with respect to each other such quote. In selecting the best of three such quotes, a BlackRock Manager
shall maintain books and records for the
three firm bids/offers in a convention that it reasonably believes is customary for the specific asset class (such as ‘‘price’’ quotes, ‘‘yield’’ quotes or ‘‘spread’’ quotes). For example, corporate bonds are often quoted on a spread basis and dealers customarily quote the spread above a certain benchmark bond’s yield (e.g., for a given
size and direction such as a BlackRock trader may ask for quotes to sell $1 million of a particular bond, dealer 1 may quote 50 bps above the yield of the 10 year treasury bond, dealer 2 might quote 52 bps above the yield of the 10 year treasury bond and dealer 3 might quote 53 bps above the yield of the 10 year treasury bond). If only two firm bids/offers can be obtained, the trade requires prior approval by the ECO and the ECO must inquire as to why three
firm bids/offers could not be obtained. If in the case of a sale or purchase a trader for a BlackRock Manager reasonably believes it would be injurious to the Client Plan to specify
the size of the intended trade to certain bidders, a bid on a portion of the intended trade may be treated as a firm bid if the trader documents (i) why the bid price is a realistic indication of the
economic terms for the actual amount being traded despite the difference in the size of the actual trade and (ii) why
it would be harmful to the Client Plan to solicit multiple bids on the actual
amount of the trade. If a trader for a BlackRock Manager solicits bids from
three or more dealers on a sale or purchase of a certain volume of Securities, and receives back three or more bids, but at least one bid is not for the full amount of the intended sale, if the price offered by the partial bidder(s) is less than the price offered by the full bidder(s), the trader may assume a full bid by the partial bidder(s) would not be the best bid, and the trader can consummate the trade, in the case of at least two full bids, with the dealer making the better of the full bids, or in the case of only one full bid, with the dealer making that full bid.

SSS. ‘‘Underwriter Exemption(s)’’ means a group of individual exemptions granted by the Department to provide relief for the origination and operation of certain asset pool investment trusts and the acquisition, holding and disposition by plans of Asset-Backed Securities representing undivided interests in those trusts. Such group of individual exemptions was collectively amended by Prohibited Transaction Exemption 2009–31, 74 FR 59001 (Nov. 16, 2009).

TTT. ‘‘U.S. Bank’’ means a bank as defined in section 202(a)(2) of the Investment Advisers Act, as amended.

UUU. ‘‘U.S. Broker-Dealer’’ means a broker-dealer registered under the 1934 Act or exempted from registration under section 15(a)(1) of the 1934 Act as a dealer in exempted government Securities (as defined in section 3(a)(12) of the 1934 Act).

VVV. ‘‘U.S. Collateral’’ means: (1) U.S. currency; (2) ‘‘Government securities’’ as defined in section 3(a)(42)(A) and (B) of the 1934 Act;


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(3) ‘‘Government securities’’ as defined in section 3(a)(42)(C) of the 1934 Act issued or guaranteed as to principal or interest by the following corporations: The Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, the Student Loan Marketing Association and the Financing Corporation;

(4) Mortgage-backed Securities meeting the definition of a ‘‘mortgage related security’’ set forth in section 3(a)(41) of the 1934 Act;

(5) Negotiable certificates of deposit and bankers acceptances issued by a
‘‘bank’’ as that term is defined in section 3(a)(6) of the 1934 Act, and which are payable in the United States and deemed to have a ‘‘ready market’’ as that term is defined in 17 CFR 240.15c3–1;

or (6) Irrevocable letters of credit issued by a U.S. Bank other than the borrower or an affiliate thereof, or any combination, thereof.

WWW. ‘‘Violation’’ means a Covered Transaction which is a prohibited
transaction under ERISA sections 406 or 407, Code section 4975, or FERSA section 8477(c) and which is not exempt by reason of a failure to comply with this exemption or another administrative or statutory exemption. To the extent that the non-exempt prohibited transaction relates to an act or omission that is separate and distinct from a prior otherwise exempt transaction that may relate to the same asset (e.g., a conversion of a debt instrument into an equity instrument or
a creditor’s committee for a debt instrument), the Violation occurs only at the current point in time and no
Violation shall be deemed to occur for the earlier transaction relating to the same asset (e.g., the initial purchase of the asset) that was otherwise in compliance with ERISA, the Code or

FERSA.

Dated: Signed at Washington, DC, this 27th day of March, 2012.
Lyssa Hall,
Acting Director of Exemption Determinations, Employee Benefits Security Administration, U.S. Department of Labor.

[FR Doc. 2012–7704 Filed 3–30–12; 8:45 am]

**BILLING CODE 4510–29–P**