Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67479 

determine whether the purchases were 

influenced by the investment by the 

Acquiring Fund in the ETMF. The 

Board will consider, among other 

things: (i) Whether the purchases were 

consistent with the investment 

objectives and policies of the ETMF (or, 

in the case of an ETMF Feeder, its 

Master Fund); (ii) how the performance 

of securities purchased in an Affiliated 

Underwriting compares to the 

performance of comparable securities 

purchased during a comparable period 

of time in underwritings other than 

Affiliated Underwritings or to a 

benchmark such as a comparable market 

index; and (iii) whether the amount of 

securities purchased by the ETMF (or, 

in the case of an ETMF Feeder, its 

Master Fund) in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board will take any appropriate actions 

based on its review, including, if 

appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interest of 

shareholders of the ETMF. 

7. Each ETMF (or, in the case of an 

ETMF Feeder, its Master Fund) will 

maintain and preserve permanently in 

an easily accessible place a written copy 

of the procedures described in the 

preceding condition, and any 

modifications to such procedures, and 

will maintain and preserve for a period 

of not less than six years from the end 

of the fiscal year in which any purchase 

in an Affiliated Underwriting occurred, 

the first two years in an easily accessible 

place, a written record of each purchase 

of securities in Affiliated Underwritings, 

once an investment by an Acquiring 

Fund in the securities of the ETMF 

exceeds the limit of section 

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

from whom the securities were 

acquired, the identity of the 

underwriting syndicate’s members, the 

terms of the purchase, and the 

information or materials upon which 

the determinations of the Board were 

made. 

8. Before investing in an ETMF in 

excess of the limits in section 

12(d)(1)(A), an Acquiring Fund and the 

ETMF will execute an Acquiring Fund 

Agreement stating that their boards of 

directors or trustees and their 

investment advisers, or Trustee and 

Sponsor, as applicable, understand the 

terms and conditions of the order, and 

agree to fulfill their responsibilities 

under the order. At the time of its 

investment in Shares of an ETMF in 

excess of the limit in section 

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

notify the ETMF of the investment. At 

such time, the Acquiring Fund will also 

transmit to the ETMF a list of the names 

of each Acquiring Fund Affiliate and 

Underwriting Affiliate. The Acquiring 

Fund will notify the ETMF of any 

changes to the list of the names as soon 

as reasonably practicable after a change 

occurs. The ETMF and the Acquiring 

Fund will maintain and preserve a copy 

of the order, the Acquiring Fund 

Agreement, and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

9. The Acquiring Fund Adviser, or 

Trustee or Sponsor, as applicable, will 

waive fees otherwise payable to it by the 

Acquiring Fund in an amount at least 

equal to any compensation received 

from an ETMF (or, in the case of an 

ETMF Feeder, its Master Fund) by the 

Acquiring Fund Adviser, or Trustee, or 

Sponsor, or an affiliated person of the 

Acquiring Fund Adviser, or Trustee, or 

Sponsor, other than any advisory fees 

paid to the Acquiring Fund Adviser, or 

Trustee, or Sponsor, or its affiliated 

person by the ETMF (or, in the case of 

an ETMF Feeder, its Master Fund), in 

connection with the investment by the 

Acquiring Fund in the ETMF. Any 

Acquiring Fund Subadviser will waive 

fees otherwise payable to the Acquiring 

Fund Subadviser, directly or indirectly, 

by the Acquiring Management Company 

in an amount at least equal to any 

compensation received from an ETMF 

(or, in the case of an ETMF Feeder, its 

Master Fund) by the Acquiring Fund 

Subadviser, or an affiliated person of the 

Acquiring Fund Subadviser, other than 

any advisory fees paid to the Acquiring 

Fund Subadviser or its affiliated person 

by the ETMF (or, in the case of an ETMF 

Feeder, its Master Fund), in connection 

with any investment by the Acquiring 

Management Company in the ETMF 

made at the direction of the Acquiring 

Fund Subadviser. In the event that the 

Acquiring Fund Subadviser waives fees, 

the benefit of the waiver will be passed 

through to the Acquiring Management 

Company. 

10. Any sales charges and/or service 

fees charged with respect to shares of an 

Acquiring Fund will not exceed the 

limits applicable to a fund of funds as 

set forth in NASD Conduct Rule 2830. 

11. No ETMF (or, in the case of an 

ETMF Feeder, its Master Fund) relying 

on the Section 12(d)(1) relief will 

acquire securities of any investment 

company or company relying on section 

3(c)(1) or 3(c)(7) of the Act in excess of 

the limits contained in section 

12(d)(1)(A) of the Act, except to the 

extent that the ETMF acquires such 

securities in compliance with section 

12(d)(1)(E) of the Act or acquires shares 

of a Master Fund; or the ETMF (or, in 

the case of an ETMF Feeder, its Master 

Fund) (a) Receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act), or (b) acquires securities of 

another investment company pursuant 

to exemptive relief from the 

Commission permitting such ETMF (or, 

in the case of an ETMF Feeder, its 

Master Fund) to (i) Acquire securities of 

one or more investment companies for 

short-term cash management purposes 

or (ii) engage in interfund borrowing 

and lending transactions. 

12. Before approving any advisory 

contract under section 15 of the Act, the 

board of each Acquiring Management 

Company, including a majority of the 

disinterested directors or trustees, will 

find that the advisory fees charged 

under such advisory contract are based 

on services provided that will be in 

addition to, rather than duplicative of, 

the services provided under the 

advisory contracts of any ETMF (or, in 

the case of an ETMF Feeder, its Master 

Fund) in which the Acquiring 

Management Company may invest. 

These findings and their basis will be 

recorded fully in the minute books of 

the appropriate Acquiring Management 

Company. 

By the Commission. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26817 Filed 11–12–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

31332; 812–14236] 

AllianceBernstein Cap Fund, Inc., et 

al.; Notice of Application 

November 6, 2014. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 12(d)(1)(J) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) for exemptions from sections 

12(d)(1)(A), (B), and (C) of the Act, 

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

for an exemption from section 17(a) of 

the Act, and under section 6(c) of the 

Act for an exemption from rule 12d1– 

2(a) under the Act. 


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1All entities that currently intend to rely on the 

requested order are named as applicants. Any other 

entity that relies on the order in the future will 

comply with the terms and conditions of the 

application. 2All references to the term ‘‘Adviser’’ include any 

successors in interest to the Adviser. A successor 

is limited to an entity that results from a 

reorganization into another jurisdiction or a change 

in the type of business organization. 

3For purposes of the request for relief from 

sections 12(d)(1)(A), (B), and (C) of the Act, the term 

‘‘group of investment companies’’ means any two 

or more registered investment companies (including 

closed-end investment companies) or business 

development companies that hold themselves out to 

investors as related companies for purposes of 

investment and investor services. 

4Certain of the Underlying Funds may be 

registered under the Act as either UITs or open-end 

management investment companies and have 

obtained exemptions from the Commission 

necessary to permit their shares to be listed and 

traded on a national securities exchange at 

negotiated prices and, accordingly, to operate as 

exchange-traded funds (collectively, ‘‘ETFs’’ and 

each, an ‘‘ETF’’). In addition, certain of the 

Underlying Funds may now or in the future pursue 

their investment objectives through a master-feeder 

arrangement in reliance on section 12(d)(1)(E) of the 

Act. In accordance with condition 12, a Fund of 

Funds may not invest in an Underlying Fund that 

operates as a feeder fund unless the feeder fund is 

part of the same ‘‘group of investment companies’’ 

as its corresponding master fund or the Fund of 

Funds. If a Fund of Funds invests in an Affiliated 

Fund that operates as a feeder fund and the 

corresponding master fund is not within the same 

‘‘group of investment companies’’ as the Fund of 

Funds and Affiliated Fund, the master fund would 

be an Unaffiliated Fund for purposes of the 

application and its conditions. 

SUMMARY OF THE APPLICATION: 

Applicants request an order that would 

(a) permit certain registered open-end 

management investment companies that 

operate as ‘‘funds of funds’’ to acquire 

shares of certain registered open-end 

management investment companies, 

registered closed-end management 

investment companies, business 

development companies as defined by 

section 2(a)(48) of the Act (‘‘business 

development companies’’), and 

registered unit investment trusts that are 

within or outside the same group of 

investment companies as the acquiring 

investment companies and (b) permit 

certain registered open-end management 

investment companies relying on rule 

12d1–2 under the Act to invest in 

certain financial instruments. 

APPLICANTS: AllianceBernstein Cap 

Fund, Inc. (the ‘‘Company’’), 

AllianceBernstein L.P. (the ‘‘Adviser’’), 

and AllianceBernstein Investments, Inc. 

(the ‘‘Distributor’’). 

DATES: Filing Dates: The application was 

filed on November 14, 2013, and 

amended on June 10, 2014, August 22, 

2014, and November 4, 2014. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on December 1, 2014, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Pursuant to rule 0–5 under the 

Act, hearing requests should state the 

nature of the writer’s interest, any facts 

bearing on the desirability of a hearing 

on the matter, the reason for the request, 

and the issues contested. Persons who 

wish to be notified of a hearing may 

request notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

Applicants: c/o Emilie D. Wrapp, 1345 

Avenue of the Americas, New York, NY 

10105. 

FOR FURTHER INFORMATION CONTACT: 

Deepak T. Pai, Senior Counsel, at (202) 

551–6876, or Mary Kay Frech, Branch 

Chief, at (202) 551–6821 (Division of 

Investment Management, Chief 

Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

‘‘Company’’ name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. The Company is an open-end 

management investment company 

registered under the Act and organized 

as a Maryland corporation. The 

Company has multiple series, which 

pursue distinct investment objectives 

and strategies. Applicants request that 

the order apply not only to any existing 

series of the Company, but also to any 

future series of the Company, and any 

other existing or future registered openend management investment companies 

and any series thereof that are part of 

the same group of investment 

companies, as defined in section 

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

Company and are, or may in the future 

be, advised by the Adviser or any other 

investment adviser controlling, 

controlled by, or under common control 

with the Adviser (together with the 

existing series of the Company, each 

series a ‘‘Fund,’’ and collectively, the 

‘‘Funds’’).1

2. The Adviser, a Delaware limited 

partnership, is registered as an 

investment adviser under the 

Investment Advisers Act of 1940 (the 

‘‘Advisers Act’’), and serves as the 

investment adviser to the existing 

Funds.2 The Distributor is a Broker (as 

defined below) and serves as the 

existing Funds’ principal underwriter 

and distributor. 

3. Applicants request relief to the 

extent necessary to permit: (a) A Fund 

(each, a ‘‘Fund of Funds,’’ and 

collectively, the ‘‘Funds of Funds’’) to 

acquire shares of registered open-end 

management investment companies 

(each, an ‘‘Unaffiliated Open-End 

Investment Company’’), registered 

closed-end management investment 

companies, business development 

companies (each registered closed-end 

management investment company and 

each business development company, 

an ‘‘Unaffiliated Closed-End Investment 

Company’’ and, together with the 

Unaffiliated Open-End Investment 

Companies, the ‘‘Unaffiliated 

Investment Companies’’), and registered 

unit investment trusts (‘‘UITs’’) (the 

‘‘Unaffiliated Trusts,’’ and together with 

the Unaffiliated Investment Companies, 

the ‘‘Unaffiliated Funds’’), in each case, 

that are not part of the same ‘‘group of 

investment companies’’ as the Funds of 

Funds; 3 (b) the Unaffiliated Open-End 

Investment Companies, their principal 

underwriters and any broker or dealer 

registered under the Securities 

Exchange Act of 1934 (the ‘‘1934 Act’’) 

(‘‘Broker’’) to sell shares of such 

Unaffiliated Open-End Investment 

Companies to the Funds of Funds; (c) 

the Funds of Funds to acquire shares of 

other registered investment companies, 

including open-end management 

investment companies and series 

thereof, closed-end management 

investment companies and UITs, as well 

as business development companies, in 

the same group of investment 

companies as the Funds of Funds 

(collectively, the ‘‘Affiliated Funds,’’ 

and, together with the Unaffiliated 

Funds, the ‘‘Underlying Funds’’); 4 and 

(d) the Affiliated Funds that are 

registered open-end management 

investment companies, their principal 

underwriters and any Broker to sell 

shares of the Affiliated Funds to the 

Funds of Funds. Applicants also request 

an order under sections 6(c) and 17(b) 

of the Act to exempt applicants from 

section 17(a) to the extent necessary to 

permit certain Underlying Funds to sell 

their shares to Funds of Funds and 

redeem their shares from Funds of 

Funds. 

4. Applicants also request an 

exemption under section 6(c) from rule 

12d1–2 under the Act to permit any 

existing or future Fund that relies on 


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5A ‘‘Fund of Funds Affiliate’’ is the Adviser, any 

Sub-Adviser, promoter or principal underwriter of 

a Fund of Funds, as well as any person controlling, 

controlled by or under common control with any 

of those entities. An ‘‘Unaffiliated Fund Affiliate’’ 

is an investment adviser(s), sponsor, promoter or 

principal underwriter of any Unaffiliated Fund or 

any person controlling, controlled by or under 

common control with any of those entities. 

6An ‘‘Underwriting Affiliate’’ is a principal 

underwriter in any underwriting or selling 

syndicate that is an officer, director, trustee, 

advisory board member, investment adviser, subadviser or employee of the Fund of Funds, or a 

person of which any such officer, director, trustee, 

investment adviser, sub-adviser, member of an 

advisory board or employee is an affiliated person. 

An Underwriting Affiliate does not include any 

person whose relationship to an Unaffiliated Fund 

is covered by section 10(f) of the Act. 

section 12(d)(1)(G) of the Act (‘‘Section 

12(d)(1)(G) Fund’’) and that otherwise 

complies with rule 12d1–2 under the 

Act, to also invest, to the extent 

consistent with its investment 

objective(s), policies, strategies and 

limitations, in other financial 

instruments that may not be securities 

within the meaning of section 2(a)(36) of 

the Act (‘‘Other Investments’’). 

Applicants’ Legal Analysis 

A. Section 12(d)(1) 

1. Section 12(d)(1)(A) of the Act, in 

relevant part, prohibits a registered 

investment company from acquiring 

shares of an investment company if the 

securities represent more than 3% of the 

total outstanding voting stock of the 

acquired company, more than 5% of the 

total assets of the acquiring company, 

or, together with the securities of any 

other investment companies, more than 

10% of the total assets of the acquiring 

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

prohibits a registered open-end 

investment company, its principal 

underwriter, and any broker or dealer 

from selling the investment company’s 

shares to another investment company if 

the sale will cause the acquiring 

company to own more than 3% of the 

acquired company’s voting stock, or if 

the sale will cause more than 10% of the 

acquired company’s voting stock to be 

owned by investment companies 

generally. Section 12(d)(1)(C) prohibits 

an investment company from acquiring 

any security issued by a registered 

closed-end investment company if such 

acquisition would result in the 

acquiring company, any other 

investment companies having the same 

investment adviser, and companies 

controlled by such investment 

companies, collectively, owning more 

than 10% of the outstanding voting 

stock of the registered closed-end 

investment company. 

2. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Applicants request an exemption under 

section 12(d)(1)(J) of the Act from the 

limitations of sections 12(d)(1)(A), (B) 

and (C) of the Act to the extent 

necessary to permit: (i) The Funds of 

Funds to acquire shares of Underlying 

Funds in excess of the limits set forth 

in section 12(d)(1)(A) and (C) of the Act; 

and (ii) the Underlying Funds that are 

registered open-end management 

investment companies, their principal 

underwriters and any Broker to sell 

shares of the Underlying Funds to the 

Funds of Funds in excess of the limits 

set forth in section 12(d)(1)(B) of the 

Act. 

3. Applicants state that the proposed 

arrangement will not give rise to the 

policy concerns underlying sections 

12(d)(1)(A), (B), and (C), which include 

concerns about undue influence by a 

fund of funds over underlying funds, 

excessive layering of fees, and overly 

complex fund structures. Accordingly, 

applicants believe that the requested 

exemption is consistent with the public 

interest and the protection of investors. 

4. Applicants submit that the 

proposed structure will not result in the 

exercise of undue influence by a Fund 

of Funds or its affiliated persons over 

the Underlying Funds. Applicants assert 

that the concern about undue influence 

does not arise in connection with a 

Fund of Funds’ investment in the 

Affiliated Funds because they are part of 

the same group of investment 

companies. To limit the control a Fund 

of Funds or Fund of Funds Affiliate 5

may have over an Unaffiliated Fund, 

applicants propose a condition 

prohibiting the Adviser and any person 

controlling, controlled by or under 

common control with the Adviser, and 

any investment company and any issuer 

that would be an investment company 

but for section 3(c)(1) or section 3(c)(7) 

of the Act advised or sponsored by the 

Adviser or any person controlling, 

controlled by or under common control 

with the Adviser (collectively, the 

‘‘Group’’) from controlling (individually 

or in the aggregate) an Unaffiliated Fund 

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

the Act. The same prohibition would 

apply to any other investment adviser 

within the meaning of section 

2(a)(20)(B) of the Act (‘‘Sub-Adviser’’) 

and any person controlling, controlled 

by or under common control with the 

Sub-Adviser, and any investment 

company or issuer that would be an 

investment company but for section 

3(c)(1) or 3(c)(7) of the Act (or portion 

of such investment company or issuer) 

advised or sponsored by the SubAdviser or any person controlling, 

controlled by or under common control 

with the Sub-Adviser (collectively, the 

‘‘Sub-Adviser Group’’). 

5. With respect to closed-end 

Underlying Funds, applicants note that 

although closed-end funds may not be 

unduly influenced by a holder’s right of 

redemption, closed-end Underlying 

Funds may be unduly influenced by a 

holder’s ability to vote a large block of 

stock. To address this concern, 

applicants submit that, with respect to 

a Fund’s investment in an Unaffiliated 

Closed-End Investment Company, (i) 

each member of the Group or SubAdviser Group that is an investment 

company or an issuer that would be an 

investment company but for section 

3(c)(1) or 3(c)(7) of the Act will vote its 

shares of the Unaffiliated Closed-End 

Investment Company in the manner 

prescribed by section 12(d)(1)(E) of the 

Act and (ii) each other member of the 

Group or Sub-Adviser Group will vote 

its shares of the Unaffiliated Closed-End 

Investment Company in the same 

proportion as the vote of all other 

holders of the same type of such 

Unaffiliated Closed-End Investment 

Company’s shares. Applicants state that, 

in this way, an Unaffiliated Closed-End 

Investment Company will be protected 

from undue influence by a Fund of 

Funds through the voting of the 

Unaffiliated Closed-End Investment 

Company’s shares. 

6. Applicants propose other 

conditions to limit the potential for 

undue influence over the Unaffiliated 

Funds, including that no Fund of Funds 

or Fund of Funds Affiliate (except to the 

extent it is acting in its capacity as an 

investment adviser to an Unaffiliated 

Investment Company or sponsor to an 

Unaffiliated Trust) will cause an 

Unaffiliated Fund to purchase a security 

in an offering of securities during the 

existence of any underwriting or selling 

syndicate of which a principal 

underwriter is an Underwriting Affiliate 

(‘‘Affiliated Underwriting’’).6

7. To further ensure that an 

Unaffiliated Investment Company 

understands the implications of a Fund 

of Funds’ investment under the 

requested exemptive relief, prior to its 

investment in the shares of an 

Unaffiliated Investment Company in 

excess of the limit of section 

12(d)(1)(A)(i) of the Act, a Fund of 

Funds and the Unaffiliated Investment 

Company will execute an agreement 


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7Any references to NASD Conduct Rule 2830 

include any successor or replacement FINRA rule 

to NASD Conduct Rule 2830. 

8Applicants acknowledge that receipt of any 

compensation by (a) an affiliated person of a Fund 

of Funds, or an affiliated person of such person, for 

the purchase by the Fund of Funds of shares of an 

Underlying Fund or (b) an affiliated person of an 

Underlying Fund, or an affiliated person of such 

person, for the sale by the Underlying Fund of its 

shares to a Fund of Funds may be prohibited by 

section 17(e)(1) of the Act. The Participation 

Agreement also will include this acknowledgement. 

9Applicants note that a Fund of Funds generally 

would purchase and sell shares of an Underlying 

Fund that operates as an ETF through secondary 

market transactions rather than through principal 

transactions with the Underlying Fund. Applicants 

nevertheless request relief from sections 17(a)(1) 

and (2) to permit each Fund of Funds that is an 

affiliated person, or an affiliated person of an 

affiliated person, as defined in section 2(a)(3) of the 

Act, of an ETF to purchase or redeem shares from 

the ETF. Applicants are not seeking relief from 

section 17(a) for, and the requested relief will not 

apply to, transactions where an ETF could be 

deemed an affiliated person, or an affiliated person 

of an affiliated person, of a Fund of Funds because 

an investment adviser to the ETF or an entity 

controlling, controlled by or under common control 

with the investment adviser to the ETF is also an 

investment adviser to the Fund of Funds. 

Applicants further note that a Fund of Funds will 

purchase and sell shares of an Underlying Fund 

that is a closed-end fund (including business 

development companies) through secondary market 

transactions at market prices rather than through 

principal transactions with the closed-end fund (or 

business development company). Accordingly, 

applicants are not requesting section 17(a) relief 

with respect to principal transactions with closedend funds (including business development 

companies). 

stating, without limitation, that each of 

their boards of directors or trustees (for 

any entity, the ‘‘Board’’) and their 

investment advisers understand the 

terms and conditions of the order and 

agree to fulfill their responsibilities 

under the order (the ‘‘Participation 

Agreement’’). Applicants note that an 

Unaffiliated Investment Company 

(including an ETF or an Unaffiliated 

Closed-End Investment Company) 

would also retain its right to reject any 

initial investment by a Fund of Funds 

in excess of the limits in section 

12(d)(1)(A)(i) of the Act by declining to 

execute the Participation Agreement 

with the Fund of Funds. In addition, an 

Unaffiliated Investment Company (other 

than an ETF or closed-end fund whose 

shares are purchased by a Fund of 

Funds in the secondary market) will 

retain its right at all times to reject any 

investment by a Fund of Funds. Finally, 

subject solely to the giving of notice to 

a Fund of Funds and the passage of a 

reasonable notice period, an 

Unaffiliated Fund (including an ETF or 

an Unaffiliated Closed-End Investment 

Company) could terminate a 

Participation Agreement with the Fund 

of Funds. 

8. Applicants state that they do not 

believe that the proposed arrangement 

will result in excessive layering of fees. 

The Board of each Fund of Funds, 

including a majority of the directors 

who are not ‘‘interested persons’’ within 

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

Act (the ‘‘Independent Directors’’), will 

find that the management or advisory 

fees charged under a Fund of Funds’ 

advisory contract are based on services 

provided that are in addition to, rather 

than duplicative of, services provided 

under the advisory contract(s) of any 

Underlying Fund in which the Fund of 

Funds may invest. In addition, the 

Adviser will waive fees otherwise 

payable to it by a Fund of Funds in an 

amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company under 

rule 12b-1 under the Act) received from 

an Unaffiliated Fund by the Adviser, or 

an affiliated person of the Adviser, other 

than any advisory fees paid to the 

Adviser or an affiliated person of the 

Adviser by the Unaffiliated Investment 

Company, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Fund. 

9. Applicants further state that any 

sales charges and/or service fees 

charged with respect to shares of a Fund 

of Funds will not exceed the limits 

applicable to funds of funds set forth in 

rule 2830 of the Conduct Rules of the 

NASD (‘‘NASD Conduct Rule 2830’’).7

10. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that no Underlying 

Fund (or, if applicable, its respective 

master fund) will acquire securities of 

any other investment company or 

company relying on section 3(c)(1) or 

3(c)(7) of the Act in excess of the limits 

contained in section 12(d)(1)(A) of the 

Act, except in certain circumstances 

identified in condition 12 below. 

B. Section 17(a) 

1. Section 17(a) of the Act generally 

prohibits sales or purchases of securities 

between a registered investment 

company and any affiliated person, or 

affiliated person of an affiliated person, 

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

Act defines an ‘‘affiliated person’’ of 

another person to include (a) any person 

directly or indirectly owning, 

controlling, or holding with power to 

vote, 5% or more of the outstanding 

voting securities of the other person; (b) 

any person 5% or more of whose 

outstanding voting securities are 

directly or indirectly owned, controlled, 

or held with power to vote by the other 

person; and (c) any person directly or 

indirectly controlling, controlled by, or 

under common control with the other 

person. 

2. Applicants state that the Funds of 

Funds and the Affiliated Funds may be 

deemed to be under the common control 

of the Adviser and, therefore, affiliated 

persons of one another. Applicants also 

state that the Funds of Funds and the 

Underlying Funds organized as openend investment companies 

(‘‘Underlying Open-End Funds’’) or 

UITs (‘‘Underlying UITs’’) may also be 

deemed to be affiliated persons of one 

another if a Fund of Funds owns 5% or 

more of the outstanding voting 

securities of one or more of such 

Underlying Open-End Funds and/or 

Underlying UITs. Applicants state that 

the sale of shares by the Underlying 

Open-End Funds or Underlying UITs to 

the Funds of Funds and the purchase of 

those shares from the Funds of Funds by 

the Underlying Open-End Funds and/or 

Underlying UITs (through redemptions) 

could be deemed to violate section 

17(a).8

3. Section 17(b) of the Act authorizes 

the Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (i) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (ii) the 

proposed transaction is consistent with 

the policies of each registered 

investment company concerned; and 

(iii) the proposed transaction is 

consistent with the general purposes of 

the Act. Section 6(c) of the Act permits 

the Commission to exempt any person 

or transactions from any provision of 

the Act if such exemption is necessary 

or appropriate in the public interest and 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act. 

4. Applicants submit that the 

proposed transactions satisfy the 

standards for relief under sections 17(b) 

and 6(c) of the Act. Applicants state that 

the terms of the transactions are 

reasonable and fair and do not involve 

overreaching. Applicants state that the 

terms upon which an Underlying OpenEnd Fund or Underlying UIT will sell 

its shares to or purchase its shares from 

a Fund of Funds will be based on the 

net asset value of each Underlying 

Open-End Fund or Underlying UIT.9

Applicants also state that the proposed 

transactions will be consistent with the 

policies of each Fund of Funds, 

Underlying Open-End Fund, and 


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Underlying UIT and with the general 

purposes of the Act. 

C. Other Investments by Section 

12(d)(1)(G) Funds 

1. Section 12(d)(1)(G) of the Act 

provides that section 12(d)(1) will not 

apply to securities of an acquired 

company purchased by an acquiring 

company if: (i) The acquiring company 

and acquired company are part of the 

same ‘‘group of investment companies,’’ 

as defined in section 12(d)(1)(G)(ii) of 

the Act; (ii) the acquiring company 

holds only securities of acquired 

companies that are part of the same 

‘‘group of investment companies,’’ as 

defined in section 12(d)(1)(G)(ii) of the 

Act, government securities, and shortterm paper; (iii) the aggregate sales loads 

and distribution-related fees of the 

acquiring company and the acquired 

company are not excessive under rules 

adopted pursuant to section 22(b) or 

section 22(c) of the Act by a securities 

association registered under section 15A 

of the 1934 Act or by the Commission; 

and (iv) the acquired company has a 

policy that prohibits it from acquiring 

securities of registered open-end 

management investment companies or 

registered UITs in reliance on section 

12(d)(1)(F) or (G) of the Act. 

2. Rule 12d1–2 under the Act permits 

a registered open-end investment 

company or a registered UIT that relies 

on section 12(d)(1)(G) of the Act to 

acquire, in addition to securities issued 

by another registered investment 

company in the same group of 

investment companies, government 

securities, and short-term paper: (1) 

Securities issued by an investment 

company that is not in the same group 

of investment companies, when the 

acquisition is in reliance on section 

12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) 

securities (other than securities issued 

by an investment company); and (3) 

securities issued by a money market 

fund, when the investment is in reliance 

on rule 12d1–1 under the Act. For the 

purposes of rule 12d1–2, ‘‘securities’’ 

means any security as defined in section 

2(a)(36) of the Act. 

3. Applicants state that the proposed 

arrangement would comply with rule 

12d1–2 under the Act, but for the fact 

that the Section 12(d)(1)(G) Funds may 

invest a portion of their assets in Other 

Investments. Applicants request an 

order under section 6(c) of the Act for 

an exemption from rule 12d1–2(a) to 

allow the Section 12(d)(1)(G) Funds to 

invest in Other Investments. Applicants 

assert that permitting a Section 

12(d)(1)(G) Fund to invest in Other 

Investments as described in the 

application would not raise any of the 

concerns that section 12(d)(1) of the Act 

was intended to address. 

4. Consistent with its fiduciary 

obligations under the Act, a Section 

12(d)(1)(G) Fund’s Board will review the 

advisory fees charged by the Section 

12(d)(1)(G) Fund’s investment adviser(s) 

to ensure that the fees are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided pursuant to the advisory 

agreement of any investment company 

in which the Section 12(d)(1)(G) Fund 

may invest. 

Applicants’ Conditions 

A. Investments by Funds of Funds in 

Underlying Funds 

Applicants agree that the order 

granting the requested relief to permit 

Funds of Funds to invest in Underlying 

Funds shall be subject to the following 

conditions: 

1. The members of the Group will not 

control (individually or in the aggregate) 

an Unaffiliated Fund within the 

meaning of section 2(a)(9) of the Act. 

The members of a Sub-Adviser Group 

will not control (individually or in the 

aggregate) an Unaffiliated Fund within 

the meaning of section 2(a)(9) of the Act. 

With respect to a Fund’s investment in 

an Unaffiliated Closed-End Investment 

Company, (i) each member of the Group 

or Sub-Adviser Group that is an 

investment company or an issuer that 

would be an investment company but 

for section 3(c)(1) or 3(c)(7) of the Act 

will vote its shares of the Unaffiliated 

Closed-End Investment Company in the 

manner prescribed by section 

12(d)(1)(E) of the Act and (ii) each other 

member of the Group or Sub-Adviser 

Group will vote its shares of the 

Unaffiliated Closed-End Investment 

Company in the same proportion as the 

vote of all other holders of the same 

type of such Unaffiliated Closed-End 

Investment Company’s shares. If, as a 

result of a decrease in the outstanding 

voting securities of any other 

Unaffiliated Fund, the Group or a SubAdviser Group, each in the aggregate, 

becomes a holder of more than 25% of 

the outstanding voting securities of such 

Unaffiliated Fund, then the Group or the 

Sub-Adviser Group will vote its shares 

of the Unaffiliated Fund in the same 

proportion as the vote of all other 

holders of the Unaffiliated Fund’s 

shares. This condition will not apply to 

a Sub-Adviser Group with respect to an 

Unaffiliated Fund for which the SubAdviser or a person controlling, 

controlled by or under common control 

with the Sub-Adviser acts as the 

investment adviser within the meaning 

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

case of an Unaffiliated Investment 

Company) or as the sponsor (in the case 

of an Unaffiliated Trust). 

2. No Fund of Funds or Fund of 

Funds Affiliate will cause any existing 

or potential investment by the Fund of 

Funds in an Unaffiliated Fund to 

influence the terms of any services or 

transactions between the Fund of Funds 

or a Fund of Funds Affiliate and the 

Unaffiliated Fund or an Unaffiliated 

Fund Affiliate. 

3. The Board of each Fund of Funds, 

including a majority of the Independent 

Directors, will adopt procedures 

reasonably designed to ensure that its 

Adviser and any Sub-Adviser to the 

Fund of Funds are conducting the 

investment program of the Fund of 

Funds without taking into account any 

consideration received by the Fund of 

Funds or Fund of Funds Affiliate from 

an Unaffiliated Investment Company or 

Unaffiliated Trust or any Unaffiliated 

Fund Affiliate of such Unaffiliated 

Investment Company or Unaffiliated 

Trust in connection with any services or 

transactions. 

4. Once an investment by a Fund of 

Funds in the securities of an 

Unaffiliated Investment Company 

exceeds the limit of section 

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

the Unaffiliated Investment Company, 

including a majority of the Independent 

Directors, will determine that any 

consideration paid by the Unaffiliated 

Investment Company to a Fund of 

Funds or a Fund of Funds Affiliate in 

connection with any services or 

transactions: (a) Is fair and reasonable in 

relation to the nature and quality of the 

services and benefits received by the 

Unaffiliated Investment Company; (b) is 

within the range of consideration that 

the Unaffiliated Investment Company 

would be required to pay to another 

unaffiliated entity in connection with 

the same services or transactions; and 

(c) does not involve overreaching on the 

part of any person concerned. This 

condition does not apply with respect to 

any services or transactions between an 

Unaffiliated Investment Company and 

its investment adviser(s), or any person 

controlling, controlled by, or under 

common control with such investment 

adviser(s). 

5. No Fund of Funds or Fund of 

Funds Affiliate (except to the extent it 

is acting in its capacity as an investment 

adviser to an Unaffiliated Investment 

Company or sponsor to an Unaffiliated 

Trust) will cause an Unaffiliated Fund 

to purchase a security in any Affiliated 

Underwriting. 

6. The Board of an Unaffiliated 

Investment Company, including a 

majority of the Independent Directors, 


tkelley on DSK3SPTVN1PROD with NOTICES
67484 Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 

will adopt procedures reasonably 

designed to monitor any purchases of 

securities by the Unaffiliated Investment 

Company in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of the Unaffiliated 

Investment Company exceeds the limit 

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

including any purchases made directly 

from an Underwriting Affiliate. The 

Board of the Unaffiliated Investment 

Company will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

purchases were influenced by the 

investment by the Fund of Funds in the 

Unaffiliated Investment Company. The 

Board of the Unaffiliated Investment 

Company will consider, among other 

things: (a) Whether the purchases were 

consistent with the investment 

objectives and policies of the 

Unaffiliated Investment Company; (b) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether the amount of securities 

purchased by the Unaffiliated 

Investment Company in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of the Unaffiliated Investment 

Company will take any appropriate 

actions based on its review, including, 

if appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interests 

of shareholders. 

7. Each Unaffiliated Investment 

Company will maintain and preserve 

permanently, in an easily accessible 

place, a written copy of the procedures 

described in the preceding condition, 

and any modifications to such 

procedures, and will maintain and 

preserve for a period of not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in an Affiliated Underwriting 

once an investment by a Fund of Funds 

in the securities of an Unaffiliated 

Investment Company exceeds the limit 

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

setting forth (1) the party from whom 

the securities were acquired, (2) the 

identity of the underwriting syndicate’s 

members, (3) the terms of the purchase, 

and (4) the information or materials 

upon which the determinations of the 

Board of the Unaffiliated Investment 

Company were made. 

8. Prior to its investment in shares of 

an Unaffiliated Investment Company in 

excess of the limit set forth in section 

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

Funds and the Unaffiliated Investment 

Company will execute a Participation 

Agreement stating, without limitation, 

that their Boards and their investment 

advisers understand the terms and 

conditions of the order and agree to 

fulfill their responsibilities under the 

order. At the time of its investment in 

shares of an Unaffiliated Investment 

Company in excess of the limit set forth 

in section 12(d)(1)(A)(i), a Fund of 

Funds will notify the Unaffiliated 

Investment Company of the investment. 

At such time, the Fund of Funds will 

also transmit to the Unaffiliated 

Investment Company a list of the names 

of each Fund of Funds Affiliate and 

Underwriting Affiliate. The Fund of 

Funds will notify the Unaffiliated 

Investment Company of any changes to 

the list as soon as reasonably practicable 

after a change occurs. The Unaffiliated 

Investment Company and the Fund of 

Funds will maintain and preserve a 

copy of the order, the Participation 

Agreement, and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

9. Before approving any advisory 

contract under section 15 of the Act, the 

Board of each Fund of Funds, including 

a majority of the Independent Directors, 

shall find that the advisory fees charged 

under the advisory contract are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided under the advisory contract(s) 

of any Underlying Fund in which the 

Fund of Funds may invest. Such 

finding, and the basis upon which the 

finding was made, will be recorded fully 

in the minute books of the appropriate 

Fund of Funds. 

10. The Adviser will waive fees 

otherwise payable to it by a Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Investment Company 

pursuant to rule 12b–1 under the Act) 

received from an Unaffiliated Fund by 

the Adviser, or an affiliated person of 

the Adviser, other than any advisory 

fees paid to the Adviser or its affiliated 

person by the Unaffiliated Investment 

Company, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Fund. Any Sub-Adviser 

will waive fees otherwise payable to the 

Sub-Adviser, directly or indirectly, by 

the Fund of Funds in an amount at least 

equal to any compensation received by 

the Sub-Adviser, or an affiliated person 

of the Sub-Adviser, from an Unaffiliated 

Fund, other than any advisory fees paid 

to the Sub-Adviser or its affiliated 

person by the Unaffiliated Investment 

Company, in connection with the 

investment by the Fund of Funds in the 

Unaffiliated Fund made at the direction 

of the Sub-Adviser. In the event that the 

Sub-Adviser waives fees, the benefit of 

the waiver will be passed through to the 

Fund of Funds. 

11. Any sales charges and/or service 

fees charged with respect to shares of a 

Fund of Funds will not exceed the 

limits applicable to funds of funds set 

forth in NASD Conduct Rule 2830. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

3(c)(1) or 3(c)(7) of the Act, in excess of 

the limits contained in section 

12(d)(1)(A) of the Act, except to the 

extent that such Underlying Fund: (a) 

Acquires such securities in compliance 

with section 12(d)(1)(E) of the Act and 

either is an Affiliated Fund or is in the 

same ‘‘group of investment companies’’ 

as its corresponding master fund; (b) 

receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act); or (c) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

Acquire securities of one or more 

investment companies for short-term 

cash management purposes or (ii) 

engage in inter-fund borrowing and 

lending transactions. 

B. Other Investments by Section 

12(d)(1)(G) Funds 

Applicants agree that the order 

granting the requested relief to permit 

Section 12(d)(1)(G) Funds to invest in 

Other Investments shall be subject to the 

following condition: 

1. Applicants will comply with all 

provisions of rule 12d1–2 under the Act, 

except for paragraph (a)(2) to the extent 

that it restricts any Section 12(d)(1)(G) 

Fund from investing in Other 

Investments as described in the 

application. 


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Federal Register / Vol. 79, No. 219 / Thursday, November 13, 2014 / Notices 67485 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Exchange adopted Rule 967NY governing 

Trade Collar Protection in 2013. See, Exchange Rule 

967NY (Securities Exchange Act Release No. 70037) 

(July 25, 2013), 78 FR 46399 (July 31, 2013) 

(NYSEMKT–2013–62). 

5The bid-ask differential changes as the price 

increases. Rule 925NY(b)(4) sets the bid-ask 

differential at no more than $0.40 where the bid is 

$2.00 or more but does not exceed $5.00. 

Accordingly, if the NBBO for XYZ is $3.00 bid and 

$3.50 offer, certain orders the Exchange receives 

will be subject to a $0.40 Trading Collar Protection. 

6A Trading Official, as defined by Rule 

900.2NY(82) is an officer or employee of the 

Exchange. Trading Officials are not affiliated with 

ATP Holders. 

7See, Rule 967NY(a)(4)(B). 

8Rule 967NY(a)(4)(C)(iv) states that a new Market 

Order on the same side as a collared order will not 

cause the order subject to Trade Collar Protection 

to be recalculated (but will redisplay with the 

additional size of the new Market Order). 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–26816 Filed 11–12–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73544; File No. SR– 

NYSEMKT–2014–14] 

Self-Regulatory Organizations; NYSE 

MKT LLC; Notice of Filing of Proposed 

Rule Change Amending Rule 967NY To 

Enhance the Functionality of the Trade 

Collar Protection Mechanism 

November 6, 2014. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on October 

24, 2014, NYSE MKT LLC (the 

‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of the Substance 

of the Proposed Rule Change 

The Exchange proposes to amend 

Rule 967NY to enhance the 

functionality of the trade collar 

protection mechanism. The text of the 

proposed rule change is available on the 

Exchange’s Web site 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is proposing to amend 

Rule 967NY(a) to clarify and conform 

with the functionality of the trade collar 

protection mechanism in use on the 

Exchange. The Exchange’s amendment 

is to specify (a) how marketable Limit 

Orders behave when received in a wide 

market, (b) how subsequently-arriving 

Market Orders effect collared orders, 

and (c) the values associated with a 

Trading Collar. The Exchange also seeks 

to make non-substantive wording 

changes to Rule 967NY(a). 

Background 

Pursuant to Rule 967NY(a), the 

Exchange applies a ‘‘Trade Collar 

Protection’’ mechanism that prevents 

the immediate execution of certain 

orders at prices outside of a specified 

parameter (referred to as a ‘‘Trading 

Collar’’).4 Pursuant to Rule 967NY(a)(3), 

the Trade Collar Protection mechanism 

is not available for quotes or for orders 

with execution conditions IOC, AON, 

FOK and NOW. 

Trading Collars are determined by the 

Exchange on a class-by-class basis and, 

unless announced otherwise via Trader 

Update, are the same value as the bidask differential guidelines established 

pursuant to Rule 925NY(b)(4), as set 

forth in Rule 967NY(a)(2). For example, 

Rule 925NY(b)(4) sets the bid-ask 

differential for an option priced less 

than $2.00 at $0.25. For any option that 

has a bid less than $2.00, the Trading 

Collar will be $0.25. Accordingly, if the 

National Best Bid and Offer (‘‘NBBO’’) 

for XYZ is $0.75 bid and $1.75 offer, 

certain orders the Exchange receives 

will be subject to a $0.25 Trading 

Collar.5 If necessary to preserve a fair 

and orderly market, the Exchange may, 

with the approval of two Trading 

Officials,6 widen or narrow the Trading 

Collar for one or more option series. 

Trade Collar Protection applies to two 

scenarios. First, pursuant to Rule 

967NY(a)(1)(i), Trade Collar Protection 

prevents executions of certain orders 

when the difference between the 

National Best Offer (‘‘NBO’’) and the 

National Best Bid (‘‘NBB’’) is greater 

than one Trading Collar. Second, 

pursuant to Rule 967NY(a)(1)(ii), Trade 

Collar Protection prevents the execution 

of the balance of an eligible buy order 

if it were to execute at a price that is the 

NBO plus a Trading Collar (or a price 

that is the NBB minus a Trading Collar 

for an eligible sell order). 

Pursuant to Rule 967NY(a)(1)(i), if the 

difference between the NBO and the 

NBB is greater than one Trading Collar, 

the Exchange will prevent execution or 

routing of certain orders. Instead, 

pursuant to Rule 967NY(a)(4)(A), the 

Exchange will display the order at a 

price equal to the NBO minus one 

Trading Collar for sell orders or the NBB 

plus one Trading Collar for buy orders 

(the ‘‘collared order’’). The Exchange 

will then attempt to execute or route the 

collared order to buy (sell) against any 

contra interest priced within one 

Trading Collar above (below) the 

displayed price of the collared order.7

As set forth in Rule 967NY(a)(4)(C)(iii), 

should market conditions prevent the 

order from trading or recalculating for a 

period of one second, the order will 

improve its displayed price by an 

amount equal to an additional Trading 

Collar. 

The collared order will re-price before 

the expiration of one second as a result 

of certain changes in the market. 

Pursuant to Rule 967NY(a)(4)(C)(i), an 

update to the NBBO (based on another 

market center or a quote or order on the 

Exchange) that improves the same side 

of the market as the collared order will 

cause the collared order to be 

redisplayed at the same price as the 

updated NBBO. In accordance with Rule 

967NY(a)(4)(C)(ii), a Limit Order (which 

is not an IOC Order, AON Order, FOK 

Order or NOW Order) on the same side 

of the market priced better than one 

Trading Collar from the collared order 

will also become subject to Trade Collar 

Protection and will cause the collared 

order to improve by one Trading Collar 

(which will redisplay at the new price 

and additional size of the new Limit 

Order).8


tkelley on DSK3SPTVN1PROD with NOTICES