50394 Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 

23 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 77724 

(April 27, 2016), 81 FR 30614 (May 17, 2016). 

4See Securities Exchange Act Release No. 79318 

(November 15, 2016), 81 FR 84696 (November 23, 

2016) (‘‘Order Approving the National Market 

System Plan Governing the Consolidated Audit 

Trail) (‘‘Approval Order’’). 

5See Securities Exchange Act Release No. 89679 

(August 26, 2020), 85 FR 54461 (September 1, 2020) 

(Notice of Filing of File No. SR–FINRA–2020–024). 

6See Letter from Lisa C. Horrigan, Associate 

General Counsel, FINRA, to Vanessa Countryman, 

Secretary, Commission, dated October 29, 2020. 

7See Securities Exchange Act Release No. 90535 

(November 30, 2020), 85 FR 78395 (December 4, 

2020) (Notice of Filing of Amendment No. 1 and 

Order Granting Accelerated Approval of SR– 

FINRA–2020–024). 

8See Securities Exchange Act Release No. 92239 

(June 23, 2021), 86 FR 34293 (June 29, 2021) (SR– 

FINRA–2021–017) (Notice of Filing and Immediate 

Effectiveness of a Proposed Rule Change Relating to 

the Retirement of FINRA’s Order Audit Trail 

System). 

9 17 CFR 242.600(B)(47). 

2021–021 and should be submitted on 

or before September 29, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.23

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19291 Filed 9–7–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92845; File No. SR–NYSE– 

2021–48] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Delete the 

Order Audit Trail System Rules in the 

Rule 7400 Series 

September 1, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on August 

30, 2021, New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to delete the 

Order Audit Trail System (‘‘OATS’’) 

rules in the Rule 7400 Series as these 

Rules provide for the collection of 

information that is duplicative of the 

data collection requirements of the CAT. 

Further, the Financial Industry 

Regulatory Authority (‘‘FINRA’’) has 

determined to eliminate its OATS rules. 

The proposed rule change is available 

on the Exchange’s website at 

www.nyse.com, at the principal office of 

the Exchange, and at the Commission’s 

Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

Rule 613 of Regulation NMS requires 

national securities exchanges and 

FINRA to create, implement, and 

maintain a consolidated audit trail to 

capture customer and order event 

information for orders in NMS 

Securities and OTC Equity Securities, 

across all markets, from the time of 

order inception through routing, 

cancellation, modification, or execution 

in a single consolidated data source. 

The Participants filed the Plan to 

comply with Rule 613 of Regulation 

NMS under the Act. The Plan was 

published for comment in the Federal 

Register on May 17, 2016,3 and 

approved by the Commission, as 

modified, on November 15, 2016.4

On August 14, 2020, FINRA filed with 

the Commission a proposed rule change 

to delete the OATS rules once Industry 

Members are effectively reporting to the 

CAT (the ‘‘OATS Retirement Filing’’).5

On October 29, 2020, FINRA filed 

Amendment No. 1 to the proposed rule 

change (‘‘Amendment No. 1’’) and a 

response to the comments that were 

submitted on the original filing 

(‘‘Response to Comments’’).6 On 

November 30, 2020, the Commission 

approved the proposed rule change, as 

modified by Amendment No. 1, on an 

accelerated basis.7 On June 17, 2021, 

FINRA filed a proposed rule change 

setting forth the basis for its 

determination that the accuracy and 

reliability of the CAT meet the 

standards approved by the Commission 

in the OATS Retirement Filing for 

purposes of eliminating the OATS 

rules.8 The FINRA proposal stated that 

FINRA would retire OATS effective 

September 1, 2021. 

After conducting an analysis of its 

rules in accordance with the CAT NMS 

Plan, the Exchange has determined that 

the information collected pursuant to 

the OATS rules is intended to be 

collected by CAT. Further, the Exchange 

believes that the Rule 7400 Series will 

no longer be necessary and proposes to 

delete such rules from the Exchange’s 

rulebook unless FINRA decides not to 

retire OATS as scheduled in which case 

member organizations will still be 

required to report to OATS. Discussed 

below is a description of the duplicative 

rule requirements as well as the 

timeline for eliminating the duplicative 

rules followed by a discussion on the 

OATS Retirement Filing that formed the 

basis for retiring OATS. 

Duplicative OATS Requirements 

The Rule 7400 Series consists of Rules 

7410 through 7470 and sets forth the 

recording and reporting requirements of 

the OATS Rules. The OATS Rules 

require all Exchange member 

organizations and associated persons to 

record in electronic form and report to 

FINRA, on a daily basis, certain 

information with respect to orders 

originated, received, transmitted, 

modified, canceled, or executed by 

members in all NMS stocks, as that term 

is defined in Rule 600(b)(47) of 

Regulation NMS,9 traded on the 

Exchange, including NYSE-listed 

securities. The Exchange relies on the 

information reported to OATS either to 

conduct surveillance or to facilitate 

surveillance conducted by FINRA 

pursuant to a regulatory services 

agreement (‘‘RSA’’). This information is 

used by Exchange and FINRA staff to 

conduct surveillance and investigations 

of member firms for violations of 

Exchange and FINRA rules and federal 

securities laws. The Exchange believes 

it is appropriate to retire OATS because 

the requirements of the Rule 7400 Series 

are duplicative of information available 

in the CAT and thus will no longer be 

necessary now that the CAT is 

operational. 


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10Appendix C of CAT NMS Plan, Approval Order 

at 85010. 

11As clarified in the OATS Retirement Filing, 

although FINRA does not believe that postcorrection errors need to be de minimis before 

OATS can be retired, FINRA was not suggesting, 

with the proposal, that 2% would meet the ultimate 

objective of de minimis error rates for CAT. See 

CAT NMS Plan, Appendix C, note 102 (error rates 

after reprocessing of error corrections are ultimately 

expected to be de minimis for the CAT). See also 

Approval Order. 

12See FINRA’s Response to Comments, supra 

note 7. 

13Appendix D of the CAT NMS Plan, Section 7.2, 

for example, requires that certain file validations 

(e.g., file transmission and receipt are in the correct 

formats, confirmation of a valid SRO-Assigned 

Market Participant Identifier, etc.), and syntax and 

context checks (e.g., format checks, data type 

checks, consistency checks, etc.) be performed on 

all submitted records. 

Timeline for Elimination of Duplicative 

Rules 

The CAT NMS Plan states that the 

elimination of rules that are duplicative 

of the requirements of the CAT and the 

retirement of the related systems should 

be effective at such time as CAT Data 

meets minimum standards of accuracy 

and reliability.10 As discussed in more 

detail in the OATS Retirement Filing, 

FINRA believes that OATS may be 

retired effective September 1, 2021 

given the error rate thresholds have 

been met, and FINRA has determined 

that its usage of the CAT Data has not 

revealed material issues that have not 

been corrected and further confirmed 

that the CAT includes all data necessary 

to allow FINRA to continue to meet its 

surveillance obligations. 

OATS Retirement Filing 

In the OATS Retirement Filing, 

FINRA proposed to eliminate the OATS 

rules once Industry Members are 

effectively reporting to the CAT and the 

CAT’s accuracy and reliability meet 

certain standards. Specifically, FINRA 

proposed that before OATS could be 

retired, the CAT generally must achieve 

a sustained error rate for Industry 

Member reporting in five categories for 

a period of at least 180 days of 5% or 

lower on a pre-correction basis, and 2% 

or lower on a post-correction basis 

(measured at T+5). In addition to the 

maximum error rates and matching 

thresholds, FINRA’s use of CAT Data 

must confirm that (i) there are no 

material issues that have not been 

corrected, (ii) the CAT includes all data 

necessary to allow FINRA to continue to 

meet its surveillance obligations, and 

(iii) the Plan Processor is sufficiently 

meeting its obligations under the CAT 

NMS Plan relating to the reporting and 

linkage of Phase 2a Industry Member 

Data. 

In the OATS Retirement Filing, 

FINRA explained that its review of CAT 

Data and error rates would be based on 

data and linkages in the initial phase of 

reporting (or ‘‘Phase 2a’’), which 

replicate the data in OATS today and 

thus are most relevant for OATS 

retirement purposes. Phase 2a Data 

includes all events and scenarios 

covered by OATS and applies only to 

equities. FINRA did not consider 

options order events or Phase 2c data 

and validations, which are not in OATS 

today, for purposes of OATS retirement. 

As described below, FINRA has 

determined that the CAT meets the 

accuracy and reliability standards 

approved by the Commission in the 

OATS Retirement Filing. 

(1) Maximum Error Rates 

As discussed in the OATS Retirement 

Filing, FINRA believes that relevant 

error rates are the primary, but not the 

sole, metric by which to determine the 

CAT’s accuracy and reliability and will 

serve as the baseline requirement 

needed before OATS can be retired. 

FINRA proposed that, before OATS 

could be retired, the CAT would 

generally need to achieve a sustained 

error rate for Industry Member reporting 

in five categories for a period of at least 

180 days of 5% or lower, measured on 

a pre-correction or as-submitted basis, 

and 2% or lower on a post-correction 

basis (measured at T+5).11 FINRA 

proposed to average the error rates 

across the period, rather than require a 

5% pre-correction and 2% postcorrection maximum each day for 180 

consecutive days. FINRA also proposed 

to measure the error rates in the 

aggregate, rather than on a firm-by-firm 

basis. Finally, FINRA proposed to 

measure the error rates separately for 

each of the five categories, rather than 

evaluate all categories in the aggregate. 

As noted above, FINRA’s assessment of 

the error rates for Industry Member 

reporting is based solely on Phase 2a 

CAT reporting for equity events since 

options orders are not included in 

OATS today. 

As discussed in the OATS Retirement 

Filing, FINRA measured the error rates 

in each of the five categories discussed 

below during the period from October 

26, 2020 through April 26, 2021 (the 

‘‘applicable period’’). FINRA 

commenced this period on October 26, 

2020, which was the date that Industry 

Members were required to begin 

correcting all errors for inter-firm 

linkages and exchange/TRF/ORF match 

validations. As discussed in the 

Response to Comments, although the 

production environment for inter-firm 

linkage and exchange/TRF/ORF match 

validations was open for testing as of 

September 28, 2020, FINRA did not 

believe it would be appropriate for the 

180-day period to commence prior to 

the October 26, 2020 compliance date.12

Rejection Rates and Data Validations. 

As described in the OATS Retirement 

Filing, the Plan Processor must perform 

certain basic data validations,13 and if a 

record does not pass these basic data 

validations, it must be rejected and 

returned to the CAT Reporter to be 

corrected and resubmitted. FINRA 

proposed that over the 180-day period, 

aggregate rejection rates must be no 

more than 5% pre-correction or 2% 

post-correction across all Industry 

Member Reporters. FINRA has 

determined that, over the applicable 

period, aggregate rejection rates across 

all Industry Member Reporters were 

0.03% pre-correction and 0.01% postcorrection. 

Intra-Firm Linkages. As described in 

the OATS Retirement Filing, the Plan 

Processor must be able to link all related 

order events from all CAT Reporters 

involved in the lifecycle of an order. At 

a minimum, this requirement includes 

the creation of an order lifecycle 

between all order events handled within 

an individual CAT Reporter, including 

orders routed to internal desks or 

departments with different functions 

(e.g., an internal ATS). FINRA proposed 

that aggregate intra-firm linkage rates 

across all Industry Member Reporters 

must be at least 95% pre-correction and 

98% post-correction. FINRA has 

determined that, over the applicable 

period, aggregate intra-firm linkage rates 

across all Industry Member Reporters 

were 99.97% pre-correction and 99.99% 

post-correction. 

Inter-Firm Linkages. As described in 

the OATS Retirement Filing, the Plan 

Processor must be able to create the 

lifecycle between orders routed between 

broker-dealers. FINRA proposed that at 

least a 95% pre-correction and 98% 

post-correction aggregate match rate be 

achieved for orders routed between two 

Industry Member Reporters. FINRA has 

determined that during the applicable 

period there was a 99.08% precorrection and 99.84% post-correction 

aggregate match rate for orders routed 

between two Industry Member 

Reporters. 

Order Linkage Rates. As described in 

the OATS Retirement Filing, in addition 

to creating linkages within and between 

broker-dealers, the Plan Processor must 

be able to create lifecycles to link 

various pieces of related orders. For 

example, the Plan requires linkages of 


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14See FINRA’s Response to Comments, supra 

note 7. 

15FINRA noted that in Phase 2a, linkage is 

required between the representative street side 

order and the order being represented when the 

representative order was originated specifically to 

represent a single order (received either from a 

customer or another broker-dealer) and there is: (1) 

An existing direct electronic link in the firm’s 

system between the order being represented and the 

representative order, and (2) any resulting 

executions are immediately and automatically 

applied to the represented order in the firm’s 

system. As set forth in the OATS Retirement Filing, 

while such linkages are not required in OATS, 

FINRA believes that it is appropriate to evaluate 

them for purposes of retiring OATS because they 

represent a significant enhancement to the data 

currently available in OATS and will enhance the 

quality of the equity audit trail. However, FINRA 

also explained in the Response to Comments that 

if all other proposed criteria have been met, FINRA 

would not anticipate delaying OATS retirement 

based on Phase 2a representative order linkage error 

rates alone. In evaluating whether the standards for 

OATS retirement have been met, FINRA 

determined that the error rates for the Phase 2a 

representative order linkages did not have a 

significant negative impact on the overall error rates 

for order linkages. Accordingly, FINRA did not 

need to separately evaluate or exclude Phase 2a 

representative order linkage rates in measuring the 

error rates over the applicable period. For example, 

if the intra-firm linkage error rate had been above 

5% over the applicable period, FINRA would have 

evaluated whether the error rate was the result of 

unlinked representative orders to create an applesto-apples comparison to OATS. 

16See Amendment No. 1. 

17FINRA’s Response to Comments noted this 

dependency, stating that the process of 

transitioning FINRA’s surveillance patterns to CAT 

Data necessarily includes, among other things, 

ingestion of all Industry Member and Plan 

Participant data and linkages in CAT format. See 

Response to Comments, supra note 7, at 4. The 

Response to Comments further noted that the Plan 

Participants would be reporting to CAT via another 

mechanism until April 2021. 

18For example, according to the CAT Reporting 

Technical Specification for Plan Participants 

(version 4.0.0–r4 dated April 20, 2021), additional 

linkage error feedback for off-exchange trade reports 

was effective as of June 1, 2021. The Technical 

Specifications can be found on the CAT NMS Plan 

website at www.catnmsplan.com/sites/default/files/ 

2021-04/04.20.2021-CAT-ReportingTechnicalSpecifications-for-Participants-4.0.0-r4.pdf. 

19FINRA notes that additional POD releases are 

scheduled; however, these releases introduce minor 

enhancements to POD, as opposed to significant 

changes that would impact the way data is ingested 

or processed in POD. 

20FINRA notes that user acceptance testing is the 

final stage of any software development life cycle 

and enables actual users to test the system to 

confirm that it is able to carry out the required tasks 

it was designed to address in real-world situations. 

order information to create an order 

lifecycle from origination or receipt to 

cancellation or execution. This category 

essentially combines all of the orderrelated linkages to capture an overall 

snapshot of order linkages in the CAT.14

FINRA proposed that there be at least a 

95% pre-correction and 98% postcorrection rate for order linkages that 

are required in Phase 2a. FINRA has 

determined that during the applicable 

period there was a 99.66% precorrection and 99.93% post-correction 

rate for order linkages required in Phase 

2a.15

Exchange and TRF/ORF Match Rates. 

As described in the OATS Retirement 

Filing, an order lifecycle must be 

created to link orders routed from 

broker-dealers to exchanges and 

executed orders and trade reports. 

FINRA proposed at least a 95% 

precorrection and 98% post-correction 

aggregate match rate across all equity 

exchanges 16 for orders routed from 

Industry Members to an exchange and, 

for over-the-counter executions, the 

same match rate for orders linked to 

trade reports. FINRA determined that, 

during the applicable period, there was 

a 99.51% pre-correction and 99.87% 

post-correction aggregate match rate 

across all equity exchanges for orders 

routed from Industry Members to an 

exchange and, for over-the-counter 

executions, there was a 99.34% precorrection and 99.53% post-correction 

rate for orders linked to trade reports 

submitted to the FINRA Trade Reporting 

Facilities and OTC Reporting Facility. 

As set forth above, the error rates for 

Industry Member reporting over the 

applicable period were well below the 

maximum rates established in the OATS 

Retirement Filing. FINRA also noted 

that the overall post-correction error rate 

for Phase 2a Industry Member reporting 

of 1.01% is comparable to the current 

overall OATS post-correction error rate, 

which generally is at or slightly below 

1%. Therefore, FINRA has determined 

that, based on the error rates for 

Industry Member reporting, the CAT 

Data meets the accuracy and reliability 

baseline standards required for OATS 

retirement. 

(2) FINRA’s Use of CAT Data 

In the OATS Retirement Filing, 

FINRA stated that while error rates are 

a key standardized measure in 

determining whether OATS retirement 

is appropriate, FINRA’s use of the data 

in the CAT also must confirm that (i) 

there are no material issues that have 

not been corrected (e.g., delays in the 

processing of data, issues with query 

functions, etc.), (ii) the CAT includes all 

data necessary to allow FINRA to 

continue to meet its surveillance 

obligations, and (iii) the Plan Processor 

is sufficiently meeting its obligations 

under the CAT NMS Plan relating to the 

reporting and linkage of Phase 2a Data. 

In the OATS Retirement Filing, 

FINRA stated that it has been planning 

for OATS retirement for several years 

and the necessary development work 

has been underway for some time. 

FINRA also has been analyzing and 

testing production CAT Data for 

purposes of transitioning its automated 

equity surveillance patterns since the 

commencement of Phase 2a Industry 

Member reporting in June 2020 and 

through subsequent CAT milestone 

releases. For example, in addition to 

quantitative reviews, such as the error 

rate statistics discussed above, FINRA 

has conducted a series of qualitative 

reviews of Industry Member CAT Data. 

Such reviews include, among other 

things, comparing the count and 

distribution of Industry Member event 

reporting through CAT versus OATS 

(e.g., new order and execution events, 

and data elements such as buy/sell/sell 

short codes), and reviewing results of 

examinations, alert reviews, and 

investigations relating to the timeliness 

and accuracy of Industry Member 

reporting. Based on such qualitative 

data reviews, FINRA has concluded that 

Industry Member CAT Data, in the 

aggregate, is a sufficient replacement for 

OATS for purposes of FINRA’s 

surveillance program. 

As discussed in the OATS Retirement 

Filing, today, FINRA’s surveillance 

patterns rely on the cross-market data 

model (‘‘CMDM’’), which comprises 

linked OATS data, equity exchange data 

feeds from each of the exchanges with 

which FINRA has entered into a RSA, 

and transactions reported to FINRA’s 

equity trade reporting facilities. The 

CMDM will be retired and replaced by 

a newly created surveillance data mart, 

the Pattern Optimized Datamart 

(‘‘POD’’), which incorporates both 

equities and options data. At that point, 

FINRA’s patterns will rely on CAT Data 

in POD, i.e., Plan Participant and 

Industry Member data reported in CAT 

format and linked by CAT.17 FINRA 

notes that the Plan Participants 

transitioned to reporting via the CAT 

technical specification as of April 26, 

2021, and full Plan Participant equities 

reporting and linkage validations in 

accordance with the CAT specification 

commenced on June 1, 2021.18

Successful completion of the transition 

to the CAT specification for Plan 

Participants is a prerequisite for FINRA 

to retire the CMDM and leverage CAT 

Data and linkages in POD for its 

surveillance patterns. As of the date of 

this filing, FINRA has completed all 

planned activities on schedule, 

including substantially completing the 

process of integrating CAT Data into 

POD and successfully running large 

amounts of production CAT Data for the 

month of May through POD.19 FINRA 

anticipates completing additional 

activities before the proposed OATS 

retirement date, including, e.g., planned 

user acceptance testing.20


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21See, e.g., CAT Q1 2021 Quarterly Progress 

Report dated April 30, 2021, available at 

www.catnmsplan.com/sites/default/files/2021-05/ 

CAT-Q1-2021-QPR.pdf. 

22FINRA notes that the CAT uses the same code 

in both the test and production environments. 

Thus, FINRA believes that linkages in the test 

environment are reliable indicators of linkages in 

the production environment. 

As discussed in the OATS Retirement 

Filing, FINRA has performed broad 

analysis of its equity surveillance 

patterns and has determined that all of 

the data required to support the 

transition is available in CAT. By 

mapping OATS data to Industry 

Member CAT Data in POD, FINRA has 

confirmed that CAT Data has equivalent 

analogs to all data elements in OATS. In 

that regard, FINRA notes that, as a Plan 

Participant, FINRA has been involved in 

CAT development efforts to ensure that 

the scope and features of Industry 

Member data and processed output are 

sufficient for FINRA’s surveillance 

program. These efforts include, for 

example, developing and updating the 

Industry Member Technical 

Specifications and Reporting Scenarios, 

conducting OATS–CAT gap analyses 

and validating that all such gaps have 

been properly addressed, and 

performing OATS-to-CAT field-level 

mappings. 

With respect to Plan Participant data, 

FINRA notes in the OATS Retirement 

Filing that the test environment for Plan 

Participant reporting in accordance with 

the CAT specification opened on 

February 15, 2021.21 Plan Participant 

equity reporting in accordance with the 

CAT specification in the test 

environment had a very high 

compliance rate for data ingestion and 

validation, and compliance in the 

production environment is comparable. 

In addition, starting on April 26, 2021, 

CAT began linking copies of Industry 

Member and Plan Participant data 

reported via the CAT specification in a 

test environment, and at that point, 

FINRA began its evaluation of the 

quality of these linkages. Based on this 

review and evaluation, in the OATS 

Retirement Filing, FINRA stated that it 

believes that the linkages between Plan 

Participant data and Industry Member 

data in CAT are comparable to the 

linkages between RSA exchange data 

and OATS data in the CMDM today.22

FINRA CAT and the Plan Participants 

have now met the necessary criteria for 

a full cutover from the RSA 

specification to the CAT specification, 

including, e.g., achieving comparable 

data ingestion validation and intervenue linkage rates (within a variance of 

under one percent) between RSA and 

CAT specification submissions. 

Accordingly, the Operating Committee 

approved the cutover from the RSA 

specification to the CAT specification as 

the official source of Plan Participant 

data as of June 1, 2021, and today, all 

Industry Member and Plan Participant 

equities data reported via the CAT 

specification is linked in the CAT 

production environment. 

As discussed in the OATS Retirement 

Filing, FINRA continues to evaluate 

CAT Data quality, and in particular, 

linkages between Industry Member and 

Plan Participant data, and to test its 

surveillance patterns to run on CAT 

Data in POD. In that regard, FINRA 

notes that it has followed established 

and time-tested processes and protocols 

throughout the development process to 

ensure that its patterns will perform as 

expected and produce the necessary 

output using CAT Data following the 

retirement of OATS. For example, 

FINRA’s Software Development 

Lifecycle (‘‘SDLC’’) procedures govern 

systems design, changes, testing and 

controls. The SDLC procedures are an 

essential component of FINRA’s 

operations and have been developed to 

serve FINRA’s unique regulatory needs 

and structure. Additionally, consistent 

with SEC Regulation SCI, FINRA 

procedures include a plan of 

coordination and communication with 

regulatory staff. By relying on these 

established processes and protocols, 

FINRA has confidence that the CAT 

Data and linkages are reliable and 

sufficient to run FINRA’s surveillance 

patterns. 

Based on these results, as well as the 

results of its quantitative and qualitative 

reviews of CAT Data and successful 

efforts integrating CAT Data into POD, 

in the OATS Retirement Filing, FINRA 

stated that it believes that the complete 

portfolio of equity surveillance patterns 

will be capable of consuming CAT Data 

and achieving comparable (or better) 

output results. 

Thus, FINRA proposes to retire OATS 

in accordance with the schedule set 

forth herein. FINRA will run its 

surveillance patterns for review periods 

through the end of the second quarter of 

2021 using OATS data and begin 

using—and be fully reliant on—CAT 

Data for its surveillance patterns for 

review periods beginning in the third 

quarter of 2021. Following the 

retirement of OATS, FINRA expects to 

maintain the current established 

cadence of its monthly, quarterly and 

semi-annual surveillance patterns. In 

addition, FINRA’s analytics platforms 

will have access to CAT Data as soon as 

such data is made available to 

regulators. Thus, outside of regularly 

scheduled surveillance pattern runs, 

FINRA can perform expedited analytics, 

as required by market events. 

As discussed in the OATS Retirement 

Filing, FINRA is finalizing the 

development and certification of its 

surveillance patterns to run on CAT 

Data on a rolling basis and, in 

accordance with its existing SDLC 

procedures, will run a month’s worth of 

data and compare the output before 

certifying each pattern. For those equity 

patterns that will be subject to 

certification after OATS retirement, 

FINRA anticipates that there would be 

sufficient time to identify and remediate 

any issues prior to running the patterns 

in accordance with the current 

established cadence. FINRA does not 

anticipate significant issues arising from 

additional scheduled POD releases or in 

the final stages of its pattern 

development and certification efforts. 

As discussed in the OATS Retirement 

Filing, on an ongoing basis following 

the retirement of OATS, FINRA will 

conduct regular reviews to ensure 

confidence in the completeness and 

accuracy of Industry Member reporting, 

along with the ability to remediate any 

issues in a timely manner. Among other 

things, FINRA has a robust mechanism 

for detecting data issues, determining 

which issues are material for purposes 

of its surveillance program, and 

requesting resubmission and/or 

reprocessing of data, as necessary. 

FINRA also (1) performs a suite of data 

quality checks against data sourced from 

CAT to POD and against data processed 

by POD for use in surveillance patterns; 

(2) oversees a robust surveillance and 

examination compliance program that 

evaluates Industry Member reporting 

timeliness, data quality, and other 

issues and trends; (3) reviews CAT 

compliance program alerts using a rapid 

remediation process and formal reviews, 

as necessary; and (4) reviews Industry 

Member self-reporting and error 

correction trends. FINRA believes that 

these practices are sufficient for 

identification and timely resolution of 

Industry Member reporting and data 

issues after OATS has been retired. 

Specifically, with regard to the 

additional standards approved in the 

OATS Retirement Filing, through its use 

of CAT Data to date, as described above, 

FINRA believes that these standards 

have been satisfied. With respect to the 

first factor, FINRA does not believe that 

there are any material issues that have 

not been corrected (or could not be 

corrected in the course of operation of 

CAT, as approved by the Operating 


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50398 Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 

23FINRA notes that FINRA CAT tracks known 

issues relating to Industry Member and Plan 

Participant reporting. See, e.g., catnmsplan.com/ 

CAT-Transaction-Known-Issues-List. FINRA 

regularly reviews and analyzes FINRA CAT’s list of 

current and resolved issues and does not believe 

that any of these issues would impact its ability to 

incorporate and use CAT Data in its surveillance 

program. 

24See CAT NMS Plan, Appendix D, Section 6.2. 

25See CAT NMS Plan, Appendix C, Section 

A.2(a). 

26See CAT NMS Plan, Appendix C, Section 

A.1(b). 

27See CAT NMS Plan, Section 6.10(c). 

28As discussed in the OATS Retirement Filing, 

OATS was originally proposed to fulfill one of the 

undertakings contained in an order issued by the 

Commission relating to the settlement of an 

enforcement action against FINRA (f/k/a National 

Association of Securities Dealers, Inc. (‘‘NASD’’)) 

for failure to adequately enforce its rules. See 

Securities Exchange Act Release No. 39729 (March 

6, 1998), 63 FR 12559 (March 13, 1998) (Order 

Approving File No SR–NASD–97- 56) (‘‘OATS 

Approval Order’’); see also Securities Exchange Act 

Release No. 37538 (August 8, 1996); Administrative 

Proceeding File No. 3–9056 (‘‘SEC Order’’). In the 

OATS Approval Order, the Commission concluded 

that OATS satisfied the conditions of the SEC Order 

and was consistent with the Exchange Act. See 63 

FR 12559, 12566–67. FINRA believes that it will 

continue to be in compliance with the requirements 

of the SEC Order once the OATS Rules are deleted. 

29The Implementation Plan and Quarterly 

Progress Reports are available at 

www.catnmsplan.com/implementation-plan. 

30 15 U.S.C. 78f(b). 

31 15 U.S.C. 78f(b)(5). 

32Appendix C of CAT NMS Plan, Approval Order 

at 85010. 

33 Id. 

Committee) 23 that would impact 

FINRA’s ability to incorporate and use 

CAT Data in FINRA’s surveillance 

program. For example, the Plan requires 

that raw unprocessed data that has been 

ingested by the Plan Processor must be 

available to Participant regulatory staff 

and the SEC prior to 12:00 p.m. Eastern 

Time on T+1, and access to all iterations 

of processed data must be available to 

Participant regulatory staff and the SEC 

between 12:00 p.m. Eastern Time on 

T+1 and T+5.24 The Plan Processor also 

must ensure that regulators have access 

to corrected and linked order data by 

8:00 a.m. Eastern Time on T+5.25

Additionally, after ingestion by the 

Central Repository, the raw unprocessed 

data must be transformed into a format 

appropriate for data querying and 

regulatory output.26 The user-defined 

direct queries and bulk extracts must 

provide authorized users with the 

ability to retrieve CAT Data via a query 

tool or language that allows users to 

query all available attributes and data 

sources.27 FINRA’s use of the CAT Data 

has not uncovered any processing 

delays or other material issues 

impacting the availability of, and 

FINRA’s access to, the data. 

With respect to the second factor, 

FINRA stated in the OATS Retirement 

Filing that it believes that the CAT 

includes all data necessary for FINRA to 

meet its surveillance obligations after 

the retirement of OATS. FINRA must 

ensure that the CAT, as the single 

source of order and trade data, can 

enable FINRA to conduct accurate and 

effective market surveillance in 

accordance with its regulatory 

obligations.28 As noted above, Phase 2a 

Data includes all events and scenarios 

covered by OATS and is the most 

relevant for OATS retirement purposes. 

FINRA Rule 7440 describes the OATS 

requirements for recording information, 

which includes information related to 

the receipt or origination of orders, 

order transmittal, and order 

modifications, cancellations and 

executions. Large Industry Members and 

Small Industry Members that currently 

are reporting to OATS were required to 

submit data to the CAT for these same 

events and scenarios commencing in 

Phase 2a. FINRA’s testing, analysis and 

use of the CAT Data (including 

integration into POD), as described 

above, has confirmed that the CAT 

includes all data necessary for FINRA to 

meet its surveillance obligations and 

that CAT is a reliable substitute for 

OATS. In addition, based on its 

qualitative data reviews, FINRA has 

concluded that Industry Member CAT 

Data, in the aggregate, is a sufficient 

replacement for OATS for purposes of 

FINRA’s surveillance program. 

With respect to the third factor, 

FINRA stated in the OATS Retirement 

Filing that it believes that the Plan 

Processor is sufficiently meeting its 

obligations under the CAT NMS Plan 

relating to the reporting and linkage of 

Phase 2a Data. As detailed in the 

Implementation Plan and Quarterly 

Progress Reports submitted by the Plan 

Participants, the Plan Processor has met 

its targeted completion dates for the 

milestones for Phase 2a, including, for 

example, production Go-Live for 

Equities 2a file submission and data 

integrity validation (Large Industry 

Members and Small OATS Reporters) 

on June 22, 2020; Production Go-Live 

for Equities 2a Intrafirm Linkage 

validations on July 27, 2020; and 

production go-live for firm-to-firm 

linkage validations for equities (Large 

Industry Members and Small OATS 

Reporters) and exchange and TRF/ORF 

linkage validations for equities (Large 

Industry Members and Small OATS 

Reporters) on October 26, 2020.29

Based on the foregoing, FINRA has 

determined that the CAT meets the 

accuracy and reliability standards 

approved by the Commission in the 

OATS Retirement Filing for purposes of 

eliminating the OATS Rules. FINRA has 

determined to retire OATS and remove 

the OATS rules from its rulebook 

effective September 1, 2021. Firms must 

continue to report to OATS all order 

events that occur on or prior to August 

31, 2021. Reports submitted to OATS for 

order events that occur after August 31, 

2021 will be rejected. In other words, 

August 31, 2021 will be the last ‘‘OATS 

Business Day,’’ as defined under FINRA 

Rule 7450(b)(3), for which OATS will 

accept order events and perform routine 

processing (including incorporation of 

corrections and repairs of rejections) 

occurring within the normal OATS 

timeframe for such activities. OATS will 

continue to accept reports for order 

events that occur on or prior to August 

31, 2021 (including, but not limited to, 

late and corrected reports for such order 

events) through September 16, 2021. 

Firms must ensure that their OATS 

reporting is accurate and complete for 

all order events that occur on or prior 

to August 31, 2021. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,30 in general, and 

furthers the objectives of Section 6(b)(5) 

of the Act,31 in particular, because it is 

designed to prevent fraudulent and 

manipulative acts and practices, 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. 

In particular, the Exchange believes 

that the proposed rule change is 

consistent with Section C.9 of Appendix 

C to the Plan, which requires each 

Participant to ‘‘file with the SEC the 

relevant rule change filing to eliminate 

or modify its duplicative rules within 

six (6) months of the SEC’s approval of 

the CAT NMS Plan.’’ 32 The Plan notes 

that ‘‘the elimination of such rules and 

the retirement of such systems [will] be 

effective at such time as CAT Data meets 

minimum standards of accuracy and 

reliability.’’ 33 Accordingly, the 

Exchange believes the proposed rule 

change implements, supports, interprets 

or clarifies the provisions of the Plan, 

and is designed to assist the Exchange 

and its member organizations in 

meeting regulatory obligations pursuant 

to, and milestones established by, the 

Plan. In approving the Plan, the SEC 


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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 50399 

34Approval Order at 84697. 

35 15 U.S.C. 78s(b)(3)(A)(iii). 

36 17 CFR 240.19b–4(f)(6). 

37 15 U.S.C. 78s(b)(3)(A). 

38 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

39 17 CFR 240.19b–4(f)(6). 

40 17 CFR 240.19b–4(f)(6)(iii). 

41For purposed only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

noted that it ‘‘is necessary and 

appropriate in the public interest, for 

the protection of investors and the 

maintenance of fair and orderly markets, 

to remove impediments to, and perfect 

the mechanism of a national market 

system, or is otherwise in furtherance of 

the purposes of the Act.’’ 34 To the 

extent that this proposal implements, 

interprets or clarifies the Plan and 

applies specific requirements to member 

organizations, the Exchange believes 

that this proposal furthers the objectives 

of the Plan, as identified by the SEC, 

and is therefore consistent with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. The 

proposed change is not designed to 

address any competitive issue but rather 

implement provisions of the CAT NMS 

Plan, and is designed to assist the 

Exchange in meeting its regulatory 

obligations pursuant to the Plan. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 35 and Rule 

19b–4(f)(6) thereunder.36 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 37 and Rule 19b–4(f)(6)(iii) 

thereunder.38 The Exchange states that 

the proposed rule change would not 

significantly affect the protection of 

investors or the public interest because 

it seeks to delete the Exchange’s OATS 

rules to be consistent with FINRA’s 

announcement to retire its OATS rules 

effective September 1, 2021. The 

Exchange further believes that the 

proposed rule change would not impose 

any significant burden on competition 

because the proposed rule change is not 

designed to address any competitive 

issue but rather implement provisions of 

the CAT NMS Plan, and is designed to 

assist the Exchange in meeting its 

regulatory obligations pursuant to the 

Plan. 

A proposed rule change filed under 

Rule 19b–4(f)(6) 39 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),40 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative by September 1, 2021, 

the date that FINRA has announced that 

it will retire OATS and delete the OATS 

rules from its rulebook, unless FINRA 

decides not to retire OATS as 

scheduled. If FINRA decides not to 

retire OATS as scheduled, member 

organizations will still be required to 

report to OATS. As discussed above, the 

Exchange believes that the OATS 

reporting requirements in the Rule 7400 

Series are duplicative of information 

available in the CAT and will no longer 

be necessary now that the CAT is 

operational. In addition, August 31, 

2021, will be the last ‘‘OATS Business 

Day,’’ as defined under FINRA Rule 

7450(b)(3), for which OATS will accept 

order events and perform routine 

processing, and reports submitted to 

OATS for order events that occur after 

August 31, 2021, will be rejected. The 

Commission believes that it is 

consistent with the protection of 

investors and the public interest for the 

Exchange to delete its OATS reporting 

rules at the same time that FINRA 

retires OATS. Accordingly, the 

Commission hereby waives the 30-day 

operative delay and designates the 

proposal operative on September 1, 

2021.41

At any time within 60 days of the 

filing of this proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

NYSE–2021–48 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2021–48. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 


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50400 Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 

42 17 CFR 200.30–3(a)(12). 

1The term ‘‘Adviser’’ means (i) the Initial 

Adviser, (ii) its successors, and (iii) any entity 

controlling, controlled by or under common control 

with, the Initial Adviser or its successors that serves 

as the primary adviser to a Subadvised Fund (as 

defined below). For the purposes of the requested 

order, ‘‘successor’’ is limited to an entity that 

results from a reorganization into another 

jurisdiction or a change in the type of business 

organization. 

2The term ‘‘Board’’ also includes the board of 

trustees or directors of a future Subadvised Fund (as 

defined below), if different from the board of 

trustees of the Trust. 

3A ‘‘Wholly-Owned Subadviser’’ is any 

investment adviser that is (1) an indirect or direct 

‘‘wholly-owned subsidiary’’ (as such term is 

defined in section 2(a)(43) of the 1940 Act) of the 

Adviser, (2) a ‘‘sister company’’ of the Adviser that 

is an indirect or direct ‘‘wholly-owned subsidiary’’ 

of the same company that indirectly or directly 

wholly owns the Adviser (the Adviser’s ‘‘parent 

company’’), or (3) a parent company of the Adviser. 

A ‘‘Non-Affiliated Subadviser’’ is any investment 

adviser that is not an ‘‘affiliated person’’ (as defined 

in the 1940 Act) of a Fund or the Adviser, except 

to the extent that an affiliation arises solely because 

the Subadviser serves as a subadviser to one or 

more Funds. Section 2(a)(43) of the 1940 Act 

defines ‘‘wholly-owned subsidiary’’ of a person as 

a company 95 per centum or more of the 

outstanding voting securities of which are, directly 

or indirectly, owned by such a person. 

4Applicants note that all other items required by 

sections 6–07(2)(a), (b) and (c) of Regulation S–X 

will be disclosed. 

5All registered open-end investment companies 

that currently intend to rely on the requested order 

are named as Applicants. Any entity that relies on 

the requested order will do so only in accordance 

with the terms and conditions contained in the 

application. 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2021–48, and 

should be submitted on or before 

September 29, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.42

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19295 Filed 9–7–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

34370; 812–15229] 

Investment Managers Series Trust and 

Hamilton Lane Advisors, L.L.C.; Notice 

of Application 

September 1, 2021. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of an application under section 

6(c) of the Investment Company Act of 

1940 (‘‘Act’’) for an exemption from 

section 15(a) of the Act, as well as from 

certain disclosure requirements in rule 

20a–1 under the Act, Item 19(a)(3) of 

Form N–1A, Items 22(c)(1)(ii), 

22(c)(1)(iii), 22(c)(8) and 22(c)(9) of 

Schedule 14A under the Securities 

Exchange Act of 1934 (‘‘1934 Act’’), and 

sections 6–07(2)(a), (b), and (c) of 

Regulation S–X (‘‘Disclosure 

Requirements’’). 

Applicants: Investment Managers 

Series Trust (the ‘‘Trust’’), a Delaware 

statutory trust registered under the Act 

as an open-end management investment 

company with multiple series, which 

include the 361 Domestic Long/Short 

Equity Fund and the 361 Global Long/ 

Short Equity Fund (each a ‘‘Fund’’), and 

Hamilton Lane Advisors, L.L.C. (‘‘Initial 

Adviser’’), a Pennsylvania limited 

liability company registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’) that serves as an 

investment adviser to the Funds 

(collectively with the Trust, the 

‘‘Applicants’’). 

Summary of Application: The 

requested exemption would permit 

Applicants to enter into and materially 

amend subadvisory agreements with 

subadvisers without shareholder 

approval and would grant relief from 

the Disclosure Requirements as they 

relate to fees paid to the subadvisers. 

Filing Dates: The application was 

filed on May 7, 2021, and amended on 

August 5, 2021, August 13, 2021, and 

August 31, 2021. 

Hearing or Notification of Hearing: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by emailing the 

Commission’s Secretary at SecretarysOffice@sec.gov and serving applicants 

with a copy of the request by email. 

Hearing requests should be received by 

the Commission by 5:30 p.m. on 

September 26, 2021, and should be 

accompanied by proof of service on the 

applicants, in the form of an affidavit, 

or, for lawyers, a certificate of service. 

Pursuant to rule 0–5 under the Act, 

hearing requests should state the nature 

of the writer’s interest, any facts bearing 

upon the desirability of a hearing on the 

matter, the reason for the request, and 

the issues contested. Persons who wish 

to be notified of a hearing may request 

notification by emailing the 

Commission’s Secretary at SecretarysOffice@sec.gov. 

ADDRESSES: The Commission: 

Secretarys-Office@sec.gov. The Trust 

and the Initial Adviser: diane.drake@

mfac-ca.com (with a copy to laurie.dee@

morganlewis.com). 

FOR FURTHER INFORMATION CONTACT: Erin 

Loomis Moore, Senior Counsel, at (202) 

551–6721, or Parisa Haghshenas, Branch 

Chief, at (202) 551–6825 (Division of 

Investment Management, Chief 

Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

website by searching for the file number 

or an Applicant using the ‘‘Company’’ 

name box, at http://www.sec.gov/ 

search/search.htm or by calling (202) 

551–8090. 

I. Requested Exemptive Relief 

1. Applicants request an order to 

permit the Adviser,1 subject to the 

approval of the board of trustees of the 

Trust (collectively, the ‘‘Board’’),2

including a majority of the trustees who 

are not ‘‘interested persons’’ of the Trust 

or the Adviser, as defined in section 

2(a)(19) of the Act (the ‘‘Independent 

Trustees’’), without obtaining 

shareholder approval, to: (i) Select 

investment subadvisers (‘‘Subadvisers’’) 

for all or a portion of the assets of one 

or more of the Funds pursuant to an 

investment subadvisory agreement with 

each Subadviser (each a ‘‘Subadvisory 

Agreement’’); and (ii) materially amend 

Subadvisory Agreements with the 

Subadvisers. 

2. Applicants also request an order 

exempting the Subadvised Funds (as 

defined below) from the Disclosure 

Requirements, which require each Fund 

to disclose fees paid to a Subadviser. 

Applicants seek relief to permit each 

Subadvised Fund to disclose (as a dollar 

amount and a percentage of the Fund’s 

net assets): (i) The aggregate fees paid to 

the Adviser and any Wholly-Owned 

Subadvisers; and (ii) the aggregate fees 

paid to Affiliated and Non-Affiliated 

Subadvisers (‘‘Aggregate Fee 

Disclosure’’).3 Applicants seek an 

exemption to permit a Subadvised Fund 

to include only the Aggregate Fee 

Disclosure.4

3. Applicants request that the relief 

apply to Applicants, as well as to any 

future Fund and any other existing or 

future registered open-end management 

investment company or series thereof 

that intends to rely on the requested 

order in the future and that: (i) Is 

advised by the Adviser; (ii) uses the 

multi-manager structure described in 

the application; and (iii) complies with 

the terms and conditions of the 

application (each, a ‘‘Subadvised 

Fund’’).5

4. 361 Capital, LLC (‘‘361 Capital’’) 

previously served as the investment 

adviser to the Funds. The Commission 


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