[Federal Register Volume 79, Number 178 (Monday, September 15, 2014)]
[Notices]
[Pages 55040-55047]
[FR Doc No: 2014-21866]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72020; File No. SR-NYSEMKT-2014-72]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Its Fees for
Non-Display Use of NYSE MKT OpenBook, NYSE MKT Trades, and NYSE MKT
BBO, and To Establish Fees for Non-Display Use of NYSE MKT Order
Imbalances

September 9, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on August 26, 2014, NYSE MKT LLC (the ``Exchange'' or
``NYSE MKT'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to amend its fees for non-display use of NYSE
MKT OpenBook, NYSE MKT Trades, and NYSE MKT BBO, and to establish fees
for non-display use of NYSE MKT Order Imbalances, operative on
September 1, 2014. The text of the proposed rule change is available on
the Exchange's Web site at www.nyse.com, at the principal office of the
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its non-display fees for NYSE MKT
OpenBook, NYSE MKT Trades, and NYSE MKT BBO, to establish such fees for
NYSE MKT Order Imbalances, and to establish managed non-display
services fees for NYSE MKT BBO, operative on September 1, 2014.\4\
---------------------------------------------------------------------------

    \4\ The Exchange's affiliates have submitted or will be
submitting similar proposals. See, e.g., SR-NYSE-2014-43.
---------------------------------------------------------------------------

    The Exchange established the current non-display and managed non-
display services fees for NYSE MKT OpenBook, NYSE MKT Trades, and NYSE
MKT BBO in April 2013.\5\ The Exchange now proposes to change those
fees and to establish similar fees for NYSE MKT Order Imbalances.
---------------------------------------------------------------------------

    \5\ See Securities Exchange Act Release No. 69285 (April 3,
2013), 78 FR 21172 (April 9, 2013) (SR-NYSEMKT-2013-32) (``2013
Release'').
---------------------------------------------------------------------------

    Under the proposal, non-display use would continue to mean
accessing, processing, or consuming an Exchange data product delivered
via direct and/or Redistributor \6\ data feeds for a purpose other than
in support of a data recipient's display or further internal or
external redistribution (``Non-Display Use''). As is the case today,
non-display and managed non-display services fees would apply to the
Non-Display Use of the data product as part of automated calculations
or algorithms to support trading decision-making processes or the
operation of trading platforms.
---------------------------------------------------------------------------

    \6\ ``Redistributor'' means a vendor or any person that provides
a real-time NYSE data product to a data recipient or to any system
that a data recipient uses, irrespective of the means of
transmission or access.
---------------------------------------------------------------------------

    The Exchange is proposing to expand the types of uses considered
Non-Display Use to also include non-trading uses. In addition, the
proposal would specify that Non-Display Use would include any trading
use, rather than only certain types of trading, such as high frequency
or algorithmic trading, as under the current fee structure. Under the
proposal, examples of Non-Display Use would include any trading in any
asset class, automated order or quote generation and/or order pegging,
price referencing for algorithmic trading or smart order routing,
operations control programs, investment analysis, order verification,
surveillance programs, risk management, compliance, and portfolio
management. The Exchange believes that non-trading uses benefit data
recipients by allowing users to automate functions, achieving

greater speed and accuracy, and in turn, for example, reducing costs of
labor to perform the functions manually. This approach would address
the difficulties of monitoring and auditing different types of trading
versus non-trading uses of the data and the burden of counting devices
used for non-trading purposes under the current fees.
Proposed Changes to Non-Display Fees
    The Exchange proposes to amend the fee structure applicable to Non-
Display Use of NYSE MKT OpenBook, NYSE MKT BBO, and NYSE MKT Trades and
to establish such fees for NYSE MKT Order Imbalance. Specifically, the
Exchange proposes certain changes to the three categories of, and fees
applicable to, data recipients. The Exchange also proposes
corresponding changes to the Fee Schedule text to remove references to
the current category descriptions.
    Under the proposal, Category 1 Fees would apply when a data
recipient's Non-Display Use of real-time market data is on its own
behalf as opposed to use on behalf of its clients. This proposal
represents an expansion of the application of Category 1 Fees, which
currently apply solely to the Non-Display Use of real time market data
for the purpose of principal trading, to usage of such data for non-
trading purposes.
    Under the proposal, Category 2 Fees would apply to a data
recipient's Non-Display Use of real-time market data on behalf of its
clients as opposed to on its own behalf. This proposal also represents
an expansion of the application of Category 2 Fees, which currently
apply solely to trading activities to facilitate a customer business,
to usage of such data for non-trading purposes. As under the current
fee, if a data recipient's use of Exchange market data is covered by
Category 1 and Category 2, then the data recipient must pay both
categories of fees.\7\
---------------------------------------------------------------------------

    \7\ See 2013 Release, supra note 5, at 21175.
---------------------------------------------------------------------------

    The Exchange believes its proposal to apply Category 1 Fees and
Category 2 Fees to Non-Display Use of market data for non-trading
purposes would address the difficulties of monitoring and auditing
trading versus non-trading uses of the data and the burden of counting
devices used for purposes of applying the per-device fees. As discussed
in more detail in the 2013 Release,\8\ the ability to accurately count
devices and audit such counts creates administrative challenges for
vendors, data recipients, and the Exchange.
---------------------------------------------------------------------------

    \8\ See 2013 Release, supra note 5, at 21174.
---------------------------------------------------------------------------

    Under the proposal, Category 3 Fees would apply to data recipients'
Non-Display Use of real-time market data for the purpose of internally
matching buy and sell orders within an organization, including matching
customer orders on a data recipient's own behalf and/or on behalf of
its clients. This category would apply to Non-Display Use in trading
platform(s), such as, but not restricted to, alternative trading
systems (``ATSs''), broker crossing networks, broker crossing systems
not filed as ATSs, dark pools, multilateral trading facilities,
exchanges and systematic internalization systems. Currently, Category 3
Fees apply where a data recipient's non-display use of market data is,
in whole or in part, for the purpose of providing reference prices in
the operation of one or more trading platforms. The Exchange believes
its proposed revision to its description of the data recipients to whom
Category 3 Fees apply is more precise because it focuses on the
functions of internally matching orders.
    In addition, the Exchange is proposing to change the application of
Category 3 Fees to data recipients that also use data for purposes that
give rise to Category 1 and/or Category 2 Fees. Currently, a data
recipient is not liable for Category 3 Fees for those market data
products for which it is also paying Category 1 and/or Category 2
Fees.\9\ Under the proposal, a data recipient's Non-Display Use of
real-time market data for Category 3 purposes would require such data
recipient to pay Category 3 Fees in addition to any Category 1 Fees or
Category 2 Fees it is required to pay for Non-Display Use of market
data.
---------------------------------------------------------------------------

    \9\ See 2013 Release, supra note 5, at 21175.
---------------------------------------------------------------------------

    There will continue to be no monthly or other reporting
requirements for data recipients' Non-Display Use. However, the
Exchange continues to reserve the right to audit data recipients' Non-
Display Use of NYSE MKT market data products in accordance with the
Exchange's vendor and subscriber agreements.
    Data recipients that receive real-time NYSE MKT market data for
Non-Display Use would be required to complete and submit a Non-Display
Use Declaration before September 1, 2014. The Non-Display Use
Declaration would replace the current declaration on the NYSE Euronext
Non-Display Usage Declaration.\10\ A firm subject to Category 3 Fees
would be required to identify each platform that uses data on a Non-
Display Use basis, such as ATSs and broker crossing systems not
registered as ATSs, as part of the Non-Display Use Declaration.
Beginning in 2016, data recipients would be required to submit, by
January 31 of each year, a Non-Display Use Declaration. In addition, if
a data recipient's use of real-time NYSE MKT market data changes at any
time after the data recipient submits a Non-Display Use Declaration,
the data recipient would be required to update it at the time of the
change to reflect the change of use.
---------------------------------------------------------------------------

    \10\ As described in more detail in the Statutory Basis section,
in order to modulate the overall fee increase that could apply, if a
firm subject to Category 3 Fees has more than three platforms, it
would only be required to declare three platforms. If a data
recipient only subscribes to products for which there are no non-
display usage fees, e.g., NYSE Realtime Reference Prices, then no
declaration is required.
---------------------------------------------------------------------------

Proposed Changes to Fees for Managed Non-Display Services
    The Exchange also proposes to change the fees for managed non-
display services for NYSE MKT OpenBook and NYSE MKT Trades and
establish managed non-display service fees for NYSE MKT BBO and NYSE
MKT Order Imbalances. Managed non-display services fees would apply, as
they do currently, where data recipients' non-display applications are
hosted by an approved third party.\11\ To be an approved third party,
the third party must manage and control the access to real-time NYSE
MKT market data for the data recipients' non-display applications and
not allow for further internal distribution or external redistribution
of the information.
---------------------------------------------------------------------------

    \11\ See 2013 Release, supra note 5, at 21176.
---------------------------------------------------------------------------

    The managed non-display services fee would only apply if a data
recipient is receiving real-time NYSE MKT market data for Non-Display
Use from a third party Redistributor \12\ that is approved by the
Exchange. As for the current managed non-display services fees, this
Redistributor must manage and control the access to NYSE MKT OpenBook,
NYSE MKT Trades, NYSE MKT BBO, and NYSE MKT Order Imbalances for these
applications and may not allow their further internal distribution or
external redistribution. The Redistributor of the managed non-display
services and the data recipient must be approved under the Exchange's
Global Data Products Unit-of-Count Policy.\13\ If a data recipient
receives NYSE MKT OpenBook, NYSE MKT Trades, NYSE MKT BBO, and NYSE MKT
Order Imbalances from a Redistributor that is not approved by the
Exchange, then the non-display fees

would apply, and data recipients would not be liable for managed non-
display fees for those market data products for which they pay non-
display fees.
---------------------------------------------------------------------------

    \12\ See id.
    \13\ The Unit-of-Count Policy is described in the 2013 Release,
supra note 5, at note 10 and accompanying text.
---------------------------------------------------------------------------

    A data recipient of real-time NYSE MKT market data through an
approved Redistributor would continue to have no reporting
requirements. However, a Redistributor would be required to report to
NYSE MKT on a monthly basis the data recipients that are receiving
real-time NYSE MKT market data through the Redistributor's managed non-
display service and the real-time NYSE MKT market data that such data
recipients are receiving through such service. This monthly reporting
requirement would be new, though the Exchange currently has the right
to audit data recipients' non-display use of NYSE MKT market data
products in accordance with the Exchange's vendor and subscriber
agreements.
Comparison of Current Fees to Proposed Fees
    The chart below compares the proposed changes to current monthly
fees:

----------------------------------------------------------------------------------------------------------------
                  Data feed                      Current fee                      Proposed fee
----------------------------------------------------------------------------------------------------------------
NYSE MKT OpenBook Non-Display Category 1.....          $1,500  $2,000.
NYSE MKT OpenBook Non-Display Category 2.....           1,500  $2,000.
NYSE MKT OpenBook Non-Display Category 3.....           1,500  $2,000.
NYSE MKT OpenBook Managed Non-Display........             500  $750.
NYSE MKT BBO Non-Display Category 3..........             500  $500, capped at $1,500.
NYSE MKT BBO Managed Non-Display.............             n/a  $150.
NYSE MKT TradesManaged Non Display...........             400  $600.
NYSE MKT Order Imbalances Category 1.........             n/a  $500.
NYSE MKT Order Imbalances Category 2.........             n/a  $500.
NYSE MKT Order Imbalances Category 3.........             n/a  $500, capped at $1,500.
NYSE MKT Order Imbalances Managed Non-Display             n/a  $100.
----------------------------------------------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\14\ in general, and
Sections 6(b)(4) and 6(b)(5) of the Act,\15\ in particular, in that it
provides an equitable allocation of reasonable fees among users and
recipients of the data and is not designed to permit unfair
discrimination among customers, issuers, and brokers.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(4), (5).
---------------------------------------------------------------------------

    The Exchange believes that charging for non-trading uses is
reasonable because data recipients can derive substantial value from
such uses, for example, by automating tasks so that they can be
performed more quickly and accurately and less expensively than if they
were performed manually. The Exchange also notes that The NASDAQ Stock
Market (``NASDAQ'') and NASDAQ OMX PHLX (``Phlx'') do not make any
distinction in their non-display use fees between trading or non-
trading uses, and as such, the proposed change will harmonize the
Exchange's approach with those exchanges. Finally, the Exchange notes
that eliminating the trading versus non-trading distinction would
substantially simplify fee calculations and ease administrative burdens
for the Exchange.
    After further experience, the Exchange also believes that it is
more equitable and not unfairly discriminatory to eliminate the
distinction for non-trading versus trading uses in light of the
significant value of both types of uses. The Exchange notes that
because non-display fees are flat fees, the expansion to cover non-
trading uses could only result in a fee increase for a data recipient
that is using the data solely for non-trading purposes and is only
subject to per-device fees; at this time, the Exchange has not
identified such a data recipient. Based on data available to the
Exchange, all data recipients use the data for at least one trading
purpose, and therefore the changes to the fees that they will pay under
the proposal would not be due to the elimination of the distinction
between trading and non-trading uses. The Exchange further notes that
based on Non-Display Use Declarations submitted to date, some users
have declared no Non-Display Use, and as such the proposed changes
would have no impact on them.
    The Exchange believes that it is reasonable to require annual
submissions of the Non-Display Use Declaration so that the Exchange
will have current and accurate information about the use of its market
data products and can correctly assess fees for the uses of those
products. The annual submission requirement is equitable and not
unfairly discriminatory because it will apply to all users.
    The Exchange believes that requiring Redistributors to provide
monthly reports of data recipients that are receiving the managed non-
display service is reasonable because as a matter of practice, the
Exchange already has been requiring such reporting pursuant to its
right under the vendor and subscriber agreements to request such
information, and there is no indication that this has been burdensome
for Redistributors. The reporting requirement is equitable and not
unfairly discriminatory because it will apply to all Redistributors and
help to ensure that ultimate data recipients are receiving data in
accordance with the Exchange's rules.
    The Exchange believes that the proposed fee increases of $1,000
[sic] per month for each of Categories 1, 2, and 3 for NYSE MKT
OpenBook and NYSE MKT Trades are reasonable. In establishing the non-
display fees in April 2013, the Exchange set its fees substantially
below comparable fees charged by certain of its competitors.\16\ After
gaining further experience with its new display/non-display fee
structure, the Exchange believes that the proposed fees better reflect
the significant value of the non-display data to data recipients, which
purchase such data on an entirely voluntary basis. Non-display data can
be used by data recipients for a wide variety of profit-generating
purposes, including proprietary and agency trading and smart order
routing, as well as by data recipients that operate order matching and
execution platforms that compete directly with the Exchange for order
flow. The data also can be used for a variety of non-trading purposes
that indirectly support trading, such as risk management and
compliance. While some of these non-trading uses do not directly
generate revenues, they can nonetheless substantially reduce the
recipient's costs by automating such functions so that they can be
carried out in a more efficient and accurate manner and reduce errors
and labor costs,

thereby benefiting end users. The Exchange believes that the proposed
fees directly and appropriately reflect the significant value of using
non-display data in a wide range of computer-automated functions
relating to both trading and non-trading activities and that the number
and range of these functions continue to grow through innovation and
technology developments.\17\
---------------------------------------------------------------------------

    \16\ See 2013 Release, supra note 5, at 21176.
    \17\ See also Exchange Act Release No. 69157, March 18, 2013, 78
FR 17946, 17949 (March 25, 2013) (SR-CTA/CQ-2013-01) (``[D]ata feeds
have become more valuable, as recipients now use them to perform a
far larger array of non-display functions. Some firms even base
their business models on the incorporation of data feeds into black
boxes and application programming interfaces that apply trading
algorithms to the data, but that do not require widespread data
access by the firm's employees. As a result, these firms pay little
for data usage beyond access fees, yet their data access and usage
is critical to their businesses.'').
---------------------------------------------------------------------------

    The fee increases are also reasonable in that they support the
Exchange's efforts to regularly upgrade systems to support more modern
data distribution formats and protocols as technology evolves. For
example, the Exchange has begun to make its proprietary data products
available over both its existing distribution channel as well as the
XDP protocol.
    Charging a separate fee for Category 3 data recipients that already
pay a fee under Category 1 or 2 is reasonable because it eliminates
what is effectively a discount for such data recipients under the
current Fee Schedule and results in a more equitable allocation of fees
to users that derive a benefit from a Category 3 use, and as such is
not unfairly discriminatory. The current fee can be viewed as having an
effective non-display fee cap of $3,000 for NYSE MKT OpenBook, $2,000
for NYSE MKT Trades, and $1,000 for NYSE MKT BBO while the proposed fee
would have an effective non-display fee cap of $10,000 for NYSE MKT
OpenBook, $7,500 for NYSE MKT Trades, and $2,500 for NYSE MKT BBO. The
Exchange believes that the proposed fees (and their associated caps)
more closely correspond to the value that Category 3 recipients derive
from the various uses of the data, some of which are operating various
types of alternative trading venues that directly compete for order
flow with the Exchange. Limiting the fees in Category 3 to no more than
three trading platforms is reasonable because it modulates the size of
the fee increase for certain recipients as compared to what they pay
under the current fee structure, in much the same manner as the current
fee does by limiting the non-display fees to a maximum of two
categories. The Exchange does not believe that it will be burdensome
for Category 3 recipients to determine, or the Exchange to audit,
whether a recipient has one, two, three or more separate platforms.
    The proposed non-display fees for NYSE MKT Order Imbalances are
reasonable because they reflect the valuable non-display uses of this
data feed for recipients and will be easier for the Exchange to
administer than counting devices, as is required under the current Fee
Schedule. The fees are equitable and not unfairly discriminatory
because they will apply to all data recipients that choose to subscribe
to the NYSE MKT Order Imbalances feed.
    The proposed monthly fees of $150 for NYSE MKT BBO managed non-
display data and $100 for NYSE MKT Order Imbalances managed non-display
data are reasonable because they are less than other managed non-
display fees charged by the Exchange for other managed non-display
products as well as by other exchanges for comparable products.\18\ The
fees are also equitable and not unfairly discriminatory because they
will apply to all data recipients that choose to subscribe to the
feeds.
---------------------------------------------------------------------------

    \18\ NASDAQ offers a Managed Data Solution that assesses a
monthly Managed Data Solution Administration fee of $1,500 and
monthly Subscriber fees of $60 for non-professionals to $300 for
professionals. See NASDAQ Rule 7026(b). Phlx charges a monthly
Managed Data Solution Administration fee of $2,000 and a monthly
Subscriber fee of $500. The monthly License fee is in addition to
the monthly Distributor fee of $3,500 (for external usage), and the
$500 monthly Subscriber fee is assessed for each Subscriber of a
Managed Data Solution. See Securities Exchange Act Release No. 70748
(October 23, 2013), 78 FR 64569 (October 29, 2013) (SR-Phlx-2013-
105).
---------------------------------------------------------------------------

    The proposed NYSE MKT OpenBook and NYSE MKT Trades managed non-
display fees are reasonable because they remain less than the
comparable fees for other exchanges' similar products.\19\ These
managed non-display fees also are equitable and not unfairly
discriminatory because they will apply to all data recipients that
choose to subscribe to the feeds.
---------------------------------------------------------------------------

    \19\ See id.
---------------------------------------------------------------------------

    The fees are also competitive with offerings by other exchanges,
which structure and set their fees in a variety of ways. For example,
NASDAQ professional subscribers pay monthly fees for non-display usage
based upon direct access to NASDAQ Level 2, NASDAQ TotalView,\20\ or
NASDAQ OpenView, which range from $300 per month for customers with one
to 10 subscribers to $75,000 for customers with 250 or more
subscribers.\21\ NASDAQ also offers an enterprise license for its last
sale data at $50,000 per month.\22\ In addition, Phlx offers an
alternative $10,000 per month ``Non-Display Enterprise License'' fee
that permits distribution to an unlimited number of internal non-
display subscribers without incurring additional fees for each internal
subscriber.\23\ The Non-Display Enterprise License covers non-display
subscriber fees for all Phlx proprietary direct data feed products and
is in addition to any other associated distributor fees for Phlx
proprietary direct data feed products. NASDAQ OMX BX, Inc. (``BX'')
also offers an alternative non-display usage fee of $16,000 per month
for its BX TotalView data feed.\24\ NASDAQ and Phlx also both offer
managed non-display data solutions at higher overall fees than the
Exchange proposes to charge.\25\
---------------------------------------------------------------------------

    \20\ NASDAQ disseminates its Net Order Imbalance Indicator for
the NASDAQ Opening and Closing Crosses and NASDAQ IPO/Halt Cross as
part of the TotalView product.
    \21\ See NASDAQ Rule 7023(b)(4).
    \22\ See NASDAQ Rule 7039(b).
    \23\ Alternatively, Phlx charges each professional subscriber
$40 per month. See Section IX of the Phlx Pricing Schedule.
    \24\ See NASDAQ OMX BX Rule 7023(a)(2). Alternatively, BX
charges each professional subscriber $40 per month.
    \25\ See supra note 188 [sic].
---------------------------------------------------------------------------

    The Exchange also notes that all of the products described herein
are entirely optional. The Exchange is not required to make these
proprietary data products available or to offer any specific pricing
alternatives to any customers, nor is any firm required to purchase any
of the products. Firms that do purchase non-display products do so for
the primary goals of using them to increase revenues, reduce expenses,
and in some instances compete directly with the Exchange for order
flow; those firms are able to determine for themselves whether any
specific product such as these are attractively priced or not.
    Firms that do not wish to purchase the data at the new prices have
a wide variety of alternative market data products from which to
choose,\26\ or if the non-display data products do not provide
sufficient value to firms as offered based on the uses those firms have
or planned to make of them, such firms may simply choose to conduct
their business operations in ways that do not require those data
products. The Exchange notes that broker-dealers are not required to
purchase proprietary market data to comply with their best

execution obligations.\27\ Similarly, there is no requirement in
Regulation NMS or any other rule that proprietary data be utilized for
order routing decisions, and some broker-dealers and ATSs have chosen
not to do so.\28\
---------------------------------------------------------------------------

    \26\ See supra notes 18-24. Because NYSE MKT BBO and NYSE MKT
Trades are subsets of the consolidated core data offered by the CTA
and CQS, customers may choose to purchase those consolidated data
products or free delayed data instead.
    \27\ See In the Matter of the Application of Securities Industry
And Financial Markets Association For Review of Actions Taken by
Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-15350;
AP-3-15351 (May 16, 2014).
    \28\ For example, Goldman Sachs Execution and Clearing, L.P. has
disclosed that it does not use proprietary market data in connection
with Sigma X, its ATS. See response to Question E3, available at
http://www.goldmansachs.com/media-relations/in-the-news/current/pdf-media/gsec-order-handling-practices-ats-specific.pdf. By way of
comparison, IEX has disclosed that it uses proprietary market data
feeds from all registered stock exchanges and LavaFlow ECN. See
http://www.iextrading.com/about/.
---------------------------------------------------------------------------

    The decision of the United States Court of Appeals for the District
of Columbia Circuit in NetCoalition v. SEC, 615 F.3d 525 (D.C. Cir.
2010), upheld reliance by the Securities and Exchange Commission
(``Commission'') upon the existence of competitive market mechanisms to
set reasonable and equitably allocated fees for proprietary market
data:

    In fact, the legislative history indicates that the Congress
intended that the market system `evolve through the interplay of
competitive forces as unnecessary regulatory restrictions are
removed' and that the SEC wield its regulatory power `in those
situations where competition may not be sufficient,' such as in the
creation of a `consolidated transactional reporting system.'

    Id. at 535 (quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted
in 1975 U.S.C.C.A.N. 323). The court agreed with the Commission's
conclusion that ``Congress intended that `competitive forces should
dictate the services and practices that constitute the U.S. national
market system for trading equity securities.''' \29\
---------------------------------------------------------------------------

    \29\ NetCoalition, 615 F.3d at 535.
---------------------------------------------------------------------------

    As explained below in the Exchange's Statement on Burden on
Competition, the Exchange believes that there is substantial evidence
of competition in the marketplace for proprietary market data and that
the Commission can rely upon such evidence in concluding that the fees
established in this filing are the product of competition and therefore
satisfy the relevant statutory standards. In addition, the existence of
alternatives to these data products, such as consolidated data and
proprietary data from other sources, as described below, further
ensures that the Exchange cannot set unreasonable fees, or fees that
are unreasonably discriminatory, when vendors and subscribers can
select such alternatives.
    As the NetCoalition decision noted, the Commission is not required
to undertake a cost-of-service or ratemaking approach. The Exchange
believes that, even if it were possible as a matter of economic theory,
cost-based pricing for non-core market data would be so complicated
that it could not be done practically or offer any significant
benefits.\30\
---------------------------------------------------------------------------

    \30\ The Exchange believes that cost-based pricing would be
impractical because it would create enormous administrative burdens
for all parties, including the Commission, to cost-regulate a large
number of participants and standardize and analyze extraordinary
amounts of information, accounts, and reports. In addition, and as
described below, it is impossible to regulate market data prices in
isolation from prices charged by markets for other services that are
joint products. Cost-based rate regulation would also lead to
litigation and may distort incentives, including those to minimize
costs and to innovate, leading to further waste. Under cost-based
pricing, the Commission would be burdened with determining a fair
rate of return, and the industry could experience frequent rate
increases based on escalating expense levels. Even in industries
historically subject to utility regulation, cost-based ratemaking
has been discredited. As such, the Exchange believes that cost-based
ratemaking would be inappropriate for proprietary market data and
inconsistent with Congress's direction that the Commission use its
authority to foster the development of the national market system,
and that market forces will continue to provide appropriate pricing
discipline. See Appendix C to NYSE's comments to the Commission's
2000 Concept Release on the Regulation of Market Information Fees
and Revenues, which can be found on the Commission's Web site at
http://www.sec.gov/rules/concept/s72899/buck1.htm.
---------------------------------------------------------------------------

    For these reasons, the Exchange believes that the proposed fees are
reasonable, equitable, and not unfairly discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. An exchange's ability to
price its proprietary market data feed products is constrained by
actual competition for the sale of proprietary market data products,
the joint product nature of exchange platforms, and the existence of
alternatives to the Exchange's proprietary data.
The Existence of Actual Competition
    The market for proprietary data products is currently competitive
and inherently contestable because there is fierce competition for the
inputs necessary for the creation of proprietary data and strict
pricing discipline for the proprietary products themselves. Numerous
exchanges compete with one another for listings and order flow and
sales of market data itself, providing ample opportunities for
entrepreneurs who wish to compete in any or all of those areas,
including producing and distributing their own market data. Proprietary
data products are produced and distributed by each individual exchange,
as well as other entities, in a vigorously competitive market. Indeed,
the U.S. Department of Justice (``DOJ'') (the primary antitrust
regulator) has expressly acknowledged the aggressive actual competition
among exchanges, including for the sale of proprietary market data. In
2011, the DOJ stated that exchanges ``compete head to head to offer
real-time equity data products. These data products include the best
bid and offer of every exchange and information on each equity trade,
including the last sale.'' \31\
---------------------------------------------------------------------------

    \31\ Press Release, U.S. Department of Justice, Assistant
Attorney General Christine Varney Holds Conference Call Regarding
NASDAQ OMX Group Inc. and IntercontinentalExchange Inc. Abandoning
Their Bid for NYSE Euronext (May 16, 2011), available at http://www.justice.gov/iso/opa/atr/speeches/2011/at-speech-110516.html.
---------------------------------------------------------------------------

    Moreover, competitive markets for listings, order flow, executions,
and transaction reports provide pricing discipline for the inputs of
proprietary data products and therefore constrain markets from
overpricing proprietary market data. Broker-dealers send their order
flow and transaction reports to multiple venues, rather than providing
them all to a single venue, which in turn reinforces this competitive
constraint. As a 2010 Commission Concept Release noted, the ``current
market structure can be described as dispersed and complex'' with
``trading volume . . . dispersed among many highly automated trading
centers that compete for order flow in the same stocks'' and ``trading
centers offer[ing] a wide range of services that are designed to
attract different types of market participants with varying trading
needs.'' \32\ More recently, SEC Chair Mary Jo White has noted that
competition for order flow in exchange-listed equities is ``intense''
and divided among many trading venues, including exchanges, more than
40 alternative

trading systems, and more than 250 broker-dealers.\33\
---------------------------------------------------------------------------

    \32\ Concept Release on Equity Market Structure, Securities
Exchange Act Release No. 61358 (Jan. 14, 2010), 75 FR 3594 (Jan. 21,
2010) (File No. S7-02-10). This Concept Release included data from
the third quarter of 2009 showing that no market center traded more
than 20% of the volume of listed stocks, further evidencing the
dispersal of and competition for trading activity. Id. at 3598. Data
available on ArcaVision show that from June 30, 2013 to June 30,
2014, no exchange traded more than 12% of the volume of listed
stocks by either trade or dollar volume, further evidencing the
continued dispersal of and fierce competition for trading activity.
See https://www.arcavision.com/Arcavision/arcalogin.jsp.
    \33\ Mary Jo White, Enhancing Our Equity Market Structure,
Sandler O'Neill & Partners, L.P. Global Exchange and Brokerage
Conference (June 5, 2014) (available on the Commission Web site),
citing Tuttle, Laura, 2014, ``OTC Trading: Description of Non-ATS
OTC Trading in National Market System Stocks,'' at 7-8.
---------------------------------------------------------------------------

    If an exchange succeeds in its competition for quotations, order
flow, and trade executions, then it earns trading revenues and
increases the value of its proprietary market data products because
they will contain greater quote and trade information. Conversely, if
an exchange is less successful in attracting quotes, order flow, and
trade executions, then its market data products may be less desirable
to customers using them in support of order routing and trading
decisions in light of the diminished content; data products offered by
competing venues may become correspondingly more attractive. Thus,
competition for quotations, order flow, and trade executions puts
significant pressure on an exchange to maintain both execution and data
fees at reasonable levels.
    In addition, in the case of products that are distributed through
market data vendors, such as Bloomberg and Thompson Reuters, the
vendors themselves provide additional price discipline for proprietary
data products because they control the primary means of access to
certain end users. These vendors impose price discipline based upon
their business models. For example, vendors that assess a surcharge on
data they sell are able to refuse to offer proprietary products that
their end users do not or will not purchase in sufficient numbers.
Vendors will not elect to make available the NYSE MKT products
described herein unless their customers request them, and customers
will not elect to pay the proposed increased fees for non-display uses
unless the non-display uses of these data products can provide value by
sufficiently increasing revenues or reducing costs in the customer's
business in a manner that will offset the fees. All of these factors
operate as constraints on pricing proprietary data products.
Joint Product Nature of Exchange Platform
    Transaction execution and proprietary data products are
complementary in that market data is both an input and a byproduct of
the execution service. In fact, proprietary market data and trade
executions are a paradigmatic example of joint products with joint
costs. The decision whether and on which platform to post an order will
depend on the attributes of the platforms where the order can be
posted, including the execution fees, data availability and quality,
and price and distribution of their data products. Without a platform
to post quotations, receive orders, and execute trades, exchange data
products would not exist.
    The costs of producing market data include not only the costs of
the data distribution infrastructure, but also the costs of designing,
maintaining, and operating the exchange's platform for posting quotes,
accepting orders, and executing transactions and the cost of regulating
the exchange to ensure its fair operation and maintain investor
confidence. The total return that a trading platform earns reflects the
revenues it receives from both products and the joint costs it incurs.
    Moreover, an exchange's broker-dealer customers generally view the
costs of transaction executions and market data as a unified cost of
doing business with the exchange. A broker-dealer will only choose to
direct orders to an exchange if the revenue from the transaction
exceeds its cost, including the cost of any market data that the
broker-dealer chooses to buy in support of its order routing and
trading decisions. If the costs of the transaction are not offset by
its value, then the broker-dealer may choose instead not to purchase
the product and trade away from that exchange. There is substantial
evidence of the strong correlation between order flow and market data
purchases. For example, in May 2014 more than 80% of the transaction
volume on each of NYSE, NYSE Arca, and NYSE MKT was executed by market
participants that purchased one or more proprietary market data
products. A super-competitive increase in the fees for either
executions or market data would create a risk of reducing an exchange's
revenues from both products.
    Other market participants have noted that proprietary market data
and trade executions are joint products of a joint platform and have
common costs.\34\ The Exchange agrees with and adopts those discussions
and the arguments therein. The Exchange also notes that the economics
literature confirms that there is no way to allocate common costs
between joint products that would shed any light on competitive or
efficient pricing.\35\
---------------------------------------------------------------------------

    \34\ See Securities Exchange Act Release No. 72153 (May 12,
2014), 79 FR 28575, 28578 n.15 (May 16, 2014) (SR-NASDAQ-2014-045)
(``[A]ll of the exchange's costs are incurred for the unified
purposes of attracting order flow, executing and/or routing orders,
and generating and selling data about market activity. The total
return that an exchange earns reflects the revenues it receives from
the joint products and the total costs of the joint products.'').
See also Securities Exchange Act Release No. 62907 (September 14,
2010), 75 FR 57314, 57317 (September 20, 2010) (SR-NASDAQ-2010-110),
and Securities Exchange Act Release No. 62908 (September 14, 2010),
75 FR 57321, 57324 (September 20, 2010) (SR-NASDAQ-2010-111).
    \35\ See generally Mark Hirschey, Fundamentals of Managerial
Economics, at 600 (2009) (``It is important to note, however, that
although it is possible to determine the separate marginal costs of
goods produced in variable proportions, it is impossible to
determine their individual average costs. This is because common
costs are expenses necessary for manufacture of a joint product.
Common costs of production--raw material and equipment costs,
management expenses, and other overhead--cannot be allocated to each
individual by-product on any economically sound basis. . . . Any
allocation of common costs is wrong and arbitrary.''). This is not
new economic theory. See, e.g., F. W. Taussig, ``A Contribution to
the Theory of Railway Rates,'' Quarterly Journal of Economics V(4)
438, 465 (July 1891) (``Yet, surely, the division is purely
arbitrary. These items of cost, in fact, are jointly incurred for
both sorts of traffic; and I cannot share the hope entertained by
the statistician of the Commission, Professor Henry C. Adams, that
we shall ever reach a mode of apportionment that will lead to
trustworthy results.'').
---------------------------------------------------------------------------

    Analyzing the cost of market data product production and
distribution in isolation from the cost of all of the inputs supporting
the creation of market data and market data products will inevitably
underestimate the cost of the data and data products because it is
impossible to obtain the data inputs to create market data products
without a fast, technologically robust, and well-regulated execution
system, and system and regulatory costs affect the price of both
obtaining the market data itself and creating and distributing market
data products. It would be equally misleading, however, to attribute
all of an exchange's costs to the market data portion of an exchange's
joint products. Rather, all of an exchange's costs are incurred for the
unified purposes of attracting order flow, executing and/or routing
orders, and generating and selling data about market activity. The
total return that an exchange earns reflects the revenues it receives
from the joint products and the total costs of the joint products.
    As noted above, the level of competition and contestability in the
market is evident in the numerous alternative venues that compete for
order flow, including 12 equities self-regulatory organization
(``SRO'') markets, as well as various forms of ATSs, including dark
pools and electronic communication networks (``ECNs''), and
internalizing broker-dealers. SRO markets compete to attract order flow
and produce transaction reports via trade executions, and two FINRA-
regulated Trade Reporting

Facilities compete to attract transaction reports from the non-SRO
venues.\36\
---------------------------------------------------------------------------

    \36\ FINRA's Alternative Display Facility also receives over-
the-counter trade reports that it sends to CTA.
---------------------------------------------------------------------------

    Competition among trading platforms can be expected to constrain
the aggregate return that each platform earns from the sale of its
joint products, but different trading platforms may choose from a range
of possible, and equally reasonable, pricing strategies as the means of
recovering total costs. For example, some platforms may choose to pay
rebates to attract orders, charge relatively low prices for market data
products (or provide market data products free of charge), and charge
relatively high prices for accessing posted liquidity. Other platforms
may choose a strategy of paying lower rebates (or no rebates) to
attract orders, setting relatively high prices for market data
products, and setting relatively low prices for accessing posted
liquidity. For example, BATS and Direct Edge, which previously operated
as ATSs and obtained exchange status in 2008 and 2010, respectively,
have provided certain market data at no charge on their Web sites in
order to attract more order flow, and use revenue rebates from
resulting additional executions to maintain low execution charges for
their users.\37\ Similarly, LavaFlow ECN provides market data to its
subscribers at no charge.\38\ In this environment, there is no economic
basis for regulating maximum prices for one of the joint products in an
industry in which suppliers face competitive constraints with regard to
the joint offering.\39\
---------------------------------------------------------------------------

    \37\ This is simply a securities market-specific example of the
well-established principle that in certain circumstances more sales
at lower margins can be more profitable than fewer sales at higher
margins; this example is additional evidence that market data is an
inherent part of a market's joint platform.
    \38\ See ``LavaFlow--ADF Migration,'' available at https://
www.lavatrading.com/news/pdf/
LavaFlowADFMigration.pdf.
    \39\ The Exchange notes that a small number of Category 3 non-
display data recipients could be using the market data strictly for
competitive purposes (e.g., other exchanges and ATSs) or for
business purposes unrelated to trading or investment (e.g., Internet
portals that wish to attract ``eyeballs'' to their pages primarily
generate advertising revenue for themselves). The Exchange does not
believe that the proposed fees will impose any unnecessary burden on
these competitors or other businesses.
---------------------------------------------------------------------------

Existence of Alternatives
    The large number of SROs, ATSs, and internalizing broker-dealers
that currently produce proprietary data or are currently capable of
producing it provides further pricing discipline for proprietary data
products. Each SRO, ATS, and broker-dealer is currently permitted to
produce and sell proprietary data products, and many currently do or
have announced plans to do so, including but not limited to the
Exchange, NYSE, NYSE Arca, NASDAQ OMX, BATS, and Direct Edge.
    The fact that proprietary data from ATSs, internalizing broker-
dealers, and vendors can bypass SROs is significant in two respects.
First, non-SROs can compete directly with SROs for the production and
sale of proprietary data products. By way of example, BATS and NYSE
Arca both published proprietary data on the Internet before registering
as exchanges. Second, because a single order or transaction report can
appear in an SRO proprietary product, a non-SRO proprietary product, or
both, the amount of data available via proprietary products is greater
in size than the actual number of orders and transaction reports that
exist in the marketplace. For example, with respect to NYSE MKT Trades
and NYSE MKT BBO, the data appears in both the real-time core data
offered by the SIPs for a fee and free SIP data that is offered on a
15-minute time delay. With respect to NYSE MKT Trades, NYSE MKT BBO,
NYSE MKT OpenBook, and NYSE MKT Order Imbalances, a close substitute
product is offered by several competitors.\40\ Because market data
users can find suitable substitutes for most proprietary market data
products, a market that overprices its market data products stands a
high risk that users may substitute another source of market data
information for its own.
---------------------------------------------------------------------------

    \40\ See supra notes 188-244 [sic]. With respect to order
imbalances, the Exchange further notes that other venues trade NYSE
listed securities before the Exchange's opening cross at 9:30 a.m.,
and therefore indicative price information is available through
these venues.
---------------------------------------------------------------------------

    Those competitive pressures imposed by available alternatives are
evident in the Exchange's proposed pricing. As noted above, the
proposed non-display fees are generally lower than the maximum non-
display fees charged by other exchanges such as NASDAQ, Phlx, and BX
for comparable products.\41\
---------------------------------------------------------------------------

    \41\ Id.
---------------------------------------------------------------------------

    In addition to the competition and price discipline described
above, the market for proprietary data products is also highly
contestable because market entry is rapid and inexpensive. The history
of electronic trading is replete with examples of entrants that swiftly
grew into some of the largest electronic trading platforms and
proprietary data producers: Archipelago, Bloomberg Tradebook, Island,
RediBook, Attain, TrackECN, BATS Trading and Direct Edge. As noted
above, BATS launched as an ATS in 2006 and became an exchange in 2008,
while Direct Edge began operations in 2007 and obtained exchange status
in 2010. As noted above, LavaFlow ECN provides market data to its
subscribers at no charge.\42\
---------------------------------------------------------------------------

    \42\ See supra note 38.
---------------------------------------------------------------------------

    In establishing the proposed fees, the Exchange considered the
competitiveness of the market for proprietary data and all of the
implications of that competition. The Exchange believes that it has
considered all relevant factors and has not considered irrelevant
factors in order to establish fair, reasonable, and not unreasonably
discriminatory fees and an equitable allocation of fees among all
users. The existence of numerous alternatives to the Exchange's
products, including proprietary data from other sources, ensures that
the Exchange cannot set unreasonable fees, or fees that are
unreasonably discriminatory, when vendors and subscribers can elect
these alternatives or choose not to purchase a specific proprietary
data product if the attendant fees are not justified by the returns
that any particular vendor or data recipient would achieve through the
purchase.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \43\ of the Act and subparagraph (f)(2) of Rule
19b-4 \44\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
---------------------------------------------------------------------------

    \43\ 15 U.S.C. 78s(b)(3)(A).
    \44\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \45\ of the Act to determine whether the proposed
rule

change should be approved or disapproved.
---------------------------------------------------------------------------

    \45\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEMKT-2014-72 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2014-72. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Section, 100 F Street
NE., Washington, DC 20549-1090, on official business days between the
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be
available for inspection and copying at the NYSE's principal office and
on its Internet Web site at www.nyse.com. All comments received will be
posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSEMKT-2014-72 and should be submitted
on or before October 6, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\46\
---------------------------------------------------------------------------

    \46\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-21866 Filed 9-12-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 83, Number 19 (Monday, January 29, 2018)]
[Notices]
[Pages 4081-4082]
[FR Doc No: 2018-01548]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32973; File No. 812-14810]

Northern Lights Fund Trust and Pacific Financial Group, LLC

January 23, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

-----------------------------------------------------------------------

    Notice of an application for an order under section 12(d)(1)(J) of
the Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 12(d)(1)(A), (B), and (C) of the Act and under sections 6(c)
and 17(b) of the Act for an exemption from sections 17(a)(1) and (2) of
the Act. The requested order would permit certain registered open-end
investment companies to acquire shares of certain registered open-end
investment companies, registered closed-end investment companies, and
business development companies, as defined in section 2(a)(48) of the
Act (``BDCs''), and registered unit investment trusts (collectively,
``Underlying Funds''), that are within and outside the same group of
investment companies as the acquiring investment companies, in excess
of the limits in section 12(d)(1) of the Act.
    Applicants: Northern Lights Fund Trust (the ``Trust''), a Delaware
statutory trust that is registered under the Act as an open-end
management investment company with multiple series, and Pacific
Financial Group, LLC (the ``Applying Manager''), a limited liability
company organized under the laws of the state of California that is
registered as an investment adviser under the Investment Advisers Act
of 1940.
    Filing Dates: The application was filed on August 14, 2017, and
amended on January 8, 2018.
    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 February 20, 2018 and should be accompanied by proof of
service on the applicants, in the form of an affidavit, or, for
lawyers, a certificate of service. Pursuant to Rule 0-5 under the Act,
hearing requests should state the nature of the writer's interest, any
facts bearing upon the desirability of a hearing on the matter, the
reason for the request, and the issues contested. Persons who wish to
be notified of a

hearing may request notification by writing to the Commission's
Secretary.

ADDRESSES:  Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE, Washington, DC 20549-1090. Applicants: Northern Lights Fund
Trust and Pacific Financial Group, LLC, c/o JoAnn Strasser, Esq.,
Thompson Hine LLP, 41 South High Street, Suite 1700, Columbus, OH
43215; and Richard Malinowski, Esq., Gemini Fund Services, 80 Arkay
Drive, Hauppauge, NY 11788.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at
(202) 551-6811, or Robert Shapiro, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's website by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling<PHONE_NUMBER>.

Summary of the Application

    1. Applicants request an order to permit (a) a Fund \1\ (each a
``Fund of Funds'') to acquire shares of Underlying Funds \2\ in excess
of the limits in sections 12(d)(1)(A) and (C) of the Act and (b) the
Underlying Funds that are registered open-end investment companies or
series thereof, their principal underwriters and any broker or dealer
registered under the Securities Exchange Act of 1934 to sell shares of
the Underlying Fund to the Fund of Funds in excess of the limits in
section 12(d)(1)(B) of the Act.\3\ Applicants also request an order of
exemption under sections 6(c) and 17(b) of the Act from the prohibition
on certain affiliated transactions in section 17(a) of the Act to the
extent necessary to permit the Underlying Funds to sell their shares
to, and redeem their shares from, the Funds of Funds.\4\ Applicants
state that such transactions will be consistent with the policies of
each Fund of Funds and each Underlying Fund and with the general
purposes of the Act and will be based on the net asset values of the
Underlying Funds.
---------------------------------------------------------------------------

    \1\ Applicants request that the order apply to each existing and
future series of the Trust and to each existing and future
registered open-end investment company or series thereof that is
advised by the Applying Manager or its successor-in-interest or by
any other investment adviser controlling, controlled by or under
common control with the Applying Manager or its successor and is
part of the same ``group of investment companies'' as the Trust
(each, a ``Fund''). For purposes of the requested order,
``successor-in-interest'' is limited to an entity that results from
a reorganization into another jurisdiction or a change in the type
of business organization. For purposes of the request for relief,
the term ``group of investment companies'' means any two or more
registered investment companies, including closed-end investment
companies or BDCs, that hold themselves out to investors as related
companies for purposes of investment and investor services.
    \2\ Certain of the Underlying Funds have obtained exemptions
from the Commission necessary to permit their shares to be listed
and traded on a national securities exchange at negotiated prices
and, accordingly, to operate as an exchange-traded fund (``ETF'').
    \3\ Applicants do not request relief for the Funds of Funds to
invest in reliance on the order in BDCs and registered closed-end
investment companies that are not listed and traded on a national
securities exchange.
    \4\ A Fund of Funds generally would purchase and sell shares of
an Underlying Fund that operates as an ETF through secondary market
transactions rather than through principal transactions with the
Underlying Fund. Applicants nevertheless request relief from section
17(a)(1) and (2) to permit each Fund of Funds that is an affiliated
person, or an affiliated person of an affiliated person, as defined
in section 2(a)(3) of the Act, of an ETF, to sell shares to or
redeem shares from the ETF. Applicants are not seeking relief from
Section 17(a) for, and the requested relief will not apply to,
transactions where an ETF could be deemed an affiliated person, or
an affiliated person of an affiliated person, of a Fund of Funds
because an investment adviser to the ETF or an entity controlling,
controlled by or under common control with the investment adviser to
the ETF, is also an investment adviser to the Fund of Funds. A Fund
of Funds will purchase and sell shares of an Underlying Fund that is
a closed-end fund or BDC through secondary market transactions at
market prices rather than through principal transactions with the
closed-end fund or BDC. Accordingly, applicants are not requesting
section 17(a) relief with respect to transactions in shares of
closed-end funds (including BDCs).
---------------------------------------------------------------------------

    2. Applicants agree that any order granting the requested relief
will be subject to the terms and conditions stated in the application.
Such terms and conditions are designed to, among other things, help
prevent any potential (i) undue influence over an Underlying Fund that
is not in the same ``group of investment companies'' as the Fund of
Funds through control or voting power, or in connection with certain
services, transactions, and underwritings, (ii) excessive layering of
fees, and (iii) overly complex fund structures, which are the concerns
underlying the limits in sections 12(d)(1)(A), (B), and (C) of the Act.
    3. 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. Section 17(b) of the Act authorizes the
Commission to grant an order permitting a transaction otherwise
prohibited by section 17(a) if it finds that (a) the terms of the
proposed transaction are fair and reasonable and do not involve
overreaching on the part of any person concerned; (b) the proposed
transaction is consistent with the policies of each registered
investment company involved; and (c) the proposed transaction is
consistent with the general purposes of the Act. Section 6(c) of the
Act permits the Commission to exempt any persons or transactions from
any provision of the Act if such exemption is necessary or appropriate
in the public interest and consistent with the protection of investors
and the purposes fairly intended by the policy and provisions of the
Act.

    For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-01548 Filed 1-26-18; 8:45 am]
 BILLING CODE 8011-01-P


 [Federal Register: August 26, 2008 (Volume 73, Number 166)] [ Notices]                [Page 50314-50315] [DOCID:fr26au08-48]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 13190-000]

  Ceresco Power and Light; Notice of Application for Preliminary

Permit Accepted for Filing and Soliciting Comments, Motions to

Intervene, and Protests

August 19, 2008.

    On April 18, 2008, Ceresco Power and Light filed an application,

pursuant to section 4(f) of the Federal Power Act (FPA), to study the

feasibility of Ceresco Hydroelectric Project. The proposed project

would be located on the Kalamazoo River in Calhoun County, Michigan.

The existing Ceresco Dam is owned by the applicant. No lands of the

United States are within the proposed project boundary.

    The proposed project using the existing Ceresco Dam would consist

of: (1) A proposed powerhouse, containing four turbine-generator units,

switchgears, circuit breakers, transformers, and a control panel; (2) a

proposed service building; and (3) appurtenant facilities. The proposed

project would have a total installed capacity of 800 kilowatts and an

average annual generation of 2.6 gigawatt-hours, to be sold to a local

utility, Consumers Energy, or the City of Battle Creek, MI.

    Applicant Contact: William Morris, 544 West Columbia Avenue, Suite

B,

Battle Creek, MI 49015,<PHONE_NUMBER> ext. 105.

    FERC Contact: Jake Tung,<PHONE_NUMBER>.

    Deadline for filing comments, motions to intervene, competing

applications (without notices of intent), or notices of intent to file

competing applications: 60 days from the issuance of this notice.

Comments, motions to intervene, notices of intent, and competing

applications may be filed electronically via the Internet. See 18 CFR

385.2001(a)(1)(iii) and the instructions on the Commission's Web site

under the ``e-Filing'' link. If unable to be filed electronically,

documents may be paper-filed. To paper-file, an original and eight

copies should be mailed to: Kimberly D. Bose, Secretary, Federal Energy

Regulatory Commission, 888 First Street, NE., Washington, DC 20426. For

more information on how to submit these types of filings please go to

the Commission's Web site located at http://www.ferc.gov/filing-

comments.asp. More information about this project can be viewed or

printed on the ``eLibrary'' link of the Commission's Web site at http:/

/www.ferc.gov/docs-filing/elibrary.asp. Enter the docket number (P-

13190) in the docket number field to access the document. For

assistance, call toll-free 1-866-208-3372.

Kimberly D. Bose,

Secretary.

 [FR Doc. E8-19685 Filed 8-25-08; 8:45 am]

BILLING CODE 6717-01-P


[Federal Register Volume 78, Number 145 (Monday, July 29, 2013)]
[Notices]
[Pages 45545-45547]
[FR Doc No: 2013-18068]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

[USCG-2013-0045]

Collection of Information under Review by Office of Management
and Budget

AGENCY: Coast Guard, DHS.

ACTION: Thirty-day notice requesting comments.

-----------------------------------------------------------------------

SUMMARY: In compliance with the Paperwork Reduction Act of 1995 the
U.S. Coast Guard is forwarding an Information Collection Request (ICR),
abstracted below, to the Office of Management and Budget (OMB), Office
of Information and Regulatory Affairs (OIRA), requesting a revision of
a currently approved collection of information:
    1625-0087; U.S. Coast Guard International Ice Patrol (IIP) Customer
Survey. Our ICR describes the information we seek to collect from the
public. Review and comments by OIRA ensure we only impose paperwork
burdens commensurate with our performance of duties.

DATES: Comments must reach the Coast Guard and OIRA on or before August
28, 2013.

ADDRESSES: You may submit comments identified by Coast Guard docket
number [USCG-2013-0045] to the Docket Management Facility (DMF) at the
U.S. Department of Transportation (DOT) and/or to OIRA. To avoid
duplicate submissions, please use only one of the following means:
    (1) Online: (a) To Coast Guard docket at http://www.regulations.gov. (b) To OIRA by email via<EMAIL_ADDRESS>.
    (2) Mail: (a) DMF (M-30), DOT, West Building Ground Floor, Room
W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001. (b) To
OIRA, 725 17th Street NW., Washington, DC 20503, attention Desk Officer
for the Coast Guard.
    (3) Hand Delivery: To DMF address above, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. The telephone number is
202-366-9329.
    (4) Fax: (a) To DMF,<PHONE_NUMBER>. (b) To OIRA at<PHONE_NUMBER>. To
ensure your comments are received in a timely manner, mark the fax,
attention Desk Officer for the Coast Guard.
    The DMF maintains the public docket for this Notice. Comments and
material received from the public, as well as documents mentioned in
this Notice as being available in the docket, will become part of the
docket and will be available for inspection or copying at room W12-140
on the West Building Ground Floor, 1200 New Jersey Avenue SE.,
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays. You may also find the docket on the Internet
at http://www.regulations.gov.
    A copy of the ICR is available through the docket on the Internet
at http://www.regulations.gov. Additionally, copies are available from:
Commandant (CG-612), ATTN: Paperwork Reduction Act Manager, US Coast
Guard, 2703 Martin Luther King Jr Avenue SE., STOP 7710, Washington DC
20593-7710.

FOR FURTHER INFORMATION CONTACT: Mr. Anthony Smith, Office of
Information Management, telephone<PHONE_NUMBER> or fax<PHONE_NUMBER>, for
questions on these documents. Contact Ms. Barbara Hairston, Program
Manager, Docket Operations,<PHONE_NUMBER>, for questions on the docket.

SUPPLEMENTARY INFORMATION:

Public Participation and Request for Comments

    This Notice relies on the authority of the Paperwork Reduction Act
of 1995; 44 U.S.C. Chapter 35, as amended. An ICR is an application to
OIRA seeking the approval, extension, or renewal of a Coast Guard
collection of information (Collection). The ICR contains information
describing the Collection's purpose, the Collection's likely burden on
the affected public, an explanation of the necessity of the Collection,
and other important information describing the Collection. There is one
ICR for each Collection.
    The Coast Guard invites comments on whether this ICR should be
granted based on the Collection being necessary for the proper
performance of Departmental functions. In particular, the Coast Guard
would appreciate comments addressing: (1) The practical utility of the
Collection; (2) the accuracy of the estimated burden of the Collection;
(3) ways to enhance the quality, utility, and clarity of information
subject to the Collection; and (4) ways to minimize the burden of the
Collection on respondents, including the use of automated collection
techniques or other forms of information technology. These comments
will help OIRA determine whether to approve the ICR referred to in this
Notice.
    We encourage you to respond to this request by submitting comments
and related materials. Comments to Coast Guard or OIRA must contain the
OMB Control Number of the ICR. They must also contain the docket number
of this request, [USCG 2013-0045], and must be received by August 28,
2013. We will post all comments received, without change, to http://www.regulations.gov. They will include any personal information you
provide. We have an agreement with DOT to use their DMF. Please see the
``Privacy Act'' paragraph below.

Submitting Comments

    If you submit a comment, please include the docket number [USCG-
2013-0045], indicate the specific section of the document to which each
comment applies, providing a reason for each comment. You may submit
your comments and material online (via http://www.regulations.gov), by
fax, mail, or hand delivery, but please use only one of these means. If
you submit a comment online via www.regulations.gov, it will be
considered received by the Coast Guard when you successfully transmit
the comment. If you fax, hand deliver, or mail your comment, it will be
considered as having been received by the Coast Guard when it is
received at the DMF. We recommend you include your name, mailing
address, an email address, or other contact information in the body of
your document so that we can contact you if we have questions regarding
your submission.
    You may submit comments and material by electronic means, mail,
fax, or delivery to the DMF at the address under ADDRESSES, but please
submit them by only one means. To submit your comment online, go to
http://www.regulations.gov, and type ``USCG-2013-0045'' in the
``Keyword'' box. If you submit your comments by mail or hand delivery,
submit them in an unbound format, no larger than 8[frac12] by 11
inches, suitable for copying and electronic filing. If you submit
comments by mail and would like to know that they reached the Facility,
please enclose a stamped, self-addressed postcard or envelope. We will
consider all comments and material received during the comment period
and will address them accordingly.

Viewing Comments and Documents

    To view comments, as well as documents mentioned in this Notice as
being available in the docket, go to http://www.regulations.gov, click
on the ``read comments'' box, which will then become highlighted in
blue. In the ``Keyword'' box insert ``USCG-2013-0045'' and click
``Search.'' Click the ``Open Docket Folder'' in the ``Actions'' column.
You may also visit the DMF in Room W12-140 on the ground floor of the
DOT West Building, 1200 New Jersey Avenue SE., Washington, DC 20590,
between 9 a.m. and 5 p.m., Monday through Friday, except Federal
holidays.
    OIRA posts its decisions on ICRs online at http://www.reginfo.gov/public/do/PRAMain after the comment period for each ICR. An OMB Notice
of Action on each ICR will become available via a hyperlink in the OMB
Control Number: 1625-0087.

Privacy Act

    Anyone can search the electronic form of comments received in
dockets by the name of the individual submitting the comment (or
signing the comment, if submitted on behalf of an association,
business, labor union, etc.). You may review a Privacy Act statement
regarding Coast Guard public dockets in the January 17, 2008, issue of
the Federal Register (73 FR 3316).

Previous Request for Comments

    This request provides a 30-day comment period required by OIRA. The
Coast Guard published the 60-day notice (78 FR 19503, April 1, 2013)
required by 44 U.S.C. 3506(c)(2). That Notice elicited no comments.

Information Collection Requests.

    Title: U.S. Coast Guard International Ice Patrol (IIP) Customer
Survey.
    OMB Control Number: 1625-0087.
    Type of Request: Revision of a currently approved collection.
    Respondents: Owners and operators of vessels transiting the North
Atlantic.
    Abstract: Customer satisfaction surveys are required by Executive
Order 12862. The U.S. Coast Guard will use the information obtained
from direct customers to measure satisfaction with current services and
determine whether additional services are requested.
    Forms: CG-16700.
    Burden Estimate: The estimated annual burden is estimated to be 120
hours.

    July 23, 2013.
R. E. Day,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Command,
Control, Communications, Computers and Information Technology.
[FR Doc. 2013-18068 Filed 7-26-13; 8:45 am]
BILLING CODE 9110-04-P


[Federal Register Volume 81, Number 82 (Thursday, April 28, 2016)]
[Rules and Regulations]
[Page 25326]
[FR Doc No: 2016-09699]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2015-3773; Airspace Docket No. 15-ANM-22]

Amendment of Class E Airspace; Deer Lodge MT

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Final rule, correction.

-----------------------------------------------------------------------

SUMMARY: This action corrects a final rule published in the Federal
Register of March 29, 2016, amending Class E airspace extending upward
from 700 feet above the surface at Deer Lodge-City-County Airport, Deer
Lodge, MT. The FAA identified that the Class E airspace area extending
upward from 1,200 feet above the surface was omitted from the Class E
airspace description for the airport.

DATES: Effective 0901 UTC, May 26, 2016. The Director of the Federal
Register approves this incorporation by reference action under Title 1,
Code of Federal Regulations, part 51, subject to the annual revision of
FAA Order 7400.9 and publication of conforming amendments.

FOR FURTHER INFORMATION CONTACT: Richard Roberts, Operations Support
Group, Western Service Center, Federal Aviation Administration, P.O.
Box 20636, Atlanta, Georgia 30320; telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

History

    The FAA published a final rule in the Federal Register amending
Class E Airspace extending upward from 700 feet above the surface at
Deer Lodge-City-County Airport, Deer Lodge, MT. (81 FR 17377, March 29,
2016) Docket No. FAA-2015-3773. Subsequent to publication, the
Aeronautical Information Services branch identified that the Class E
airspace extending upward from 1,200 feet above the surface was
inadvertently left out of the regulatory text describing the boundary
for the airport. This action reestablishes the airspace extending
upward from 1,200 feet above the surface as part of that description.
    Class E airspace designations are published in paragraph 6005, of
FAA Order 7400.9Z, dated August 6, 2015, and effective September 15,
2015, which is incorporated by reference in 14 CFR 71.1. The Class E
airspace designations listed in this document will be published
subsequently in the Order.

Availability and Summary of Documents for Incorporation by Reference

    This document amends FAA Order 7400.9Z, Airspace Designations and
Reporting Points, dated August 6, 2015, and effective September 15,
2015. Availability information for FAA Order 7400.9Z can be found in
the original final rule (81 FR 17377, March 29, 2016). FAA Order
7400.9Z lists Class A, B, C, D, and E airspace areas, air traffic
service routes, and reporting points.

Correction to Final Rule

    Accordingly, pursuant to the authority delegated to me, in the
Federal Register of March 29, 2016 (81 FR 17377) FR Doc. 2016-06934,
Amendment of Class E Airspace; Deer Lodge, MT, is corrected as follows:

Sec.  71.1  [Amended]

ANM MT E5 Deer Lodge, MT [Corrected]

    On page 17378, column 3, after line 48, add the following text:

    ``That airspace extending upward from 1,200 feet above the
surface bounded by a line beginning at lat. 46[deg]41'00'' N., long.
114[deg]08'00'' W.; to lat. 47[deg]03'00'' N., long. 113[deg]33'00''
W.; to lat. 46[deg]28'00'' N., long. 112[deg]15'00'' W.; to lat.
45[deg]41'00'' N., long. 112[deg]13'00'' W.; to lat. 45[deg]44'00''
N., long. 113[deg]03'00'' W.; thence to the point of origin.''

    Issued in Seattle, Washington, on_April 18, 2016.
Tracey Johnson,
Manager, Operations Support Group, Western Service Center.
[FR Doc. 2016-09699 Filed 4-27-16; 8:45 am]
 BILLING CODE 4910-13-P


[Federal Register Volume 77, Number 154 (Thursday, August 9, 2012)]
[Notices]
[Page 47628]
[FR Doc No: 2012-19507]

-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[P-13123-002-CA]

Eagle Mountain Pumped Storage Hydroelectric Project; Eagle Crest
Energy; Notice of Meeting Postponement

    On July 17, 2012, the Commission issued a ``NOTICE OF MEETING WITH
THE BUREAU OF LAND MANAGEMENT''. That meeting was scheduled to occur on
Wednesday, August 15, 2012, at 9 a.m. (Pacific Time), and on Thursday,
August 16, 2012, at 9 a.m. (if needed). The purpose of the meeting is
to provide Commission staff and the staff of the Bureau of Land
Management an opportunity to improve agency coordination and discuss
the agencies' overlapping jurisdictions (pursuant to the Federal Land
Policy and Management Act and the Federal Power Act), on the Eagle
Mountain Pumped Storage Hydroelectric Project. However, the meeting has
been postponed.
    Notice of the date, time, and location of the meeting will be
provided in a future notice upon the meeting's rescheduling. Any
questions regarding this notice should be directed to Kenneth Hogan at:
(202) 502-8434, or via email at<EMAIL_ADDRESS>
    Dated: August 3, 2012.
Kimberly D. Bose,
Secretary.
[FR Doc. 2012-19507 Filed 8-8-12; 8:45 am]
BILLING CODE 6717-01-P