73346 Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 

USPS 870.200 

SYSTEM NAME: 

[CHANGE TO READ] 

Postage Validation Imprint (PVI), 

Electronic Verification System (eVS), 

Postage Meter, and PC Postage Customer 

Data and Transaction Records 

SYSTEM LOCATION: 

[CHANGE TO READ] 

USPS Headquarters, USPS facilities, 

Integrated Business Solutions Services 

Centers, and partner locations. 

* * * * * 

CATEGORIES OF RECORDS IN THE SYSTEM: 

[CHANGE TO READ] 

1. Customer information: Contact 

name, address, and telephone number; 

registration identifiers; company name; 

and change of address information. 

2. Identification information: 

Customer/system ID(s), IP address(es), 

date of device installation, device ID 

number, device model number, and 

certificate serial number. 

3. Mailing and transaction 

information: Tracking ID, package 

identification code (PIC), customer 

provided package/transaction attribute 

data, postage paid, contract pricing, 

package attribute data, USPS collection 

and source system identifiers, mail 

piece images, and package destination 

and origin. 

AUTHORITY FOR MAINENANCE OF THE SYSTEM: 

[CHANGE TO READ] 

39 U.S.C. 401, 403, and 404; 39 CFR 

part 501. 

* * * * * 

ROUTINE USES OF RECORDS IN THE SYSTEM, 

INCLUDING CATEGORIES OF USERS AND THE

PURPOSES OF SUCH USES: 

* * * * * 

[ADD TEXT] 

b. Customer-specific records and 

related sampling systems in this system 

may be disclosed to relevant eVS 

customers, indicia providers, and PC 

Postage providers, including approved 

shippers, for revenue assurance to 

ensure accuracy of postage payment 

across payment systems, and to 

otherwise enable responsible 

administration of postage evidencing 

system activities. 

* * * * * 

RETENTION AND DISPOSAL: 

[CHANGE TO READ] 

* * * * * 

2. Other records in this system are 

retained up to 7 years after a customer 

ceases using a postage evidencing 

system. 

* * * * * 

Stanley F. Mires, 

Attorney, Federal Requirements. 

[FR Doc. 2014–28882 Filed 12–9–14; 8:45 am] 

BILLING CODE 7710–12–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

31365; 812–14283] 

Dreyfus ETF Trust, et al.; Notice of 

Application 

December 3, 2014. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 6(c) of the 

Investment Company Act of 1940 

(‘‘Act’’) for an exemption from sections 

2(a)(32), 5(a)(1), 22(d) and 22(e) of the 

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

sections 6(c) and 17(b) of the Act for an 

exemption from sections 17(a)(1) and 

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

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

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

Act. 

Applicants: Dreyfus ETF Trust 

(‘‘Trust’’), The Dreyfus Corporation 

(‘‘Dreyfus’’), and Mellon Capital 

Management Corporation (‘‘Mellon 

Capital’’). 

Summary of Application: Applicants 

request an order that permits: (a) 

Actively-managed series of certain 

open-end management investment 

companies to issue shares (‘‘Shares’’) 

redeemable in large aggregations only 

(‘‘Creation Units’’); (b) secondary market 

transactions in Shares to occur at 

negotiated market prices; (c) certain 

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days from the tender of Shares for 

redemption; (d) certain affiliated 

persons of the series to deposit 

securities into, and receive securities 

from, the series in connection with the 

purchase and redemption of Creation 

Units; and (e) certain registered 

management investment companies and 

unit investment trusts outside of the 

same group of investment companies as 

the series to acquire Shares. 

DATES: 

Filing Dates: The application was 

filed on February 24, 2014, and 

amended on July 18, 2014, and October 

22, 2014. 

Hearing or Notification of Hearing: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on December 29, 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 upon the desirability of a 

hearing on the matter, the reason for the 

request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

writing to the Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

Applicants: c/o Jeff Prusnofsky, The 

Dreyfus Corporation, 200 Park Avenue, 

New York, NY 10166. 

FOR FURTHER INFORMATION: Courtney S. 

Thornton, Senior Counsel, at (202) 551– 

6812 or David P. Bartels, 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 Trust is a Massachusetts 

business trust and will register with the 

Commission as an open-end 

management investment company. The 

Trust will be organized as a series fund 

with multiple series, but will initially be 

comprised of a single series (the ‘‘Initial 

Fund’’). Subject to market conditions, 

applicants expect that the investment 

objective of the Initial Fund will be to 

seek capital growth. The Initial Fund 

will seek to achieve its investment 

objective by investing primarily in a 

diversified portfolio of equity and fixedincome securities, other debt 

instruments and certain derivative 

instruments. 

2. Dreyfus, a New York corporation 

registered with the Commission as an 

investment adviser under the 

Investment Adviser Act of 1940 

(‘‘Advisers Act’’), will be the investment 

adviser to the Initial Fund. The Adviser 

(as defined below) may enter into subadvisory agreements with one or more 

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Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 73347 

1For the purposes of the requested order, a 

‘‘successor’’ is limited to an entity or entities that 

result from a reorganization into another 

jurisdiction or a change in the type of business 

organization. 

2Any Adviser to a Future Fund will be registered 

as an investment adviser under the Advisers Act. 

All entities that currently intend to rely on the 

order are named as applicants. Any other entity that 

relies on the order in the future will comply with 

the terms and conditions of the application. 

3Applicants further request that the order apply 

to any future Distributor of the Funds, which would 

be a Broker and would comply with the terms and 

conditions of the application. The Distributor of any 

Fund may be an affiliated person of the Adviser 

and/or Sub-Advisers. 

4 If a Fund invests in derivatives, then (a) the 

board of trustees or directors (‘‘Board’’) of the Fund 

will periodically review and approve the Fund’s 

use of derivatives and how the Adviser assesses and 

manages risk with respect to the Fund’s use of 

derivatives and (b) the Fund’s disclosure of its use 

of derivatives in its offering documents and 

periodic reports will be consistent with relevant 

Commission and staff guidance. 

5 Depositary Receipts are typically issued by a 

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

ownership in a security or pool of securities that 

have been deposited with the depository. A Fund 

will not invest in any Depositary Receipts that the 

Adviser or Sub-Adviser deems to be illiquid or for 

which pricing information is not readily available. 

No affiliated persons of applicants, any Future 

Fund, any Adviser or any Sub-Adviser will serve 

as the depositary bank for any Depositary Receipts 

held by a Fund. 

6An Investing Fund may rely on the order only 

to invest in Funds and not in any other registered 

investment company. 

7The Funds must comply with the federal 

securities laws in accepting Deposit Instruments 

and satisfying redemptions with Redemption 

Instruments, including that the Deposit Instruments 

and Redemption Instruments are sold in 

transactions that would be exempt from registration 

under the Securities Act of 1933 (‘‘Securities Act’’). 

In accepting Deposit Instruments and satisfying 

redemptions with Redemption Instruments that are 

restricted securities eligible for resale pursuant to 

Rule 144A under the Securities Act, the Funds will 

comply with the conditions of Rule 144A. 

8Each Fund will sell and redeem Creation Units 

on any day the Fund is open, including as required 

by section 22(e) of the Act (each, a ‘‘Business Day’’). 

9The portfolio used for this purpose will be the 

same portfolio used to calculate the Fund’s net asset 

value (‘‘NAV’’) for that Business Day. 

10A tradeable round lot for a security will be the 

standard unit of trading in that particular type of 

security in its primary market. 

11A TBA Transaction is a method of trading 

mortgage-backed securities. In a TBA Transaction, 

the buyer and seller agree on general trade 

parameters such as agency, settlement date, par 

amount and price. 

12This includes instruments that can be 

transferred in kind only with the consent of the 

original counterparty to the extent the Fund does 

not intend to seek such consents. 

investment advisers, each of which will 

act as sub-adviser to a Fund (as defined 

below) (each a ‘‘Sub-Adviser’’). Mellon 

Capital, a Delaware corporation 

registered with the Commission as an 

investment adviser under the Advisers 

Act, will serve as Sub-Adviser to the 

Initial Fund. Applicants state that each 

Sub-Adviser will be registered, or not 

subject to registration, under the 

Advisers Act. 

3. A registered broker-dealer 

(‘‘Broker’’) under the Securities 

Exchange Act of 1934 (the ‘‘Exchange 

Act’’), will be selected and approved by 

the Board (as defined below) to act as 

the distributor and principal 

underwriter of the Funds (the ‘‘Initial 

Distributor’’). The Distributor of any 

Fund may be an ‘‘affiliated person’’ or 

an affiliated person of an affiliated 

person of that Fund’s Adviser and/or 

Sub-Advisers. No Distributor, Adviser, 

Sub-Adviser, Trust, or Fund is, or will 

be, affiliated with any national 

securities exchange, as defined in 

section 2(a)(26) of the Act (‘‘Stock 

Exchange’’). 

4. Applicants request that the order 

apply to the Initial Fund and any future 

series of the Trust or of any other openend management companies that may 

utilize active management investment 

strategies (collectively, ‘‘Future 

Funds’’). Any Future Fund will (a) be 

advised by Dreyfus or an entity 

controlling, controlled by, or under 

common control with Dreyfus (Dreyfus 

and each such other entity and any 

successor thereto included in the term 

‘‘Adviser’’),1 and (b) comply with the 

terms and conditions of the 

application.2 The Initial Fund and 

Future Funds together are the ‘‘Funds’’.3

Each Fund will consist of a portfolio of 

securities (including fixed income 

securities and/or equity securities), 

currencies traded in the U.S. and/or 

non-U.S. markets, and derivatives, other 

assets, and other investment positions 

(‘‘Portfolio Instruments’’).4 Funds may 

invest in ‘‘Depositary Receipts.’’ 5 Each 

Fund will operate as an actively 

managed exchange-traded fund (‘‘ETF’’). 

5. Applicants request that any 

exemption under section 12(d)(1)(J) 

apply to: (1) With respect to section 

12(d)(1)(B), any Fund that is currently 

or subsequently part of the same ‘‘group 

of investment companies’’ as the Initial 

Fund within the meaning of section 

12(d)(1)(G)(ii) of the Act as well as any 

principal underwriter for the Fund and 

any Brokers selling Shares of a Fund to 

an Investing Fund (as defined below); 

and (2) with respect to section 

12(d)(1)(A), each management 

investment company or unit investment 

trust registered under the Act that is not 

part of the same ‘‘group of investment 

companies’’ as the Funds, and that 

enters into a FOF Participation 

Agreement (as defined below) to acquire 

Shares of a Fund (such management 

investment companies, ‘‘Investing 

Management Companies,’’ such unit 

investment trusts, ‘‘Investing Trusts,’’ 

and Investing Management Companies 

and Investing Trusts together, 

‘‘Investing Funds’’). Investing Funds do 

not include the Funds.6

6. Applicants anticipate that a 

Creation Unit will consist of a fixed 

number of Shares (e.g., at least 25,000). 

Applicants anticipate that the trading 

price of a Share will range from $10 to 

$100. All orders to purchase Creation 

Units must be placed with a Distributor 

by or through a party that has entered 

into a participant agreement with the 

Distributor and the transfer agent of the 

Fund (‘‘Authorized Participant’’) with 

respect to the creation and redemption 

of Creation Units. An Authorized 

Participant is either: (a) A Broker or 

other participant, in the Continuous Net 

Settlement System of the National 

Securities Clearing Corporation 

(‘‘NSCC’’), a clearing agency registered 

with the Commission and affiliated with 

the Depository Trust Company (‘‘DTC’’), 

or (b) a participant in the DTC (‘‘DTC 

Participant’’). 

7. In order to keep costs low and 

permit each Fund to be as fully invested 

as possible, Shares will be purchased 

and redeemed in Creation Units and 

generally on an in-kind basis. Except 

where the purchase or redemption will 

include cash under the limited 

circumstances specified below, 

purchasers will be required to purchase 

Creation Units by making an in-kind 

deposit of specified instruments 

(‘‘Deposit Instruments’’), and 

shareholders redeeming their Shares 

will receive an in-kind transfer of 

specified instruments (‘‘Redemption 

Instruments’’).7 On any given Business 

Day,8 the names and quantities of the 

instruments that constitute the Deposit 

Instruments and the names and 

quantities of the instruments that 

constitute the Redemption Instruments 

will be identical, and these instruments 

may be referred to, in the case of either 

a purchase or redemption, as the 

‘‘Creation Basket.’’ In addition, the 

Creation Basket will correspond pro rata 

to the positions in a Fund’s portfolio 

(including cash positions),9 except: (a) 

In the case of bonds, for minor 

differences when it is impossible to 

break up bonds beyond certain 

minimum sizes needed for transfer and 

settlement; (b) for minor differences 

when rounding is necessary to eliminate 

fractional shares or lots that are not 

tradeable round lots; 10 or (c) TBA 

Transactions,11 short positions and 

other positions that cannot be 

transferred in kind 12 will be excluded 

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73348 Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 

13Because these instruments will be excluded 

from the Creation Basket, their value will be 

reflected in the determination of the Cash Amount 

(defined below). 

14A ‘‘custom order’’ is any purchase or 

redemption of Shares made in whole or in part on 

a cash basis in reliance on clause (e)(i) or (e)(ii). 

15 In all cases, the Transaction Fee will be limited 

in accordance with the requirements of the 

Commission applicable to open-end management 

investment companies offering redeemable 

securities. 

16 If Shares are listed on The NASDAQ Stock 

Market LLC (‘‘Nasdaq’’) or a similar electronic Stock 

Exchange (including NYSE Arca), one or more 

member firms of that Stock Exchange will act as 

Market Maker and maintain a market for Shares 

trading on that Stock Exchange. On Nasdaq, no 

particular Market Maker would be contractually 

obligated to make a market in Shares. However, the 

listing requirements on Nasdaq, for example, 

stipulate that at least two Market Makers must be 

registered in Shares to maintain a listing. In 

addition, on Nasdaq and NYSE Arca, registered 

Market Makers are required to make a continuous 

two-sided market or subject themselves to 

regulatory sanctions. No Market Maker will be an 

affiliated person or an affiliated person of an 

affiliated person, of the Funds, except within the 

meaning of section 2(a)(3)(A) or (C) of the Act due 

solely to ownership of Shares as discussed below. 

17Shares will be registered in book-entry form 

only. DTC or its nominee will be the record or 

registered owner of all outstanding Shares. 

Beneficial ownership of Shares will be shown on 

the records of DTC or DTC Participants. 

from the Creation Basket.13 If there is a 

difference between NAV attributable to 

a Creation Unit and the aggregate market 

value of the Creation Basket exchanged 

for the Creation Unit, the party 

conveying instruments with the lower 

value will also pay to the other an 

amount in cash equal to that difference 

(the ‘‘Cash Amount’’). 

8. Purchases and redemptions of 

Creation Units may be made in whole or 

in part on a cash basis, rather than in 

kind, solely under the following 

circumstances: (a) To the extent there is 

a Cash Amount, as described above; (b) 

if, on a given Business Day, a Fund 

announces before the open of trading 

that all purchases, all redemptions or all 

purchases and redemptions on that day 

will be made entirely in cash; (c) if, 

upon receiving a purchase or 

redemption order from an Authorized 

Participant, a Fund determines to 

require the purchase or redemption, as 

applicable, to be made entirely in cash; 

(d) if, on a given Business Day, a Fund 

requires all Authorized Participants 

purchasing or redeeming Shares on that 

day to deposit or receive (as applicable) 

cash in lieu of some or all of the Deposit 

Instruments or Redemption Instruments, 

respectively, solely because: (i) Such 

instruments are not eligible for transfer 

through either the NSCC or DTC; or (ii) 

in the case of Funds holding non-U.S. 

investment (‘‘Global Funds’’), such 

instruments are not eligible for trading 

due to local trading restrictions, local 

restrictions on securities transfers or 

other similar circumstances; or (e) if a 

Fund permits an Authorized Participant 

to deposit or receive (as applicable) cash 

in lieu of some or all of the Deposit 

Instruments or Redemption Instruments, 

respectively, solely because: (i) Such 

instruments are, in the case of the 

purchase of a Creation Unit, not 

available in sufficient quantity; (ii) such 

instruments are not eligible for trading 

by an Authorized Participant or the 

investor on whose behalf the 

Authorized Participant is acting; or (iii) 

a holder of Shares of a Global Fund 

would be subject to unfavorable income 

tax treatment if the holder receives 

redemption proceeds in kind.14

9. Each Business Day, before the open 

of trading on a Stock Exchange on 

which Shares are listed, each Fund will 

cause to be published through the NSCC 

the names and quantities of the 

instruments comprising the Creation 

Basket, as well as the estimated Cash 

Amount (if any), for that day. The 

published Creation Basket will apply 

until a new Creation Basket is 

announced on the following Business 

Day, and there will be no intra-day 

changes to the Creation Basket except to 

correct errors in the published Creation 

Basket. The Stock Exchange will 

disseminate every 15 seconds 

throughout the trading day an amount 

representing, on a per Share basis, the 

sum of the current value of the Portfolio 

Instruments that were publicly 

disclosed prior to the commencement of 

trading in Shares on the Stock 

Exchange. 

10. A Fund may recoup the settlement 

costs charged by NSCC and DTC by 

imposing a transaction fee on investors 

purchasing or redeeming Creation Units 

(‘‘Transaction Fee’’). The Transaction 

Fee will be borne only by purchasers 

and redeemers of Creation Units and 

will be limited to amounts that have 

been determined appropriate by the 

Adviser to defray the transaction 

expenses that will be incurred by a 

Fund when an investor purchases or 

redeems Creation Units.15 All orders to 

purchase Creation Units will be placed 

with a Distributor by or through an 

Authorized Participant and the 

Distributor will transmit all purchase 

orders to the relevant Fund. The 

Distributor will be responsible for 

delivering a prospectus (‘‘Prospectus’’) 

to those persons purchasing Creation 

Units and for maintaining records of 

both the orders placed with it and the 

confirmations of acceptance furnished 

by it. 

11. Shares will be listed and traded at 

negotiated prices on a Stock Exchange 

and traded in the secondary market. 

Applicants expect that Stock Exchange 

specialists or market makers (‘‘Market 

Makers’’) will be assigned to Shares. 

The price of Shares trading on the Stock 

Exchange will be based on a current 

bid/offer in the secondary market. 

Transactions involving the purchases 

and sales of Shares on the Stock 

Exchange will be subject to customary 

brokerage commissions and charges. 

12. Applicants expect that purchasers 

of Creation Units will include 

institutional investors and arbitrageurs. 

Specialists or Market Makers, acting in 

their unique role to provide a fair and 

orderly secondary market for Shares, 

also may purchase Creation Units for 

use in their own market making 

activities.16 Applicants expect that 

secondary market purchasers of Shares 

will include both institutional and retail 

investors.17 Applicants expect that 

arbitrage opportunities created by the 

ability to continually purchase or 

redeem Creation Units at their NAV per 

Share should ensure that the Shares will 

not trade at a material discount or 

premium in relation to their NAV. 

13. Shares will not be individually 

redeemable and owners of Shares may 

acquire those Shares from a Fund, or 

tender such shares for redemption to the 

Fund, in Creation Units only. To 

redeem, an investor must accumulate 

enough Shares to constitute a Creation 

Unit. Redemption requests must be 

placed by or through an Authorized 

Participant. 

14. Neither the Trust nor any Fund 

will be marketed or otherwise held out 

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

will be marketed as an ‘‘actively 

managed exchange-traded fund’’. In any 

advertising material where features of 

obtaining, buying or selling Shares 

traded on the Stock Exchange are 

described, there will be an appropriate 

statement to the effect that Shares are 

not individually redeemable. 

15. The Funds’ Web site, which will 

be publicly available prior to the public 

offering of Shares, will include a 

Prospectus and additional quantitative 

information updated on a daily basis, 

including, on a per Share basis for each 

Fund, the prior Business Day’s NAV and 

the market closing price or mid-point of 

the bid/ask spread at the time of the 

calculation of such NAV (‘‘Bid/Ask 

Price’’), and a calculation of the 

premium or discount of the market 

closing price or Bid/Ask Price against 

such NAV. On each Business Day, 

before commencement of trading in 

Shares on the Stock Exchange, the Fund 

will disclose on its Web site the 

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Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 73349 

18Applicants note that under accounting 

procedures followed by the Funds, trades made on 

the prior Business Day will be booked and reflected 

in NAV on the current Business Day. Accordingly, 

each Fund will be able to disclose at the beginning 

of the Business Day the portfolio that will form the 

basis for its NAV calculation at the end of such 

Business Day. 

19Applicants acknowledge that no relief obtained 

from the requirements of section 22(e) will affect 

any obligations that it may otherwise have under 

rule 15c6–1 under the Exchange Act. Rule 15c6–1 

requires that most securities transactions be settled 

within three business days of the trade date. 

identities and quantities of the Portfolio 

Instruments held by the Fund 

(including any short positions held in 

securities (‘‘Short Positions’’)) that will 

form the basis for the Fund’s calculation 

of NAV at the end of the Business Day.18

Applicants’ Legal Analysis 

1. Applicants request an order under 

section 6(c) of the Act for an exemption 

from sections 2(a)(32), 5(a)(1), 22(d) and 

22(e) of the Act and rule 22c–1 under 

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

the Act for an exemption from sections 

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

under section 12(d)(1)(J) of the Act for 

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

and (B) of the Act. 

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

the Commission may exempt any 

person, security or transaction, or any 

class of persons, securities or 

transactions, from any provisions of the 

Act, if and to the extent that such 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. Section 17(b) 

of the Act authorizes the Commission to 

exempt a proposed transaction from 

section 17(a) of the Act if evidence 

establishes that the terms of the 

transaction, including the consideration 

to be paid or received, are reasonable 

and fair and do not involve 

overreaching on the part of any person 

concerned, and the proposed 

transaction is consistent with the 

policies of the registered investment 

company and the general provisions of 

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

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities or transactions, from 

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

exemption is consistent with the public 

interest and the protection of investors. 

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

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

‘‘open-end company’’ as a management 

investment company that is offering for 

sale or has outstanding any redeemable 

security of which it is the issuer. 

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

redeemable security as any security, 

other than short-term paper, under the 

terms of which the holder, upon its 

presentation to the issuer, is entitled to 

receive approximately a proportionate 

share of the issuer’s current net assets, 

or the cash equivalent. Because Shares 

will not be individually redeemable, 

applicants request an order that would 

permit each Fund to redeem Shares in 

Creation Units only. Applicants state 

that investors may purchase Shares in 

Creation Units from each Fund and 

redeem Creation Units from each Fund. 

Applicants further state that because the 

market price of Creation Units will be 

disciplined by arbitrage opportunities, 

investors should be able to sell Shares 

in the secondary market at prices that 

do not vary materially from their NAV. 

Section 22(d) of the Act and Rule 

22c–1 Under the Act 

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

other things, prohibits a dealer from 

selling a redeemable security that is 

currently being offered to the public by 

or through a principal underwriter, 

except at a current public offering price 

described in the prospectus. Rule 22c– 

1 under the Act generally requires that 

a dealer selling, redeeming, or 

repurchasing a redeemable security do 

so only at a price based on its NAV. 

Applicants state that secondary market 

trading in Shares will take place at 

negotiated prices, not at a current 

offering price described in the 

Prospectus, and not at a price based on 

NAV. Thus, purchases and sales of 

Shares in the secondary market will not 

comply with section 22(d) of the Act 

and rule 22c–1 under the Act. 

Applicants request an exemption under 

section 6(c) from these provisions. 

5. Applicants assert that the concerns 

sought to be addressed by section 22(d) 

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

with respect to pricing are equally 

satisfied by the proposed method of 

pricing Shares. Applicants maintain that 

while there is little legislative history 

regarding section 22(d), its provisions, 

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

have been designed to (a) prevent 

dilution caused by certain risklesstrading schemes by principal 

underwriters and contract dealers, (b) 

prevent unjust discrimination or 

preferential treatment among buyers 

resulting from sales at different prices, 

and (c) assure an orderly distribution 

system of investment company shares 

by eliminating price competition from 

brokers offering shares at less than the 

published sales price and repurchasing 

shares at more than the published 

redemption price. 

6. Applicants believe that none of 

these purposes will be thwarted by 

permitting Shares to trade in the 

secondary market at negotiated prices. 

Applicants state that (a) secondary 

market trading in Shares does not 

involve the Funds as parties and cannot 

result in dilution of an investment in 

Shares, and (b) to the extent different 

prices exist during a given trading day, 

or from day to day, such variances occur 

as a result of third-party market forces, 

such as supply and demand. Therefore, 

applicants assert that secondary market 

transactions in Shares will not lead to 

discrimination or preferential treatment 

among purchasers. Finally, applicants 

contend that the proposed distribution 

system will be orderly because arbitrage 

activity should ensure that the 

difference between the market price of 

Shares and their NAV remains narrow. 

Section 22(e) of the Act 

7. Section 22(e) of the Act generally 

prohibits a registered investment 

company from suspending the right of 

redemption or postponing the date of 

payment of redemption proceeds for 

more than seven days after the tender of 

a security for redemption. Applicants 

observe that settlement of redemptions 

of Creation Units of Global Funds is 

contingent not only on the settlement 

cycle of the U.S. securities markets but 

also on the delivery cycles present in 

foreign markets in which those Funds 

invest. Applicants have been advised 

that, under certain circumstances, the 

delivery cycles for transferring Portfolio 

Instruments to redeeming investors, 

coupled with local market holiday 

schedules, will require a delivery 

process of up to 14 calendar days. 

Applicants therefore request relief from 

section 22(e) in order to provide 

payment or satisfaction of redemptions 

within the maximum number of 

calendar days required for such 

payment or satisfaction in the principal 

local markets where transactions in the 

Portfolio Instruments of each Global 

Fund customarily clear and settle, but in 

all cases no later than 14 calendar days 

following the tender of a Creation 

Unit.19

8. Applicants state that section 22(e) 

was designed to prevent unreasonable, 

undisclosed and unforeseen delays in 

the actual payment of redemption 

proceeds. Applicants assert that the 

requested relief will not lead to the 

problems that section 22(e) was 

designed to prevent. Applicants state 

that allowing redemption payments for 

Creation Units of a Fund to be made 

within a maximum of 14 calendar days 

would not be inconsistent with the 

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20An ‘‘Investing Fund Affiliate’’ is any Investing 

Fund Adviser, Investing Fund Sub-Adviser, 

Sponsor, promoter and principal underwriter of an 

Investing Fund, and any person controlling, 

controlled by or under common control with any 

of these entities. ‘‘Fund Affiliate’’ is an investment 

adviser, promoter, or principal underwriter of a 

Fund or any person controlling, controlled by or 

under common control with any of these entities. 

21Any reference to NASD Conduct Rule 2830 

includes any successor or replacement rule that 

may be adopted by the Financial Industry 

Regulatory Authority (‘‘FINRA’’). 

spirit and intent of section 22(e). 

Applicants state each Global Fund’s 

statement of additional information 

(‘‘SAI’’) will disclose those local 

holidays (over the period of at least one 

year following the date of the SAI), if 

any, that are expected to prevent the 

delivery of redemption proceeds in 

seven calendar days and the maximum 

number of days needed to deliver the 

proceeds for each affected Global Fund. 

Applicants are not seeking relief from 

section 22(e) with respect to Global 

Funds that do not affect redemptions inkind. 

Section 12(d)(1) of the Act 

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

prohibits a registered investment 

company from acquiring shares of an 

investment company if the securities 

represent more than 3% of the total 

outstanding voting stock of the acquired 

company, more than 5% of the total 

assets of the acquiring company, or, 

together with the securities of any other 

investment companies, more than 10% 

of the total assets of the acquiring 

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

prohibits a registered open-end 

investment company, its principal 

underwriter, or any other broker or 

dealer from selling its shares to another 

investment company if the sale will 

cause the acquiring company to own 

more than 3% of the acquired 

company’s voting stock, or if the sale 

will cause more than 10% of the 

acquired company’s voting stock to be 

owned by investment companies 

generally. 

10. Applicants request relief to permit 

Investing Funds to acquire Shares in 

excess of the limits in section 

12(d)(1)(A) of the Act and to permit the 

Funds, their principal underwriters and 

any Broker to sell Shares to Investing 

Funds in excess of the limits in section 

12(d)(l)(B) of the Act. Applicants submit 

that the proposed conditions to the 

requested relief address the concerns 

underlying the limits in section 12(d)(1), 

which include concerns about undue 

influence, excessive layering of fees and 

overly complex structures. 

11. Applicants submit that their 

proposed conditions address any 

concerns regarding the potential for 

undue influence. To limit the control 

that an Investing Fund may have over a 

Fund, applicants propose a condition 

prohibiting the adviser of an Investing 

Management Company (‘‘Investing Fund 

Adviser’’), sponsor of an Investing Trust 

(‘‘Sponsor’’), any person controlling, 

controlled by, or under common control 

with the Investing Fund Adviser or 

Sponsor, and any investment company 

or issuer that would be an investment 

company but for sections 3(c)(1) or 

3(c)(7) of the Act that is advised or 

sponsored by the Investing Fund 

Adviser, the Sponsor, or any person 

controlling, controlled by, or under 

common control with the Investing 

Fund Adviser or Sponsor (‘‘Investing 

Fund’s Advisory Group’’) from 

controlling (individually or in the 

aggregate) a Fund within the meaning of 

section 2(a)(9) of the Act. The same 

prohibition would apply to any subadviser to an Investing Management 

Company (‘‘Investing Fund SubAdviser’’), any person controlling, 

controlled by or under common control 

with the Investing Fund Sub-Adviser, 

and any investment company or issuer 

that would be an investment company 

but for sections 3(c)(1) or 3(c)(7) of the 

Act (or portion of such investment 

company or issuer) advised or 

sponsored by the Investing Fund SubAdviser or any person controlling, 

controlled by or under common control 

with the Investing Fund Sub-Adviser 

(‘‘Investing Fund’s Sub-Advisory 

Group’’). 

12. Applicants propose a condition to 

ensure that no Investing Fund or 

Investing Fund Affiliate 20 (except to the 

extent it is acting in its capacity as an 

investment adviser to a Fund) will cause 

a Fund to purchase a security in an 

offering of securities during the 

existence of an underwriting or selling 

syndicate of which a principal 

underwriter is an Underwriting Affiliate 

(‘‘Affiliated Underwriting’’). An 

‘‘Underwriting Affiliate’’ is a principal 

underwriter in any underwriting or 

selling syndicate that is an officer, 

director, member of an advisory board, 

Investing Fund Adviser, Investing Fund 

Sub-Adviser, employee or Sponsor of 

the Investing Fund, or a person of which 

any such officer, director, member of an 

advisory board, Investing Fund Adviser, 

Investing Fund Sub-Adviser, employee 

or Sponsor is an affiliated person 

(except any person whose relationship 

to the Fund is covered by section 10(f) 

of the Act is not an Underwriting 

Affiliate). 

13. Applicants propose several 

conditions to address the potential for 

layering of fees. Applicants note that the 

board of directors or trustees of any 

Investing Management Company, 

including a majority of the directors or 

trustees who are not ‘‘interested 

persons’’ within the meaning of section 

2(a)(19) of the Act (‘‘independent 

directors or trustees’’), will be required 

to find that the advisory fees charged 

under the contract are based on services 

provided that will be in addition to, 

rather than duplicative of, services 

provided under the advisory contract of 

any Fund in which the Investing 

Management Company may invest. 

Applicants also state that any sales 

charges and/or service fees charged with 

respect to shares of an Investing Fund 

will not exceed the limits applicable to 

a fund of funds as set forth in NASD 

Conduct Rule 2830.21

14. Applicants submit that the 

proposed arrangement will not create an 

overly complex fund structure. 

Applicants note that a Fund will be 

prohibited from acquiring securities of 

any investment company or company 

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

the Act in excess of the limits contained 

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

to the extent permitted by exemptive 

relief from the Commission permitting 

the Fund to purchase shares of other 

investment companies for short-term 

cash management purposes. 

15. To ensure that an Investing Fund 

is aware of the terms and conditions of 

the requested order, the Investing Funds 

must enter into an agreement with the 

respective Funds (‘‘FOF Participation 

Agreement’’). The FOF Participation 

Agreement will include an 

acknowledgement from the Investing 

Fund that it may rely on the order only 

to invest in a Fund and not in any other 

investment company. 

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

16. Section 17(a) of the Act generally 

prohibits an affiliated person of a 

registered investment company, or an 

affiliated person of such a person 

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

security to or purchasing any security 

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

Act defines ‘‘affiliated person’’ to 

include any person directly or indirectly 

owning, controlling, or holding with 

power to vote, 5% or more of the 

outstanding voting securities of the 

other person and any person directly or 

indirectly controlling, controlled by, or 

under common control with, the other 

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

defines ‘‘control’’ as the power to 

exercise a controlling influence over the 

management or policies of a company 

and provides that a control relationship 

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22Applicants are not seeking relief from section 

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

transactions where a Fund could be deemed an 

affiliated person, or an affiliated person of an 

affiliated person, of an Investing Fund because an 

investment adviser to the Funds is also an 

investment adviser to an Investing Fund. 

23Applicants expect most Investing Funds will 

purchase Shares in the secondary market and will 

not purchase Creation Units directly from a Fund. 

To the extent that purchases and sales of Shares 

occur in the secondary market and not through 

principal transactions directly between an Investing 

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

not be necessary. However, the requested relief 

would apply to direct sales of Shares in Creation 

Units by a Fund to an Investing Fund and 

redemptions of those Shares. The requested relief 

is intended to also cover the in-kind transactions 

that may accompany such sales and redemptions. 

24Applicants acknowledge that the receipt of 

compensation by (a) an affiliated person of an 

Investing Fund, or an affiliated person of such 

person, for the purchase by the Investing Fund of 

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

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

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

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

The FOF Participation Agreement also will include 

this acknowledgment. 

will be presumed where one person 

owns more than 25% of another 

person’s voting securities. Each Fund 

may be deemed to be controlled by an 

Adviser and hence affiliated persons of 

each other. In addition, the Funds may 

be deemed to be under common control 

with any other registered investment 

company (or series thereof) advised by 

an Adviser (an ‘‘Affiliated Fund’’). 

17. Applicants request an exemption 

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

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

Act to permit in-kind purchases and 

redemptions of Creation Units by 

persons that are affiliated persons or 

second tier affiliates of the Funds solely 

by virtue of one or more of the 

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

excess of 25% of the outstanding Shares 

of one or more Funds; (b) having an 

affiliation with a person with an 

ownership interest described in (a); or 

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

25% of the Shares of one or more 

Affiliated Funds.22 Applicants also 

request an exemption in order to permit 

a Fund to sell its Shares to and redeem 

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

accompany such sales and redemptions 

with, certain Investing Funds of which 

the Funds are affiliated persons or 

second-tier affiliates.23

18. Applicants assert that no useful 

purpose would be served by prohibiting 

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

of Shares of a Fund in Creation Units. 

Absent the unusual circumstances 

discussed in the application, the 

Deposit Instruments and Redemption 

Instruments available for a Fund will be 

the same for all purchasers and 

redeemers, respectively, and will 

correspond pro rata to the Fund’s 

Portfolio Instruments. The deposit 

procedures for in-kind purchases of 

Creation Units and the redemption 

procedures for in-kind redemptions will 

be the same for all purchases and 

redemptions. Deposit Instruments and 

Redemption Instruments will be valued 

in the same manner as those Portfolio 

Instruments currently held by the 

relevant Funds, and the valuation of the 

Deposit Instruments and Redemption 

Instruments will be made in the same 

manner and on the same terms for all, 

regardless of the identity of the 

purchaser or redeemer. Applicants do 

not believe that in-kind purchases and 

redemptions will result in abusive selfdealing or overreaching of the Fund. 

19. Applicants also submit that the 

sale of Shares to and redemption of 

Shares from an Investing Fund meets 

the standards for relief under sections 

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

note that any consideration paid for the 

purchase or redemption of Shares 

directly from a Fund will be based on 

the NAV of the Fund in accordance with 

policies and procedures set forth in the 

Fund’s registration statement.24 The 

FOF Participation Agreement will 

require any Investing Fund that 

purchases Creation Units directly from 

a Fund to represent that the purchase of 

Creation Units from a Fund by an 

Investing Fund will be accomplished in 

compliance with the investment 

restrictions of the Investing Fund and 

will be consistent with the investment 

policies set forth in the Investing Fund’s 

registration statement. Applicants also 

state that the proposed transactions are 

consistent with the general purposes of 

the Act and appropriate in the public 

interest. 

Applicants’ Conditions 

Applicants agree that any order of the 

Commission granting the requested 

relief will be subject to the following 

conditions: 

A. ETF Relief 

1. As long as a Fund operates in 

reliance on the requested order, the 

Shares of the Fund will be listed on a 

Stock Exchange. 

2. Neither the Trust nor any Fund will 

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

fund. Any advertising material that 

describes the purchase or sale of 

Creation Units or refers to redeemability 

will prominently disclose that the 

Shares are not individually redeemable 

and that owners of the Shares may 

acquire those Shares from the Fund and 

tender those Shares for redemption to 

the Fund in Creation Units only. 

3. The Web site for the Funds, which 

is and will be publicly accessible at no 

charge, will contain, on a per Share 

basis, for each Fund the prior Business 

Day’s NAV and the market closing price 

or Bid/Ask Price, and a calculation of 

the premium or discount of the market 

closing price or Bid/Ask Price against 

such NAV. 

4. On each Business Day, before 

commencement of trading in Shares on 

the Stock Exchange, the Fund will 

disclose on its Web site the identities 

and quantities of the Portfolio 

Instruments held by the Fund that will 

form the basis for the Fund’s calculation 

of NAV at the end of the Business Day. 

5. Neither the Adviser nor any SubAdviser, directly or indirectly, will 

cause any Authorized Participant (or 

any investor on whose behalf an 

Authorized Participant may transact 

with the Fund) to acquire any Deposit 

Instrument for the Fund through a 

transaction in which the Fund could not 

engage directly. 

6. The requested relief to permit ETF 

operations will expire on the effective 

date of any Commission rule under the 

Act that provides relief permitting the 

operation of actively-managed 

exchange-traded funds. 

B. Section 12(d)(1) Relief 

1. The members of the Investing 

Fund’s Advisory Group will not control 

(individually or in the aggregate) a Fund 

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

the Act. The members of the Investing 

Fund’s Sub-Advisory Group will not 

control (individually or in the aggregate) 

a Fund within the meaning of section 

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

decrease in the outstanding voting 

securities of a Fund, the Investing 

Fund’s Advisory Group or the Investing 

Fund’s Sub-Advisory Group, each in the 

aggregate, becomes a holder of more 

than 25 percent of the outstanding 

voting securities of a Fund, it will vote 

its Shares of the Fund in the same 

proportion as the vote of all other 

holders of the Fund’s Shares. This 

condition does not apply to the 

Investing Fund’s Sub-Advisory Group 

with respect to a Fund for which the 

Investing Fund Sub-Adviser or a person 

controlling, controlled by or under 

common control with the Investing 

Fund Sub-Adviser acts as the 

investment adviser within the meaning 

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

2. No Investing Fund or Investing 

Fund Affiliate will cause any existing or 

potential investment by the Investing 

Fund in a Fund to influence the terms 

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73352 Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Notices 

of any services or transactions between 

the Investing Fund or an Investing Fund 

Affiliate and the Fund or a Fund 

Affiliate. 

3. The board of directors or trustees of 

an Investing Management Company, 

including a majority of the independent 

directors or trustees, will adopt 

procedures reasonably designed to 

ensure that the Investing Fund Adviser 

and any Investing Fund Sub-Adviser are 

conducting the investment program of 

the Investing Management Company 

without taking into account any 

consideration received by the Investing 

Management Company or an Investing 

Fund Affiliate from a Fund or a Fund 

Affiliate in connection with any services 

or transactions. 

4. Once an investment by an Investing 

Fund in the Shares of a Fund exceeds 

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

Act, the Board of a Fund, including a 

majority of the independent directors or 

trustees, will determine that any 

consideration paid by the Fund to the 

Investing Fund or an Investing Fund 

Affiliate in connection with any services 

or transactions: (i) Is fair and reasonable 

in relation to the nature and quality of 

the services and benefits received by the 

Fund; (ii) is within the range of 

consideration that the Fund would be 

required to pay to another unaffiliated 

entity in connection with the same 

services or transactions; and (iii) does 

not involve overreaching on the part of 

any person concerned. This condition 

does not apply with respect to any 

services or transactions between a Fund 

and its investment adviser(s), or any 

person controlling, controlled by or 

under common control with such 

investment adviser(s). 

5. The Investing Fund Adviser, or 

Trustee or Sponsor, as applicable, will 

waive fees otherwise payable to it by the 

Investing Fund in an amount at least 

equal to any compensation (including 

fees received pursuant to any plan 

adopted by a Fund under rule 12b–1 

under the Act) received from a Fund by 

the Investing Fund Adviser, or Trustee 

or Sponsor, or an affiliated person of the 

Investing Fund Adviser, or Trustee or 

Sponsor, other than any advisory fees 

paid to the Investing Fund Adviser, or 

Trustee or Sponsor, or its affiliated 

person by the Fund, in connection with 

the investment by the Investing Fund in 

the Fund. Any Investing Fund SubAdviser will waive fees otherwise 

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

Investing Management Company in an 

amount at least equal to any 

compensation received from a Fund by 

the Investing Fund Sub-Adviser, or an 

affiliated person of the Investing Fund 

Sub-Adviser, other than any advisory 

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

Fund, in connection with the 

investment by the Investing 

Management Company in the Fund 

made at the direction of the Investing 

Fund Sub-Adviser. In the event that the 

Investing Fund Sub-Adviser waives 

fees, the benefit of the waiver will be 

passed through to the Investing 

Management Company. 

6. No Investing Fund or Investing 

Fund Affiliate (except to the extent it is 

acting in its capacity as an investment 

adviser to a Fund) will cause a Fund to 

purchase a security in an Affiliated 

Underwriting. 

7. The Board of a Fund, including a 

majority of the independent directors or 

trustees, will adopt procedures 

reasonably designed to monitor any 

purchases of securities by the Fund in 

an Affiliated Underwriting, once an 

investment by an Investing Fund in the 

securities of the Fund exceeds the limit 

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

including any purchases made directly 

from an Underwriting Affiliate. The 

Board will review these purchases 

periodically, but no less frequently than 

annually, to determine whether the 

purchases were influenced by the 

investment by the Investing Fund in the 

Fund. The Board will consider, among 

other things: (i) Whether the purchases 

were consistent with the investment 

objectives and policies of the Fund; (ii) 

how the performance of securities 

purchased in an Affiliated Underwriting 

compares to the performance of 

comparable securities purchased during 

a comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (iii) 

whether the amount of securities 

purchased by the Fund in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board will take any appropriate actions 

based on its review, including, if 

appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interest of 

shareholders of the Fund. 

8. Each Fund will maintain and 

preserve permanently in an easily 

accessible place a written copy of the 

procedures described in the preceding 

condition, and any modifications to 

such procedures, and will maintain and 

preserve for a period of not less than six 

years from the end of the fiscal year in 

which any purchase in an Affiliated 

Underwriting occurred, the first two 

years in an easily accessible place, a 

written record of each purchase of 

securities in Affiliated Underwritings 

once an investment by an Investing 

Fund in the securities of the Fund 

exceeds the limit of section 

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

from whom the securities were 

acquired, the identity of the 

underwriting syndicate’s members, the 

terms of the purchase, and the 

information or materials upon which 

the Board’s determinations were made. 

9. Before investing in a Fund in 

excess of the limits in section 

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

execute a FOF Participation Agreement 

with the Fund stating that their 

respective boards of directors or trustees 

and their investment advisers, or 

Trustee and Sponsor, as applicable, 

understand the terms and conditions of 

the order, and agree to fulfill their 

responsibilities under the order. At the 

time of its investment in Shares of a 

Fund in excess of the limit in section 

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

notify the Fund of the investment. At 

such time, the Investing Fund will also 

transmit to the Fund a list of the names 

of each Investing Fund Affiliate and 

Underwriting Affiliate. The Investing 

Fund will notify the Fund of any 

changes to the list as soon as reasonably 

practicable after a change occurs. The 

Fund and the Investing Fund will 

maintain and preserve a copy of the 

order, the FOF Participation Agreement, 

and the list with any updated 

information for the duration of the 

investment and for a period of not less 

than six years thereafter, the first two 

years in an easily accessible place. 

10. Before approving any advisory 

contract under section 15 of the Act, the 

board of directors or trustees of each 

Investing Management Company, 

including a majority of the independent 

directors or trustees, will find that the 

advisory fees charged under such 

contract are based on services provided 

that will be in addition to, rather than 

duplicative of, the services provided 

under the advisory contract(s) of any 

Fund in which the Investing 

Management Company may invest. 

These findings and their basis will be 

recorded fully in the minute books of 

the appropriate Investing Management 

Company. 

11. Any sales charges and/or service 

fees charged with respect to shares of an 

Investing Fund will not exceed the 

limits applicable to a fund of funds as 

set forth in NASD Conduct Rule 2830. 

12. No Fund relying on 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 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78f(b). 

4 15 U.S.C. 78f(b)(5). 

the Act in excess of the limits contained 

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

to the extent permitted by exemptive 

relief from the Commission permitting 

the Fund to purchase shares of other 

investment companies for short-term 

cash management purposes. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28880 Filed 12–9–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73738; File No. SR–MIAX– 

2014–61] 

Self-Regulatory Organizations; Miami 

International Securities Exchange LLC; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Exchange Rule 510 

To Extend the Penny Pilot Program 

December 4, 2014. 

Pursuant to the provisions of 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 November 25, 2014, Miami 

International Securities Exchange LLC 

(‘‘MIAX’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. 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 Substance of 

the Proposed Rule Change 

The Exchange is filing a proposal to 

amend Rule 510, Interpretations and 

Policies .01 to extend the pilot program 

for the quoting and trading of certain 

options in pennies (the ‘‘Penny Pilot 

Program’’). 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.miaxoptions.com/filter/

wotitle/rule_filing, at MIAX’s principal 

office, 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 

Exchange 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 

Exchange 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is a participant in an 

industry-wide pilot program that 

provides for the quoting and trading of 

certain option classes in penny 

increments (the ‘‘Penny Pilot Program’’ 

or ‘‘Program’’). Specifically, the Penny 

Pilot Program allows the quoting and 

trading of certain option classes in 

minimum increments of $0.01 for all 

series in such option classes with a 

price of less than $3.00; and in 

minimum increments of $0.05 for all 

series in such option classes with a 

price of $3.00 or higher. Options 

overlying the PowerShares QQQ Trust 

(‘‘QQQQ’’)®, SPDR S&P 500 Exchange 

Traded Funds (‘‘SPY’’), and iShares 

Russell 2000 Index Funds (‘‘IWM’’), 

however, are quoted and traded in 

minimum increments of $0.01 for all 

series regardless of the price. The Penny 

Pilot Program was initiated at the then 

existing option exchanges in January 

2007 and currently includes more than 

300 of the most active option classes. 

The Penny Pilot Program is currently 

scheduled to expire on December 31, 

2014. The purpose of the proposed rule 

change is to extend the Penny Pilot 

Program in its current format through 

June 30, 2015. 

In addition to the extension of the 

Penny Pilot Program through June 30, 

2015, the Exchange will replace any 

Penny Pilot issues that have been 

delisted with the next most actively 

traded multiply listed option classes 

that are not yet included in the Penny 

Pilot Program. The replacement issues 

will be selected based on trading 

activity in the previous six months and 

will be added to the Penny Pilot 

Program on the second trading day 

following January 1, 2015. Please note, 

the month immediately preceding a 

replacement class’s addition to the Pilot 

program (i.e., June) will not be used for 

purposes of the six-month analysis. 

Thus, a replacement added on the 

second trading day following January 1, 

2015 will be identified based on trading 

activity from June 1, 2014 through 

November 30, 2014. Rule 510 has been 

updated to reflect the new date 

replacement issues will be added to the 

Penny Pilot Program. 

2. Statutory Basis 

The Exchange believes that its 

proposed rule change is consistent with 

Section 6(b) 3 of the Act in general, and 

furthers the objectives of Section 

6(b)(5) 4 of the Act in particular, in that 

it is designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. In particular, the 

proposed rule change, which extends 

the Penny Pilot Program for six months, 

allows the Exchange to continue to 

participate in a program that has been 

viewed as beneficial to traders, investors 

and public customers and viewed as 

successful by the other options 

exchanges participating in it. 

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 not 

necessary or appropriate in furtherance 

of the purposes of the Act. Specifically, 

the Exchange believes that, by extending 

the expiration of the Pilot Program, the 

proposed rule change will allow for 

further analysis of the Penny Pilot 

Program and a determination of how the 

Program should be structured in the 

future. In doing so, the proposed rule 

change will also serve to promote 

regulatory clarity and consistency, 

thereby reducing burdens on the 

marketplace and facilitating investor 

protection. In addition, consistent with 

previous practices, the Exchange 

believes the other options exchanges 

will be filing similar extensions of the 

Penny Pilot Program. 

mstockstill on DSK4VPTVN1PROD with NOTICES