42390 Federal Register / Vol. 82, No. 172 / Thursday, September 7, 2017 / Notices 

protection of investors and purposes 

fairly intended by the policy and 

provisions of the Act. Applicants 

believe that the requested relief meets 

this standard because, as further 

explained in the application, the 

Investment Advisory Agreements will 

remain subject to shareholder approval, 

while the role of the Subadvisers is 

substantially equivalent to that of 

individual portfolio managers, so that 

requiring shareholder approval of 

Subadvisory Agreements would impose 

unnecessary delays and expenses on the 

Subadvised Fund. Applicants believe 

that the requested relief from the 

Disclosure Requirements meets this 

standard because it will improve the 

Adviser’s ability to negotiate fees paid 

to the Subadvisers that are more 

advantageous for the Subadvised Fund. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–18932 Filed 9–6–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

32804; 813–00387] 

Hudson Advisors L.P., et al. 

August 31, 2017. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of application for an order 

under sections 6(b) and 6(e) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) granting an exemption from all 

provisions of the Act and the rules and 

regulations thereunder, except sections 

9, 17, 30, and 36 through 53 of the Act, 

and the rules and regulations 

thereunder (the ‘‘Rules and 

Regulations’’). With respect to sections 

17(a), (d), (e), (f), (g) and (j) and 30(a), 

(b), (e), and (h) of the Act, and the Rules 

and Regulations, and rule 38a–1 under 

the Act, the exemption is limited as set 

forth in the application. 

SUMMARY OF APPLICATION: Applicants 

request an order to exempt certain 

limited partnerships and other entities 

(‘‘Partnerships’’) formed for the benefit 

of eligible employees of Hudson 

Advisors L.P. (‘‘Hudson’’) and Lone Star 

Global Acquisitions, Ltd. (‘‘LSGA’’) and 

their affiliates (Hudson and LSGA, along 

with their affiliated companies and 

affiliated persons, collectively the 

‘‘Advisers’’) from certain provisions of 

the Act. Each Partnership will be an 

‘‘employees’ securities company’’ 

within the meaning of section 2(a)(13) of 

the Act. 

APPLICANTS: Hudson, LSGA, LSREF V 

Investments, L.P., HudCo Real Estate V, 

L.P., HudCo Real Estate V (Bermuda), 

L.P., HudCo Real Estate V (Europe I), 

L.P., HudCo Real Estate V (Europe II), 

L.P., HudCo GenPar RE V, LLC, HudCo 

GenPar RE V (Europe I), LLC, and HH 

GenPar RE V (Europe II), LLC. 

FILING DATES: The application was filed 

on November 18, 2016 and was 

amended on April 13, 2017, June 23, 

2017 and August 25, 2017. 

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 September 25, 2017, 

and should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090; 

Applicants: c/o William D. Young, 2711 

N. Haskell Avenue, Suite 1800, Dallas, 

TX 75204; c/o William D. Young, 2711 

N. Haskell Avenue, Suite 1700, Dallas, 

TX 75204. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth G. Miller, Senior Counsel, at 

(202) 551–8707, or Holly Hunter-Ceci, 

Assistant Chief Counsel, at (202) 551– 

6825 (Division of Investment 

Management, Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

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 Advisers have organized, and 

may in the future organize, limited 

partnerships, limited liability 

companies, business trusts or other 

entities as ‘‘employees’ securities 

companies,’’ as defined in section 

2(a)(13) of the Act (each a ‘‘Partnership’’ 

and, collectively, the ‘‘Partnerships’’). 

2. A Partnership may be organized 

under the laws of the state of Delaware, 

another state, or a jurisdiction outside 

the United States. A Partnership may 

serve as the master fund of one or more 

other Partnerships (such entities, 

‘‘Master Partnerships’’). A Partnership 

may be organized under the laws of a 

non-U.S. jurisdiction to address any tax, 

legal, accounting and regulatory 

considerations applicable to certain 

Eligible Employees (as defined below) 

in other jurisdictions or the nature of 

the program. Interests in a Partnership 

(‘‘Interests’’) may be issued in one or 

more series, each of which corresponds 

to particular Partnership investments 

(each, a ‘‘Series’’). Each Series will be an 

‘‘employees’ securities company’’ 

within the meaning of section 2(a)(13) of 

the Act. Each Partnership will operate 

as a closed-end management investment 

company, and a particular Partnership 

may operate as a ‘‘diversified’’ or ‘‘nondiversified’’ vehicle within the meaning 

of the Act. The Partnerships are 

intended to provide investment 

opportunities for Eligible Employees 

that are competitive with those at other 

investment management and financial 

services firms and to facilitate the 

recruitment and retention of high 

caliber professionals. The Advisers will 

control each Partnership within the 

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

3. The initial Master Partnership, 

LSREF V Investments, L.P., is a 

Bermuda exempted limited partnership 

established on February 17, 2016. 

HudCO GenPar RE V, LLC is its general 

partner and Hudson serves as its 

investment adviser. HudCO Real Estate 

V, L.P., a Delaware limited partnership, 

was established on February 23, 2016. 

HudCo GenPar RE V, LLC is its general 

partner and Hudson serves as its 

investment adviser. HudCo Real Estate 

V (Bermuda), L.P., a Bermuda exempted 

limited partnership, was established on 

February 17, 2016. HudCo GenPar RE V, 

LLC is its general partner and Hudson 

serves as its investment adviser. HudCo 

Real Estate V (Europe I), L.P., a Bermuda 

exempted limited partnership, was 

established on February 17, 2016. 

HudCo GenPar RE V (Europe I), LLC is 

its general partner and Hudson serves as 

its investment adviser. HudCo Real 

Estate V (Europe II), L.P., a Delaware 

limited partnership, was established on 

September 8, 2016. HH GenPar RE V 

(Europe II), LLC is its general partner 

and Hudson serves as its investment 

adviser. The Advisers provide certain 

advisory and related services to a family 

of closed-end, privately offered funds 

(the ‘‘Funds’’), which invest globally in 

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1 If a General Partner or Investment Adviser is 

registered under the Advisers Act, the Carried 

Interest payable to it by a Partnership will be 

pursuant to an arrangement that complies with rule 

205–3 under the Advisers Act. If the General 

Partner or Investment Adviser is not required to 

register under the Advisers Act, the Carried Interest 

payable to it will comply with section 205(b)(3) of 

the Advisers Act (with such Partnership treated as 

though it were a business development company 

solely for the purpose of that section). 

2A ‘‘Consultant’’ is a person or entity whom the 

Advisers have engaged on retainer to provide 

services and professional expertise on an ongoing 

basis as a regular consultant or as a business or legal 

adviser and who shares a community of interest 

with the Advisers and the Advisers’ employees. In 

order to participate in a Partnership, Consultants 

must be currently engaged with the Advisers and 

will be required to be sophisticated investors who 

qualify as accredited investors (‘‘Accredited 

Investors’’) under Rule 501(a) of Regulation D under 

the Securities Act. If a Consultant is an entity (such 

as, for example, a law firm or consulting firm), and 

the Consultant proposes to invest in the Partnership 

through a partnership, corporation or other entity 

that is controlled by the Consultant, the individual 

participants in such partnership, corporation or 

other entity will be limited to senior level 

employees, members or partners of the Consultant 

who are responsible for the activities of the 

Consultant and will be required to qualify as 

Accredited Investors. In addition, such entities will 

be limited to businesses controlled by individuals 

who have levels of expertise and sophistication in 

the area of investments in securities that are 

comparable to other Eligible Employees who are 

employees, officers or directors of the Advisers and 

who have an interest in maintaining an ongoing 

relationship with the Advisers. The individuals 

participating through such entities will belong to 

that class of persons who will have access to the 

directors and officers of the General Partner and/or 

the officers of the Advisers responsible for making 

investments for the Partnerships similar to the 

access afforded other Eligible Employees who are 

employees, officers or directors of the Advisers. 

3Such employees must meet the sophistication 

requirements set forth in Rule 506(b)(2)(ii) of 

Regulation D under the Securities Act and may be 

permitted to invest his or her own funds in the 

Partnership if, at the time of the employee’s 

investment in a Partnership, he or she (a) has a 

graduate degree in business, law or accounting, (b) 

has a minimum of five years of consulting, 

investment banking or similar business experience, 

and (c) has had reportable income from all sources 

of at least $100,000 in each of the two most recent 

years and a reasonable expectation of income from 

all sources of at least $140,000 in each year in 

which such person will be committed to make 

investments in a Partnership. In addition, such an 

employee will not be permitted to invest in any 

year more than 10% of his or her income from all 

sources for the immediately preceding year in the 

aggregate in such Partnership and in all other 

Partnerships in which he or she has previously 

invested. 

4The inclusion of partnerships, corporations, or 

other entities controlled by an Eligible Employee in 

the definition of ‘‘Eligible Investment Vehicle’’ is 

intended to enable Eligible Employees to make 

investments in the Partnerships through personal 

investment vehicles for the purpose of personal and 

family investment and estate planning objectives. 

a broad range of real estate, equity, 

credit and other financial assets. 

4. Each Partnership will have a 

general partner, managing member or 

other such similar entity (a ‘‘General 

Partner’’). All investors in a Partnership 

will be ‘‘Limited Partners.’’ The General 

Partner will be responsible for the 

overall management of each Partnership 

and will have the authority to make all 

decisions regarding the management 

control, and direction of the Partnership 

and its operations, business, and affairs. 

An Adviser entity may be a General 

Partner of each Partnership. The General 

Partner may be permitted to delegate 

certain of its responsibilities regarding 

the acquisition, management and 

disposition of Partnership investments 

to an Investment Adviser (as defined 

below), provided that the ultimate 

responsibility for, and control of, each 

Partnership, remain with the applicable 

General Partner. 

5. The General Partner or another 

Adviser entity will serve as investment 

adviser to a Partnership (the 

‘‘Investment Adviser’’). The Investment 

Adviser will be registered as an 

investment adviser under the 

Investment Advisers Act of 1940 (the 

‘‘Advisers Act’’), if required under 

applicable law. Each Investment 

Adviser shall comply with the standards 

prescribed in sections 9, 36 and 37 of 

the Act. The Applicants represent and 

concede that each General Partner and 

Investment Adviser managing a 

Partnership is an ‘‘investment adviser’’ 

within the meaning of sections 9 and 36 

of the Act and is subject to those 

sections. An Investment Adviser may be 

paid a management fee, which will 

generally be determined as a percentage 

of the capital commitments or assets 

under management (appreciated capital 

commitments) of the Limited Partners. 

A General Partner or Investment 

Adviser may receive a performancebased fee (a ‘‘Carried Interest’’) based on 

the net gains of the Partnership’s 

investments in addition to any amount 

allocable to the General Partner’s or 

Investment Adviser’s capital 

contribution.1

6. If the General Partner determines 

that a Partnership enter into any sideby-side investment with an unaffiliated 

entity, the General Partner will be 

permitted to engage as sub-investment 

adviser the unaffiliated entity (an 

‘‘Unaffiliated Subadviser’’), which will 

be responsible for the management of 

such side-by-side investment. 

7. Interests in a Partnership will be 

offered without registration in reliance 

on section 4(a)(2) of the Securities Act 

of 1933 (the ‘‘Securities Act’’), or 

Regulation D or Regulation S under the 

Securities Act, and will be sold only to: 

(i) Eligible Employees; (ii) at the request 

of Eligible Employees and the discretion 

of the General Partner, to Qualified 

Participants (as defined below) of such 

Eligible Employees; or (iii) to Adviser 

entities. Prior to offering Interests to an 

Eligible Employee or an Eligible Family 

Member (as defined below), a General 

Partner must reasonably believe that the 

Eligible Employee or Eligible Family 

Member will be capable of 

understanding and evaluating the merits 

and risks of participating in a 

Partnership and that each such 

individual is able to bear the economic 

risk of such participation and afford a 

complete loss of his or her investments 

in a Partnership. Investing in the 

Partnerships will be voluntary on the 

part of Eligible Employees and Qualified 

Participants. 

8. To qualify as an ‘‘Eligible 

Employee,’’ (a) an individual must (i) be 

a current or former employee, officer or 

director or current Consultant 2 of the 

Advisers and (ii) except for certain 

individuals who meet the definition of 

‘‘knowledgeable employee’’ in Rule 3c– 

5(a)(4) under the Act as if the 

Partnerships were ‘‘Covered 

Companies’’ within the meaning of the 

rule and a limited number of other 

employees of the Advisers 3

(collectively, ‘‘Non-Accredited 

Investors’’), meet the standards of an 

‘‘accredited investor’’ under Rule 

501(a)(5) or (a)(6) of Regulation D, or (b) 

an entity must (i) be a current 

Consultant of the Advisers and (ii) meet 

the standards of an ‘‘accredited 

investor’’ under Rule 501(a) of 

Regulation D. A Partnership may not 

have more than 35 Non-Accredited 

Investors. At the request of an Eligible 

Employee and the discretion of the 

General Partner, Interests may be 

assigned by such Eligible Employee, or 

sold directly by the Partnership, to a 

Qualified Participant of an Eligible 

Employee. In order to qualify as a 

‘‘Qualified Participant,’’ an individual 

or entity must (i) be an Eligible Family 

Member or Eligible Investment Vehicle 

(in each case as defined below), 

respectively, of an Eligible Employee 

and (ii) if purchasing an Interest from a 

Partnership, except as discussed below, 

come within one of the categories of an 

‘‘accredited investor’’ under Rule 501(a) 

of Regulation D. An ‘‘Eligible Family 

Member’’ is a spouse, parent, child, 

spouse of child, brother, sister or 

grandchild of an Eligible Employee, 

including step and adoptive 

relationships. An ‘‘Eligible Investment 

Vehicle’’ is (a) a trust of which the 

trustee, grantor and/or beneficiary is an 

Eligible Employee, (b) a partnership, 

corporation or other entity controlled by 

an Eligible Employee,4 or (c) a trust or 

other entity established solely for the 

benefit of an Eligible Employee and/or 

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5 If such investment vehicle is an entity other 

than a trust, the term ‘‘settlor’’ will be read to mean 

a person who created such vehicle, alone or 

together with other Eligible Employees and/or 

Eligible Family Members, and contributed funds to 

such vehicle. 

6 ‘‘Audit’’ will have the meaning defined in rule 

1–02(d) of Regulation S–X. 

7The Applicant is not requesting any exemption 

from any provision of the Act or any rule 

thereunder that may govern the eligibility of a 

Partnership to invest in an entity relying on section 

3(c)(1) or 3(c)(7) of the Act or any such entity’s 

status under the Act. 

8An ‘‘Aggregation Vehicle’’ is an investment pool 

sponsored or managed by an Adviser entity that is 

formed solely for the purpose of permitting a 

Partnership and other Adviser entities or Third 

Party Funds to collectively invest in other entities. 

The Applicant states that it may be more efficient 

for a Partnership and other Adviser entities and 

Third Party Funds to invest in an entity together 

through an Aggregation Vehicle rather than having 

each investor separately acquire a direct interest in 

such entity. An Aggregation Vehicle will not be 

used to issue interests that discriminate against a 

Partnership or provide preferential treatment to an 

Adviser entity or other Adviser-related investors 

with respect to a portfolio company investment. 

The Applicant submits that because no investment 

decisions are made at the Aggregation Vehicle level, 

the fact that a person who participates in the 

Partnership’s decision to acquire an interest in an 

Aggregation Vehicle also serves as an officer, 

director, general partner or investment adviser of 

the Aggregation Vehicle would not create a conflict 

of interest on the part of such person. 

9A Partnership may, subject to the terms and 

conditions set out herein, make investments in 

issuers that are portfolio companies of funds 

managed by the Advisers, and such investments 

may take the form of loans. 

one or more Eligible Family Members of 

an Eligible Employee. 

9. An Eligible Employee or Eligible 

Family Member may purchase an 

Interest through an Eligible Investment 

Vehicle only if either (i) the investment 

vehicle is an accredited investor, as 

defined in rule 501(a) of Regulation D 

under the Securities Act or (ii) the 

applicable Eligible Employee or Eligible 

Family Member is a settlor 5 and 

principal investment decision-maker 

with respect to the investment vehicle. 

Eligible Investment Vehicles that are not 

accredited investors will be included in 

accordance with Regulation D toward 

the 35 Non-Accredited Investor limit 

discussed above. 

10. While the terms of a Partnership 

will be determined by the Advisers in 

their discretion, these terms will be 

fully disclosed to each Eligible 

Employee and, if a Qualified Participant 

of such Eligible Employee is required to 

make an investment decision with 

respect to whether or not to participate 

in a Partnership, to such Qualified 

Participant, at the time such Eligible 

Employee or Qualified Participant is 

invited to participate in the Partnership. 

A Partnership will send its Limited 

Partners an annual financial statement 

within 120 days, or as soon as 

practicable, after the end of the 

Partnership’s fiscal year. The financial 

statement will be audited 6 by 

independent certified public 

accountants. In addition, as soon as 

practicable after the end of each fiscal 

year of a Partnership, a report will be 

sent to each Limited Partner setting 

forth the information with respect such 

Limited Partner’s share of income, 

gains, losses, credits, and other items for 

federal and state income tax purposes. 

11. Interests in each Partnership will 

be non-transferable except with the 

prior written consent of the General 

Partner, and, in any event, no person or 

entity will be admitted into the 

Partnership as a Limited Partner unless 

such person is (i) an Eligible Employee, 

(ii) a Qualified Participant or (iii) an 

Adviser entity. No sales load or similar 

fee of any kind will be charged in 

connection with the sale of Interests. 

12. The Applicant states that a 

General Partner may have the right to 

repurchase or cancel the Interest of (i) 

an Eligible Employee who ceases to be 

an employee, officer, director or current 

Consultant of any Adviser entity for any 

reason or (ii) any Qualified Participant 

of any person described in clause (i). 

Once a Consultant’s ongoing 

relationship with an Adviser entity is 

terminated: (i) such Consultant and its 

Qualified Participants, if any, will not 

be permitted to contribute any 

additional capital to a Partnership; and 

(ii) the existing Interests of such 

Consultant and its Qualified 

Participants, if any, as of the date of 

such termination will (A) to the extent 

the governing documents of a 

Partnership provide for periodic 

redemptions in the ordinary course, be 

redeemed as of the next regularly 

scheduled redemption date and (B) to 

the extent the governing documents of 

a Partnership do not provide for such 

periodic redemptions (e.g., as a result of 

the vehicle primarily investing in 

illiquid investments), be retained. The 

Partnership Agreement or private 

placement memorandum for each 

Partnership will describe, if applicable, 

the amount that a Limited Partner 

would receive upon repurchase, 

cancellation or forfeiture of its Interest. 

A Limited Partner would receive upon 

repurchase, cancellation or forfeiture of 

its Interest, at a minimum, the lesser of 

(i) the amount actually paid by or 

(subject to any vesting requirements) on 

behalf of the Limited Partner to acquire 

the Interest, plus interest, less any 

distributions, and (ii) the fair market 

value of the Interest determined at the 

time of the repurchase or cancellation as 

determined in good faith by the General 

Partner. The amount to be received by 

the Limited Partner will be subject to 

any applicable vesting schedule or 

forfeiture provisions and to the extent 

there is an oversubscription for a 

regularly scheduled redemption, 

existing Interests of the Limited Partner 

will be redeemed on a pro rata basis 

with all other Limited Partners who 

have made a request, in accordance with 

the governing documents, to be 

redeemed as of that redemption date 

and any subsequent regularly scheduled 

redemption date until all of such 

Limited Partner’s existing Interests are 

redeemed. 

13. The Applicant states that the 

Partnerships may invest either directly 

or through investments in limited 

partnerships and other investment pools 

(including pools that are exempt from 

registration in reliance on section 3(c)(1) 

or 3(c)(7) of the Act) and investments in 

registered investment companies.7

Investments may be made side by side 

with Adviser entities and through 

investment pools (including 

‘‘Aggregation Vehicles’’) 8 sponsored or 

managed by an Adviser entity or an 

unaffiliated entity. 

14. The Applicant states that a 

Partnership may also co-invest in a 

portfolio company with the Advisers or 

an investment fund or separate account 

organized primarily for the benefit of 

investors who are not affiliated with the 

Advisers over which an Adviser entity 

or an Unaffiliated Subadviser exercises 

investment discretion (‘‘Third Party 

Funds’’). The General Partner will not 

delegate management and investment 

discretion for the Partnership to an 

Unaffiliated Subadviser or a sponsor of 

a Third Party Fund. Side-by-side 

investments held by a Third Party Fund, 

or by an Adviser entity in a transaction 

in which the Adviser investment was 

made pursuant to a contractual 

obligation to a Third Party Fund, will 

not be subject to the restrictions 

contained in Condition 3 below. All 

other side-by-side investments held by 

Adviser entities will be subject to the 

restrictions contained in Condition 3. 

15. A Partnership will not borrow 

from any person if the borrowing would 

cause any person not named in section 

2(a)(13) of the Act to own securities of 

the Partnership (other than short-term 

paper). A Partnership will not make any 

loans to the Advisers, their subsidiaries 

or any entity that controls the Advisers.9

A Partnership will not borrow from any 

person if the borrowing would cause the 

Partnership not to be an ‘‘employees’ 

securities company’’ as defined in 

Section 2(a)(13) of the Act. Any 

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indebtedness of a Partnership, other 

than indebtedness incurred specifically 

on behalf of a Limited Partner where the 

Limited Partner has agreed to guarantee 

the loan or to act as co-obligor of the 

loan, will be the debt of the Partnership 

and without recourse to the Limited 

Partners. 

16. In compliance with section 

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

will not purchase or otherwise acquire 

any security issued by a registered 

investment company if, immediately 

after the acquisition, the Partnership 

will own, in the aggregate, more than 

3% of the outstanding voting stock of 

the registered investment company. 

Applicant’s Legal Analysis 

1. Section 6(b) of the Act provides 

that, upon application, the Commission 

will exempt employees’ securities 

companies from the provisions of the 

Act to the extent that the exemption is 

consistent with the protection of 

investors. Section 6(b) provides that the 

Commission will consider, in 

determining the provisions of the Act 

from which the company should be 

exempt, the company’s form of 

organization and capital structure, the 

persons owning and controlling its 

securities, the price of the company’s 

securities and the amount of any sales 

load, how the company’s funds are 

invested, and the relationship between 

the company and the issuers of the 

securities in which it invests. Section 

2(a)(13) defines an employees’ securities 

company, in relevant part, as any 

investment company all of whose 

securities (other than short-term paper) 

are beneficially owned (a) by current or 

former employees, or persons on 

retainer, of one or more affiliated 

employers, (b) by immediate family 

members of such persons, or (c) by such 

employer or employers together with 

any of the persons in (a) or (b). 

2. Section 7 of the Act generally 

prohibits investment companies that are 

not registered under section 8 of the Act 

from selling or redeeming their 

securities. Section 6(e) of the Act 

provides that, in connection with any 

order exempting an investment 

company from any provision of section 

7, certain provisions of the Act, as 

specified by the Commission, will be 

applicable to the company and other 

persons dealing with the company as 

though the company were registered 

under the Act. The Applicants request 

an order under sections 6(b) and 6(e) of 

the Act exempting the Partnerships from 

all provisions of the Act, except sections 

9, 17, 30, and 36 through 53 of the Act, 

and the Rules and Regulations. With 

respect to sections 17(a), (d), (e), (f), (g), 

and (j) and 30(a), (b), (e), and (h) of the 

Act, and the Rules and Regulations, and 

rule 38a–1 under the Act, the exemption 

is limited as set forth in the application. 

3. Section 17(a) generally prohibits 

any affiliated person of a registered 

investment company, or any affiliated 

person of an affiliated person, acting as 

principal, from knowingly selling or 

purchasing any security or other 

property to or from the company. The 

Applicants request an exemption from 

section 17(a) to the extent necessary to 

permit an Adviser entity or a Third 

Party Fund (or any affiliated person of 

any such Adviser entity or Third Party 

Fund), acting as principal, to purchase 

or sell securities or other property to or 

from any Partnership or any company 

controlled by such Partnership. Any 

such transaction to which any 

Partnership is a party will be effected 

only after a determination by the 

General Partner that the requirements of 

condition 1 below have been satisfied. 

In addition, the Applicants, on behalf of 

the Partnerships, represents that any 

transactions otherwise subject to section 

17(a) of the Act, for which exemptive 

relief has not been requested, would 

require approval of the Commission. 

4. The Applicants submit that an 

exemption from section 17(a) is 

consistent with the purposes of the 

Partnerships and the protection of 

investors. The Applicants state that the 

Limited Partners will be informed of the 

possible extent of the Partnership’s 

dealings with the Advisers and of the 

potential conflicts of interest that may 

exist. The Applicants also state that, as 

professionals engaged in financial 

services businesses, the Limited 

Partners will be able to evaluate the 

risks associated with those dealings. 

The Applicants assert that the 

community of interest among the 

Limited Partners and the Advisers and 

the Funds will serve to reduce the risk 

of abuse. The Applicants acknowledge 

that the requested relief will not extend 

to any transactions between a 

Partnership and an Unaffiliated 

Subadviser or an affiliated person of an 

Unaffiliated Subadviser, or between a 

Partnership and any person who is not 

an employee, officer or director of the 

Advisers or is an entity outside of the 

Advisers and is an affiliated person of 

the Partnership as defined in section 

2(a)(3)(E) of the Act (‘‘Advisory Person’’) 

or any affiliated person of such a 

person. 

5. Section 17(d) of the Act and rule 

17d–1 under the Act prohibit any 

affiliated person or principal 

underwriter of a registered investment 

company, or any affiliated person of 

such person or principal underwriter, 

acting as principal, from participating in 

any joint arrangement with the company 

unless authorized by the Commission. 

The Applicants request relief to permit 

affiliated persons of the Partnerships 

(such as the Funds), or affiliated persons 

of any of such persons, to participate in, 

or effect any transaction in connection 

with, any joint enterprise or other joint 

arrangement or profit-sharing plan in 

which a Partnership or a company 

controlled by the Partnerships 

participate. The Applicants 

acknowledge that the requested relief 

will not extend to any transaction in 

which an Unaffiliated Subadviser or an 

Advisory Person, or an affiliated person 

of either such person, has an interest, 

except in connection with a Third Party 

Fund sponsored by an Unaffiliated 

Subadviser. 

6. The Applicants assert that 

compliance with section 17(d) would 

cause the Partnership to forego 

investment opportunities simply 

because the Funds, a Limited Partner, 

the General Partner or any other 

affiliated person of the Partnership (or 

any affiliate of the affiliated person) 

made a similar investment. The 

Applicants submit that the types of 

investment opportunities in which the 

Partnerships will co-invest with the 

Funds require each investor to make 

funds available in an amount that may 

be substantially greater than what a 

Partnership (including its Eligible 

Employees and Qualified Participants) 

may be able to make available on its 

own. The Applicants contend that, as a 

result, the only way in which a 

Partnership (and thus its Eligible 

Employees and Qualified Participants) 

may be able to participate in these 

opportunities is to co-invest with the 

Funds, which would be affiliated 

persons, as defined in section 2(a)(3) of 

the Act. The Applicants assert that the 

flexibility to structure co-investments 

and joint investments will not involve 

abuses of the type section 17(d) and rule 

17d–1 were designed to prevent. In 

addition, the Applicants represent that 

any transactions otherwise subject to 

section 17(d) of the Act and rule 17d– 

1 thereunder, for which exemptive relief 

has not been requested, would require 

approval by the Commission. 

7. Co-investments with Third Party 

Funds, or by an Adviser entity pursuant 

to a contractual obligation to a Third 

Party Fund, will not be subject to 

condition 3 below. The Applicants note 

that it is common for a Third Party Fund 

to require that the Advisers invest their 

own capital in Third Party Fund 

investments, and that the Advisers’ 

investments be subject to substantially 

the same terms as those applicable to 

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the Third Party Fund. The Applicants 

believe it is important that the interests 

of the Third Party Fund take priority 

over the interests of the Partnerships, 

and that the Third Party Fund not be 

burdened or otherwise affected by 

activities of the Partnerships. In 

addition, the Applicants assert that the 

relationship of a Partnership to a Third 

Party Fund is fundamentally different 

from a Partnership’s relationship to the 

Advisers. The Applicants contend that 

the focus of, and the rationale for, the 

protections contained in the requested 

relief are to protect the Partnerships 

from any overreaching by the Advisers 

in the employer/employee context, 

whereas the same concerns are not 

present with respect to the Partnerships 

vis-a`-vis a Third Party Fund. 

8. Section 17(e) of the Act and rule 

17e–1 under the Act limit the 

compensation an affiliated person may 

receive when acting as agent or broker 

for a registered investment company. 

The Applicant requests an exemption 

from section 17(e) to permit an Adviser 

entity (including the General Partner) 

that acts as an agent or broker to receive 

placement fees, advisory fees, or other 

compensation from a Partnership in 

connection with the purchase or sale by 

the Partnership of securities, provided 

that the fees or other compensation are 

deemed ‘‘usual and customary.’’ The 

Applicants state that for purposes of the 

application, fees or other compensation 

that are charged or received by an 

Adviser entity will be deemed ‘‘usual 

and customary’’ only if (a) the 

Partnership is purchasing or selling 

securities with other unaffiliated third 

parties, including Third Party Funds, (b) 

the fees or other compensation being 

charged to the Partnership (directly or 

indirectly) are also being charged to the 

unaffiliated third parties, including 

Third Party Funds, and (c) the amount 

of securities being purchased or sold by 

the Partnership (directly or indirectly) 

does not exceed 50% of the total 

amount of securities being purchased or 

sold by the Partnership (directly or 

indirectly) and the unaffiliated third 

parties, including Third Party Funds. 

The Applicants assert that, because the 

Advisers do not wish to appear to be 

favoring the Partnerships, compliance 

with section 17(e) would prevent a 

Partnership from participating in 

transactions where the Partnership is 

being charged lower fees than 

unaffiliated third parties. The 

Applicants assert that the fees or other 

compensation paid by a Partnership to 

an Adviser entity will be the same as 

those negotiated at arm’s length with 

unaffiliated third parties. 

9. Rule 17e–1(b) under the Act 

requires that a majority of directors who 

are not ‘‘interested persons’’ (as defined 

in section 2(a)(19) of the Act) take 

actions and make approvals regarding 

commissions, fees, or other 

remuneration. Rule 17e–1(c) under the 

Act requires each investment company 

relying on the rule to satisfy the fund 

governance standards defined in rule 0– 

1(a)(7) under the Act (the ‘‘Fund 

Governance Standards’’). The 

Applicants request an exemption from 

rule 17e–1 to the extent necessary to 

permit each Partnership to comply with 

the rule without having a majority of the 

directors of the General Partner who are 

not interested persons take actions and 

make determinations as set forth in 

paragraph (b) of the rule, and without 

having to satisfy the standards set forth 

in paragraph (c) of the rule. The 

Applicants state that because all the 

directors of the General Partner will be 

affiliated persons, without the relief 

requested, a Partnership could not 

comply with rule 17e–1. The Applicants 

state that each Partnership will comply 

with rule 17e–1 by having a majority of 

the directors of the General Partner take 

actions and make approvals as set forth 

in the rule. The Applicants state that 

each Partnership will otherwise comply 

with rule 17e–1. 

10. Section 17(f) of the Act designates 

the entities that may act as investment 

company custodians, and rule 17f–1 

under the Act imposes certain 

requirements when the custodian is a 

member of a national securities 

exchange. The Applicants request an 

exemption from section 17(f) and 

subsections (a), (b) (to the extent such 

subsection refers to contractual 

requirements), (c), and (d) of rule 17f– 

1 to permit an Adviser entity to act as 

custodian of Partnership assets without 

a written contract. The Applicants also 

request an exemption from the rule 17f– 

1(b)(4) requirement that an independent 

accountant periodically verify the assets 

held by the custodian. The Applicants 

state that, because of the community of 

interest between the Advisers and the 

Partnerships and the existing 

requirement for an independent audit, 

compliance with this requirement 

would be unnecessary. The Applicants 

will comply with all other requirements 

of rule 17f–1. 

11. The Applicants also request an 

exemption from section 17 and rule 17f– 

2 to permit the following exceptions 

from the requirements of rule 17f–2: (a) 

A Partnership’s investments may be 

kept in the locked files of the Advisers, 

the General Partner or the Investment 

Adviser; (b) for purposes of paragraph 

(d) of the rule, (i) employees of the 

General Partner (or the Advisers) will be 

deemed to be employees of the 

Partnerships, (ii) officers or managers of 

the General Partner of a Partnership (or 

the Advisers) will be deemed to be 

officers of the Partnership and (iii) the 

General Partner of a Partnership or its 

board of directors will be deemed to be 

the board of directors of a Partnership 

and (c) in place of the verification 

procedure under paragraph (f) of the 

rule, verification will be effected 

quarterly by two employees, each of 

whom will have sufficient knowledge, 

sophistication and experience in 

business matters to perform such 

examination. The Applicants expect 

that, with respect to certain 

Partnerships, some of their investments 

may be evidenced only by partnership 

agreements, participation agreements or 

similar documents, rather than by 

negotiable certificates that could be 

misappropriated. The Applicants assert 

that for such a Partnership, these 

instruments are most suitably kept in 

the files of the Advisers, the General 

Partner, or the Adviser entity that serves 

as investment adviser to the 

Partnership, where they can be referred 

to as necessary. The Applicants will 

comply with all other provisions of rule 

17f–2. 

12. Section 17(g) of the Act and rule 

17g–1 under the Act generally require 

the bonding of officers and employees of 

a registered investment company who 

have access to its securities or funds. 

Rule 17g–1 requires that a majority of 

directors who are not interested persons 

of a registered investment company take 

certain actions and give certain 

approvals relating to fidelity bonding. 

The rule also requires that the board of 

directors of an investment company 

relying on the rule satisfy the Fund 

Governance Standards. The Applicants 

request relief to permit the General 

Partner’s board of directors, who may be 

deemed interested persons, to take 

actions and make determinations as set 

forth in the rule. The Applicants state 

that, because all directors or other 

governing body of the General Partner 

will be affiliated persons, a Partnership 

could not comply with rule 17g–1 

without the requested relief. 

Specifically, each Partnership will 

comply with rule 17g–1 by having a 

majority of the applicable General 

Partner’s directors (or members of a 

comparable body) take actions and make 

determinations as set forth in rule 17g– 

1. The Applicants also request an 

exemption from the requirements of: (i) 

Paragraph (g) of the rule relating to the 

filing of copies of fidelity bonds and 

related information with the 

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10 If a Partnership invests through an Aggregation 

Vehicle and such investment is a Section 17 

Transaction, this condition will apply with respect 

to both the investment in the Aggregation Vehicle 

and any investment by the Aggregation Vehicle of 

Partnership funds. 

11Each Partnership will preserve the accounts, 

books and other documents required to be 

maintained in an easily accessible place for the first 

two years. 

12 If a Partnership invests in a Rule 17d–1 

Investment through an Aggregation Vehicle, the 

requirements of clauses (i) and (ii) of this sentence 

shall apply to both the Affiliated Co-Investor’s 

disposition of such Rule 17d–1 Investment and, if 

the Affiliated Co-Investor also holds a Rule 17d–1 

Investment through such Aggregation Vehicle, its 

disposition of all or part of its investment in the 

Aggregation Vehicle. 

Commission and the provision of 

notices to the board of directors; (ii) 

paragraph (h) of the rule relating to the 

appointment of a person to make the 

filings and provide the notices required 

by paragraph (g); and (iii) paragraph 

(j)(3) of the rule relating to compliance 

with the Fund Governance Standards. 

The Applicants state that the fidelity 

bond of each Partnership will cover the 

Advisers’ employees who have access to 

the securities and funds of the 

Partnership. The Applicants state that 

the Partnerships will comply with all 

other requirements of rule 17g–1. 

13. Section 17(j) of the Act and 

paragraph (b) of rule 17j–1 under the 

Act make it unlawful for certain 

enumerated persons to engage in 

fraudulent or deceptive practices in 

connection with the purchase or sale of 

a security held or to be acquired by a 

registered investment company. Rule 

17j–1 also requires that every registered 

investment company adopt a written 

code of ethics and that every access 

person of a registered investment 

company report personal securities 

transactions. The Applicants request an 

exemption from section 17(j) and the 

provisions of rule 17j–1, except for the 

anti-fraud provisions of paragraph (b), 

because they assert that these 

requirements are unnecessarily 

burdensome as applied to the 

Partnerships. The relief requested will 

only extend to Adviser entities and is 

not requested with respect to any 

Unaffiliated Subadviser or Advisory 

Person. 

14. The Applicants request an 

exemption from the requirements in 

sections 30(a), 30(b), and 30(e) of the 

Act, and the rules under those sections, 

that registered investment companies 

prepare and file with the Commission 

and mail to their shareholders certain 

periodic reports and financial 

statements. The Applicant contends that 

the forms prescribed by the Commission 

for periodic reports have little relevance 

to the Partnerships and would entail 

administrative and legal costs that 

outweigh any benefit to the Limited 

Partners. The Applicant requests 

exemptive relief to the extent necessary 

to permit each Partnership to report 

annually to its Limited Partners, as 

described in the application. The 

Applicants also request an exemption 

from section 30(h) of the Act to the 

extent necessary to exempt the General 

Partner of each Partnership, members of 

the General Partner or any board of 

managers or directors or committee of 

the Advisers’ employees to whom the 

General Partner may delegate its 

functions, and any other persons who 

may be deemed to be members of an 

advisory board of a Partnership, from 

filing Forms 3, 4, and 5 under section 

16(a) of the Exchange Act with respect 

to their ownership of Interests in the 

Partnership. The Applicants assert that, 

because there will be no trading market 

and the transfers of Interests will be 

severely restricted, these filings are 

unnecessary for the protection of 

investors and burdensome to those 

required to make them. 

15. Rule 38a–1 requires registered 

investment companies to adopt, 

implement and periodically review 

written policies reasonably designed to 

prevent violation of the federal 

securities laws and to appoint a chief 

compliance officer. Each Partnership 

will comply will rule 38a–1(a), (c) and 

(d), except that (i) since the Partnership 

does not have a board of directors, the 

board of directors or other governing 

body of the General Partner will fulfill 

the responsibilities assigned to the 

Partnership’s board of directors under 

the rule, and (ii) since the board of 

directors or other governing body of the 

General Partner does not have any 

disinterested members, (a) approval by 

a majority of the disinterested board 

members required by rule 38a–1 will 

not be obtained, and (b) the Partnerships 

will comply with the requirement in 

rule 38a–1(a)(4)(iv) that the chief 

compliance officer meet with the 

independent directors by having the 

chief compliance officer meet with the 

board of directors of the General Partner 

as constituted. 

Applicants’ Conditions 

The Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Each proposed transaction 

involving a Partnership otherwise 

prohibited by section 17(a) or section 

17(d) of the Act and rule 17d–1 under 

the Act to which a Partnership is a party 

(the ‘‘Section 17 Transactions’’) will be 

effected only if the applicable General 

Partner determines that (i) the terms of 

the Section 17 Transaction, including 

the consideration to be paid or received, 

are fair and reasonable to the Limited 

Partners of the Partnership and do not 

involve overreaching of the Partnership 

or its Limited Partners on the part of any 

person concerned, and (ii) the Section 

17 Transaction is consistent with the 

interests of the Limited Partners, the 

Partnership’s organizational documents 

and the Partnership’s reports to its 

Limited Partners.10

In addition, the applicable General 

Partner of a Partnership will record and 

preserve a description of all Section 17 

Transactions, the General Partner’s 

findings, the information or materials 

upon which the findings are based and 

the basis for the findings. All such 

records will be maintained for the life 

of the Partnership and at least six years 

thereafter and will be subject to 

examination by the Commission and its 

staff.11

2. The General Partner of each 

Partnership will adopt, and periodically 

review and update, procedures designed 

to ensure that reasonable inquiry is 

made, prior to the consummation of any 

Section 17 Transaction, with respect to 

the possible involvement in the 

transaction of any affiliated person or 

promoter of or principal underwriter for 

the Partnership or any affiliated person 

of such person, promoter or principal 

underwriter. 

3. The General Partner of each 

Partnership will not invest the funds of 

the Partnership in any investment in 

which an ‘‘Affiliated Co-Investor’’ (as 

defined below) has acquired or proposes 

to acquire the same class of securities of 

the same issuer and where the 

investment transaction involves a joint 

enterprise or other joint arrangement 

within the meaning of Rule 17d–1 in 

which the Partnership and an Affiliated 

Co-Investor are participants (each such 

investment, a ‘‘Rule 17d–1 

Investment’’), unless any such Affiliated 

Co-Investor, prior to disposing of all or 

part of its investment, (i) gives the 

General Partner sufficient, but not less 

than one day’s, notice of its intent to 

dispose of its investment; and (ii) 

refrains from disposing of its investment 

unless the Partnership has the 

opportunity to dispose of the 

Partnership’s investment prior to or 

concurrently with, on the same terms as, 

and pro rata with the Affiliated CoInvestor.12 The term ‘‘Affiliated CoInvestor’’ with respect to any 

Partnership means any person who is: 

(i) An ‘‘affiliated person’’ (as such term 

is defined in section 2(a)(3) of the Act) 

of the Partnership (other than a Third 

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13Each Partnership will preserve the accounts, 

books and other documents required to be 

maintained in an easily accessible place for the first 

two years. 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(1). 

5Capitalized terms not defined herein are defined 

in the GSD Rules, available at www.dtcc.com/∼/ 

media/Files/Downloads/legal/rules/ficc_gov_

rules.pdf, and the MBSD Rules, available at 

www.dtcc.com/∼/media/Files/Downloads/legal/ 

rules/ficc_mbsd_rules.pdf. 

Party Fund); (ii) the Advisers; (iii) an 

officer or director of the Advisers; (iv) 

an Eligible Employee; or (v) an entity 

(other than a Third Party Fund) in 

which an Adviser entity acts as a 

general partner or has a similar capacity 

to control the sale or other disposition 

of the entity’s securities. The 

restrictions contained in this condition, 

however, shall not be deemed to limit 

or prevent the disposition of an 

investment by an Affiliated Co-Investor 

(i) to its direct or indirect wholly-owned 

subsidiary, to any company (a ‘‘Parent’’) 

of which the Affiliated Co-Investor is a 

direct or indirect wholly-owned 

subsidiary or to a direct or indirect 

wholly-owned subsidiary of its Parent, 

(ii) to immediate family members of the 

Affiliated Co-Investor or a trust or other 

investment vehicle established for any 

Affiliated Co-Investor or any such 

immediate family member, or (iii) when 

the investment is comprised of 

securities that are (a) listed on a national 

securities exchange registered under 

section 6 of the Exchange Act, (b) NMS 

stocks pursuant to section 11A(a)(2) of 

the Exchange Act and rule 600(a) of 

Regulation NMS thereunder, (c) 

government securities as defined in 

section 2(a)(16) of the Act or other 

securities that meet the definition of 

‘‘Eligible Security’’ in rule 2a–7 under 

the Act, or (d) listed or traded on any 

foreign securities exchange or board of 

trade that satisfies regulatory 

requirements under the law of the 

jurisdiction in which such foreign 

securities exchange or board of trade is 

organized similar to those that apply to 

a national securities exchange or a 

national market system for securities. 

4. Each Partnership and its General 

Partner will maintain and preserve, for 

the life of each Series of the Partnership 

and at least six years thereafter, such 

accounts, books and other documents 

constituting the record forming the basis 

for the audited financial statements that 

are to be provided to the Limited 

Partners in the Partnership, and each 

annual report of the Partnership 

required to be sent to the Limited 

Partners, and agree that all such records 

will be subject to examination by the 

Commission and its staff.13

5. Within 120 days after the end of 

each fiscal year of each Partnership, or 

as soon as practicable thereafter, the 

General Partner of each Partnership will 

send to each Limited Partner having an 

Interest in the Partnership at any time 

during the fiscal year then ended, 

Partnership financial statements audited 

by the Partnership’s independent 

accountants. At the end of each fiscal 

year, the General Partner will make or 

cause to be made a valuation of all of 

the assets of the Partnership as of such 

fiscal year end in a manner consistent 

with customary practice with respect to 

the valuation of assets of the kind held 

by the Partnership. In addition, within 

120 days after the end of each fiscal year 

of each Partnership (or as soon as 

practicable thereafter), the General 

Partner will send a report to each person 

who was a Limited Partner at any time 

during the fiscal year then ended, 

setting forth such tax information as 

shall be necessary for the preparation by 

the Limited Partner of that partner’s 

federal and state income tax returns and 

a report of the investment activities of 

the Partnership during that fiscal year. 

6. If a Partnership makes purchases or 

sales from or to an entity affiliated with 

the Partnership by reason of an officer, 

director or employee of an Adviser 

entity (i) serving as an officer, director, 

general partner, manager or investment 

adviser of the entity (other than an 

entity that is an Aggregation Vehicle), or 

(ii) having a 5% or more investment in 

the entity, such individual will not 

participate in the Partnership’s 

determination of whether or not to effect 

the purchase or sale. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–18930 Filed 9–6–17; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81511; File No. SR–FICC– 

2017–019] 

Self-Regulatory Organizations; Fixed 

Income Clearing Corporation; Notice of 

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Adopt the 

Interpretive Guidance With Respect to 

Watch List Consequences 

August 31, 2017. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 

23, 2017, Fixed Income Clearing 

Corporation (‘‘FICC’’) 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 primarily 

prepared by the clearing agency. FICC 

filed the proposed rule change pursuant 

to Section 19(b)(3)(A) of the Act 3 and 

Rule 19b–4(f)(1) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Clearing Agency’s Statement of the 

Terms of Substance of the Proposed 

Rule Change 

The proposed rule change would 

amend FICC’s Government Securities 

Division (‘‘GSD’’) Rulebook (‘‘GSD 

Rules’’) and Mortgage-Backed Securities 

Division (‘‘MBSD’’) Clearing Rules 

(‘‘MBSD Rules,’’ and collectively with 

the GSD Rules, the ‘‘Rules’’) 5 in order 

to adopt the Interpretive Guidance with 

Respect to Watch List Consequences 

(‘‘Interpretive Guidance’’), which would 

provide guidance to members of GSD 

and MBSD regarding placement on the 

Watch List and its impact on their 

respective Clearing Fund deposits as 

well as other consequences. 

II. Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

In its filing with the Commission, the 

clearing agency 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 

clearing agency has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 

(A) Clearing Agency’s Statement of the 

Purpose of, and Statutory Basis for, the 

Proposed Rule Change 

1. Purpose 

The proposed rule change would add 

the Interpretive Guidance into the 

Rules, which will provide guidance to 

members of GSD and MBSD regarding 

the Watch List and its impact on their 

respective Clearing Fund deposits as 

well as other possible consequences. 

(i) Background 

FICC occupies an important role in 

the securities settlement system by 

interposing itself through each of GSD 

and MBSD as a central counterparty 

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