[Federal Register Volume 81, Number 95 (Tuesday, May 17, 2016)]
[Notices]
[Pages 30585-30589]
[FR Doc No: 2016-11534]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32113; File No. 812-14561]

TCW Alternative Funds, et al.; Notice of Application

May 11, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order pursuant to: (a) Section
6(c) of the Investment Company Act of 1940 (``Act'') granting an
exemption from sections 18(f) and 21(b) of the Act; (b) section
12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of
the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption
from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d)
section 17(d) of the Act and rule 17d-1 under the Act to permit certain
joint arrangements and transactions.

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    Summary of the Application: Applicants request an order that would
permit certain registered open-end management investment companies to
participate in a joint lending and borrowing facility.
    Applicants: TCW Alternative Funds and Metropolitan West Funds (each
a ``Trust'' and collectively the ``Trusts''), TCW Funds, Inc. (the
``Corporation''); TCW Investment Management Company (``TCWIMC'') and
Metropolitan West Asset Management, LLC (``MWAM'') (each, an
``Adviser,'' and such entities together, the ``Advisers'').
    Filing Dates: The application was filed on October 5, 2015, and
amended on January 28, 2016 and May 10, 2016.
    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 June 6, 2016, 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: 865 S. Figueroa
Street, Suite 1800, Los Angeles, CA 90017.

FOR FURTHER INFORMATION CONTACT: Mark N. Zaruba, Senior Counsel, at
(202) 551-6878 or Mary Kay Frech, 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 Web site by searching for the file number, or an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling<PHONE_NUMBER>.

Applicants' Representations

    1. Each Trust is organized as a Delaware statutory trust and is
registered under the Act as an open-end management investment company.
The Corporation is a Maryland corporation and is registered as an open-
end management investment company. Each Trust and the Corporation has
issued one or more series, each of which has its own investment
objective and its own investment policies.\1\ TCWIMC is a California
corporation and MWAM is a California limited liability company, and
each of TCWIMC and MWAM is registered as an investment adviser under
the Investment Advisers Act of 1940 (``Advisers Act''). Both are
wholly-owned subsidiaries (direct or indirect) of the TCW Group, Inc.,
which, in turn, is owned indirectly by two investment funds that are
controlled by The Carlyle Group, L.P. In the future, the Advisers may
advise Funds that are money market funds that comply with rule 2a-7
under the Act (collectively, the ``Money Market Funds'').\2\
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    \1\ Applicants request that the order apply to any registered
open-end management investment company or series thereof for which
TCWIMC, MWAM or any successor thereto or an investment adviser
controlling, controlled by, or under common control (within the
meaning of section 2(a)(9) of the Act) with TCWIMC or MWAM or any
successor thereto serves as investment adviser (each a ``Fund'' and
collectively the ``Funds'' or each such investment adviser an
``Adviser''). For purposes of the requested order, ``successor'' is
limited to any entity that results from a reorganization into
another jurisdiction or a change in the type of a business
organization.
    \2\ All Funds that currently intend to rely on the requested
order have been named as applicants. Any other Fund that relies on
the requested order in the future will comply with the terms and
conditions of the application.
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    2. The Funds may lend cash to banks or other entities by entering
into repurchase agreements or purchasing short-term instruments. The
Funds may also need to borrow money for temporary purposes. In order to
meet an unexpected volume of redemptions or to cover unanticipated cash
shortfalls, the Metropolitan West Funds have contracted for a revolving
credit facility with the Bank of New York Mellon Corporation, and other
lenders that may be added in the future to the lending syndicate
(``Bank Borrowing''). The TCW Alternative Funds and TCW Funds, Inc. may
in the future join this credit facility or enter into other
arrangements with other bank lenders (each also a ``Bank Borrowing'').
The amount of borrowing under each of these lines of credit is limited
to the amount specified by fundamental investment restrictions, the
terms specified in the agreements, and/or other policies of the
applicable Fund and section 18 of the Act.
    3. If Funds that experience a cash shortfall were to draw down on
their Bank Borrowing, they would pay interest at a rate that is likely
to be higher than the rate that could be earned by non-borrowing Funds
on investments in repurchase agreements and other short-term money
market instruments of the same maturity as the Bank Borrowing (``Short-
Term Instruments''). Applicants assert the difference between the
higher rate paid on Bank Borrowing and what the bank pays to borrow
under repurchase agreements or other arrangements represents the bank's
profit for serving as the middleperson between a borrower and lender
and is not attributable to any material difference in the credit
quality or risk of such transactions.
    4. The Funds seek to enter into master interfund lending agreements
with each other (the ``InterFund Program'') that would permit each Fund
whose policies permit it to do so to lend money directly to and borrow
money directly from other Funds for temporary purposes through the
InterFund Program (an ``Interfund Loan''). The Money Market Funds will
not participate as borrowers. Applicants state that the requested will
relief enable the Funds to access an available source of money and
reduce costs incurred by the Funds that need to obtain loans for
temporary purposes and permit those Funds that have cash

available: (i) To earn a return on the money that they might not
otherwise be able to invest; or (ii) to earn a higher rate of interest
on investment of their short-term balances. Although the proposed
InterFund Program would reduce the Funds' need to borrow from banks or
through custodian drafts, the Funds would be free to establish and/or
continue committed lines of credit or other borrowing arrangements with
banks.
    5. Applicants anticipate that the proposed InterFund Program would
provide a borrowing Fund with significant savings at times when the
cash position of the Fund is insufficient to meet temporary cash
requirements. This situation could arise when shareholder redemptions
exceed anticipated cash volumes and certain Funds have insufficient
cash on hand to satisfy such redemptions. When the Funds liquidate
portfolio securities to meet redemption requests, they often do not
receive payment in settlement for up to three days (or longer for
certain foreign transactions). However, redemption requests normally
are effected on the day following the trade date. The proposed
InterFund Program would provide a source of immediate, short-term
liquidity pending settlement of the sale of portfolio securities.
    6. Applicants also anticipate that a Fund could use the InterFund
Program when a sale of securities ``fails'' due to circumstances beyond
the Fund's control, such as a delay in the delivery of cash to the
Fund's custodian or improper delivery instructions by the broker
effecting the transaction. ``Sales fails'' may present a cash shortfall
if the Fund has undertaken to purchase a security using the proceeds
from securities sold. Alternatively, the Fund could: (i) ``Fail'' on
its intended purchase due to lack of funds from the previous sale,
resulting in additional cost to the Fund; or (ii) sell a security on a
same-day settlement basis, earning a lower return on the investment.
Use of the InterFund Program under these circumstances would enable the
Fund to have access to immediate short-term liquidity.
    7. While Bank Borrowing and/or custodian overdrafts generally could
supply Funds with needed cash to cover unanticipated redemptions and
sales fails, under the proposed InterFund Program, a borrowing Fund
would pay lower interest rates than those that would be payable under
short-term loans offered by banks or custodian overdrafts. In addition,
Funds making short-term cash loans directly to other Funds would earn
interest at a rate higher than they otherwise could obtain from
investing their cash in Short-Term Instruments. Thus, applicants assert
that the proposed InterFund Program would benefit both borrowing and
lending Funds.
    8. The interest rate to be charged to the Funds on any Interfund
Loan (the ``Interfund Loan Rate'') would be the average of the ``Repo
Rate'' and the ``Bank Loan Rate,'' both as defined below. The Repo Rate
would be the highest current overnight repurchase agreement rate
available to a lending Fund. The Bank Loan Rate for any day would be
calculated by the InterFund Program Team, as defined below, on each day
an Interfund Loan is made according to a formula established by each
Fund's board of trustees (the ``Board'') intended to approximate the
lowest interest rate at which a bank short-term loan would be available
to the Fund. The formula would be based upon a publicly available rate
(e.g., Federal funds rate and/or LIBOR) plus an additional spread of
basis points and would vary with this rate so as to reflect changing
bank loan rates. The initial formula and any subsequent modifications
to the formula would be subject to the approval of each Fund's Board.
In addition, the Board of each Fund would periodically review the
continuing appropriateness of reliance on the formula used to determine
the Bank Loan Rate, as well as the relationship between the Bank Loan
Rate and current bank loan rates that would be available to the Fund.
    9. Certain members of the Advisers' administration personnel (other
than investment advisory personnel) (the ``InterFund Program Team'')
would administer the InterFund Program. No portfolio manager of any
Fund will serve as a member of the InterFund Program Team. Under the
proposed InterFund Program, the portfolio managers for each
participating Fund could provide standing instructions to participate
daily as a borrower or lender. The InterFund Program Team on each
business day would collect data on the uninvested cash and borrowing
requirements of all participating Funds. Once the InterFund Program
Team has determined the aggregate amount of cash available for loans
and borrowing demand, the InterFund Program Team will allocate loans
among borrowing Funds without any further communication from the
portfolio managers of the Funds. Applicants anticipate that there
typically will be far more available uninvested cash each day than
borrowing demand. Therefore, after the InterFund Program Team has
allocated cash for Interfund Loans, the InterFund Program Team will
invest any remaining cash in accordance with the standing instructions
of the relevant portfolio manager or such remaining amounts will be
invested directly by the portfolio managers of the Funds.
    10. The InterFund Program Team would allocate borrowing demand and
cash available for lending among the Funds on what the InterFund
Program Team believes to be an equitable basis, subject to certain
administrative procedures applicable to all Funds, such as the time of
filing requests to participate, minimum loan lot sizes, and the need to
minimize the number of transactions and associated administrative
costs. To reduce transaction costs, each Interfund Loan normally would
be allocated in a manner intended to minimize the number of
participants necessary to complete the loan transaction. The method of
allocation and related administrative procedures would be approved by
the Board of each of the Funds, including a majority of the Board
members who are not ``interested persons,'' as defined in section
2(a)(19) of the Act (``Independent Board Members''), to ensure that
both borrowing and lending Funds participate on an equitable basis.
    11. The InterFund Program Team, on behalf of the Advisers. would:
(a) Monitor the Interfund Loan Rate and the other terms and conditions
of the Interfund Loans; (b) limit the borrowings and loans entered into
by each Fund to ensure that they comply with the Fund's investment
policies and limitations; (c) implement and follow procedures designed
to ensure equitable treatment of each Fund; and (d) make quarterly
reports to the Board of each Fund concerning any transactions by the
applicable Fund under the InterFund Program and the Interfund Loan
Rate.
    12. The Advisers, through the InterFund Program Team, would
administer the InterFund Program as disinterested fiduciaries as part
of their duties under the investment management and administrative
agreements with each Fund and would receive no additional fee as
compensation for its services in connection with the administration of
the InterFund Program.
    13. No Fund may participate in the InterFund Program unless: (a)
The Fund has obtained shareholder approval for its participation, if
such approval is required by law; (b) the Fund has fully disclosed all
material information concerning the InterFund Program in its
registration statement on Form N-1A; and (c) the Fund's participation
in the InterFund Program is consistent with its

investment objectives, limitations and organizational documents.
    14. As part of the Board's review of the continuing appropriateness
of a Fund's participation in the proposed credit facility as required
by condition 14, the Board of the Fund, including a majority of the
Independent Board Members, also will review the process in place to
appropriately assess: (i) If the Fund participates as a lender, any
effect its participation may have on the Fund's liquidity risk; and
(ii) if the Fund participates as a borrower, whether the Fund's
portfolio liquidity is sufficient to satisfy its obligations under the
facility along with its other liquidity needs.
    15. In connection with the InterFund Program, applicants request an
order under section 6(c) of the Act exempting them from the provisions
of sections 18(f) and 21(b) of the Act; under section 12(d)(1)(J) of
the Act exempting them from section 12(d)(1) of the Act; under sections
6(c) and 17(b) of the Act exempting them from sections 17(a)(1),
17(a)(2), and 17(a)(3) of the Act; and under section 17(d) of the Act
and rule 17d-1 under the Act to permit certain joint arrangements and
transactions.

Applicants' Legal Analysis

    1. Section 17(a)(3) of the Act generally prohibits any affiliated
person of a registered investment company, or affiliated person of an
affiliated person, from borrowing money or other property from the
registered investment company. Section 21(b) of the Act generally
prohibits any registered management company from lending money or other
property to any person, directly or indirectly, if that person controls
or is under common control with that company. Section 2(a)(3)(C) of the
Act defines an ``affiliated person'' of another person, in part, to be
any person directly or indirectly controlling, controlled by, or under
common control with, such other person. Section 2(a)(9) of the Act
defines ``control'' as the ``power to exercise a controlling influence
over the management or policies of a company,'' but excludes
circumstances in which ``such power is solely the result of an official
position with such company.'' Applicants state that the Funds may be
under common control by virtue of having common investment advisers
and/or by having common trustees, directors, managers and/or officers.
    2. Section 6(c) of the Act provides that an exemptive order may be
granted where an exemption is necessary or appropriate in the public
interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Section 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) provided that the terms of the
transaction, including the consideration to be paid or received, are
fair and reasonable and do not involve overreaching on the part of any
person concerned, and the transaction is consistent with the policy of
the investment company as recited in its registration statement and
with the general purposes of the Act. Applicants believe that the
proposed arrangements satisfy these standards for the reasons discussed
below.
    3. Applicants assert that sections 17(a)(3) and 21(b) of the Act
were intended to prevent a party with strong potential adverse
interests to, and some influence over the investment decisions of, a
registered investment company from causing or inducing the investment
company to engage in lending transactions that unfairly inure to the
benefit of such party and that are detrimental to the best interests of
the investment company and its shareholders. Applicants assert that the
proposed transactions do not raise these concerns because: (a) The
Advisers, through the InterFund Program Team members, would administer
the InterFund Program as disinterested fiduciaries as part of their
duties under the investment management and administrative agreements
with each Fund; (b) all Interfund Loans would consist only of
uninvested cash reserves that the Fund otherwise would invest in short-
term repurchase agreements or other short-term investments; (c) the
Interfund Loans would not involve a greater risk than such other
investments; (d) the lending Fund would receive interest at a rate
higher than it could otherwise obtain through such other investments;
and (e) the borrowing Fund would pay interest at a rate lower than
otherwise available to it under its bank loan agreements or through
custodian overdrafts and avoid the commitment fees associated with
lines of credit. Moreover, applicants assert that the other terms and
conditions that applicants propose also would effectively preclude the
possibility of any Fund obtaining an undue advantage over any other
Fund.
    4. Section 17(a)(1) of the Act generally prohibits an affiliated
person of a registered investment company, or any affiliated person of
such a person, from selling securities or other property to the
investment company. Section 17(a)(2) of the Act generally prohibits an
affiliated person of a registered investment company, or any affiliated
person of such a person, from purchasing securities or other property
from the investment company. Section 12(d)(1) of the Act generally
prohibits a registered investment company from purchasing or otherwise
acquiring any security issued by any other investment company except in
accordance with the limitations set forth in that section.
    5. Applicants state that the obligation of a borrowing Fund to
repay an Interfund Loan could be deemed to constitute a security for
the purposes of sections 17(a)(1) and 12(d)(1). Applicants also state
that any pledge of securities to secure an Interfund Loan by the
borrowing Fund to the lending Fund could constitute a purchase of
securities for purposes of section 17(a)(2) of the Act. Section
12(d)(1)(J) of the Act provides that the Commission may exempt persons
or transactions from any provision of section 12(d)(1) if and to the
extent that such exemption is consistent with the public interest and
the protection of investors. Applicants contend that the standards
under sections 6(c), 17(b), and 12(d)(1)(J) are satisfied for all the
reasons set forth above in support of their request for relief from
sections 17(a)(3) and 21(b) and for the reasons discussed below.
Applicants state that the requested relief from section 17(a)(2) of the
Act meets the standards of section 6(c) and 17(b) because any
collateral pledged to secure an Interfund Loan would be subject to the
same conditions imposed by any other lender to a Fund that imposes
conditions on the quality of or access to collateral for a borrowing
(if the lender is another Fund) or the same or better conditions (in
any other circumstance).
    6. Applicants state that section 12(d)(1) was intended to prevent
the pyramiding of investment companies in order to avoid imposing on
investors additional and duplicative costs and fees attendant upon
multiple layers of investment companies. Applicants submit that the
proposed InterFund Program does not involve these abuses. Applicants
note that there will be no duplicative costs or fees to the Funds or
their shareholders, and that each Adviser will receive no additional
compensation for its services in administering the InterFund Program.
Applicants also note that the purpose of the proposed InterFund Program
is to provide economic benefits for all the participating Funds and
their shareholders. Section 18(f)(1) of the Act prohibits open-end
investment companies from issuing any senior security except that a
company is permitted to borrow from any bank, provided, that
immediately after the borrowing, there is asset coverage of at

least 300 per centum for all borrowings of the company. Under section
18(g) of the Act, the term ``senior security'' generally includes any
bond, debenture, note or similar obligation or instrument constituting
a security and evidencing indebtedness. Applicants request exemptive
relief under section 6(c) from section 18(f)(1) to the limited extent
necessary to implement the InterFund Program (because the lending Funds
are not banks).
    7. Applicants believe that granting relief under section 6(c) is
appropriate because the Funds would remain subject to the requirement
of section 18(f)(1) that all borrowings of a Fund, including combined
Interfund Loans and bank borrowings, have at least 300% asset coverage.
Based on the conditions and safeguards described in the application,
applicants also submit that to allow the Funds to borrow from other
Funds pursuant to the proposed InterFund Program is consistent with the
purposes and policies of section 18(f)(1).
    8. Section 17(d) of the Act and rule 17d-1 under the Act generally
prohibit an affiliated person of a registered investment company, or
any affiliated person of such a person, when acting as principal, from
effecting any joint transaction in which the investment company
participates, unless, upon application, the transaction has been
approved by the Commission. Rule 17d-1(b) under the Act provides that
in passing upon an application filed under the rule, the Commission
will consider whether the participation of the registered investment
company in a joint enterprise, joint arrangement or profit sharing plan
on the basis proposed is consistent with the provisions, policies and
purposes of the Act and the extent to which such participation is on a
basis different from or less advantageous than that of the other
participants.
    9. Applicants assert that the purpose of section 17(d) is to avoid
overreaching by and an unfair advantage to insiders. Applicants assert
that the InterFund Program is consistent with the provisions, policies
and purposes of the Act in that it offers both reduced borrowing costs
and enhanced returns on loaned funds to all participating Funds and
their shareholders. Applicants note that each Fund would have an equal
opportunity to borrow and lend on equal terms consistent with its
investment policies and fundamental investment limitations. Applicants
assert that each Fund's participation in the proposed InterFund Program
would be on terms that are no different from or less advantageous than
that of other participating Funds.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will
be subject to the following conditions:
    1. The Interfund Loan Rate will be the average of the Repo Rate and
the Bank Loan Rate.
    2. On each business day, when an interfund loan is to be made, the
InterFund Program Team will compare the Bank Loan Rate with the Repo
Rate and will make cash available for Interfund Loans only if the
Interfund Loan Rate is: (a) More favorable to the lending Fund than the
Repo Rate; and (b) more favorable to the borrowing Fund than the Bank
Loan Rate.
    3. If a Fund has outstanding Bank Borrowings, any Interfund Loan to
the Fund will: (a) Be at an interest rate equal to or lower than the
interest rate of any outstanding bank loan; (b) be secured at least on
an equal priority basis with at least an equivalent percentage of
collateral to loan value as any outstanding bank loan that requires
collateral; (c) have a maturity no longer than any outstanding bank
loan (and in any event not over seven days); and (d) provide that, if
an event of default occurs under any agreement evidencing an
outstanding bank loan to the Fund, that event of default by the Fund,
will automatically (without need for action or notice by the lending
Fund) constitute an immediate event of default under the interfund
lending agreement which both (i) entitles the lending Fund to call the
Interfund Loan immediately and exercise all rights with respect to any
collateral and (ii) causes the call to be made if the lending bank
exercises its right to call its loan under its agreement with the
borrowing Fund.
    4. A Fund may borrow on an unsecured basis through the InterFund
Program only if the relevant borrowing Fund's outstanding borrowings
from all sources immediately after the interfund borrowing total 10% or
less of its total assets, provided that if the borrowing Fund has a
secured loan outstanding from any other lender, including but not
limited to another Fund, the lending Fund's Interfund Loan will be
secured on at least an equal priority basis with at least an equivalent
percentage of collateral to loan value as any outstanding loan that
requires collateral. If a borrowing Fund's total outstanding borrowings
immediately after an Interfund Loan would be greater than 10% of its
total assets, the Fund may borrow through the InterFund Program only on
a secured basis. A Fund may not borrow through the InterFund Program or
from any other source if its total outstanding borrowings immediately
after the borrowing would be more than 33\1/3\% of its total assets or
any lower threshold provided for by a Fund's fundamental restriction or
non-fundamental policy.
    5. Before any Fund that has outstanding interfund borrowings may,
through additional borrowings, cause its outstanding borrowings from
all sources to exceed 10% of its total assets, it must first secure
each outstanding Interfund Loan to a Fund by the pledge of segregated
collateral with a market value at least equal to 102% of the
outstanding principal value of the loan. If the total outstanding
borrowings of a Fund with outstanding Interfund Loans exceed 10% of its
total assets for any other reason (such as a decline in net asset value
or because of shareholder redemptions), the Fund will within one
business day thereafter either: (a) Repay all its outstanding Interfund
Loans to other Funds; (b) reduce its outstanding indebtedness to other
Funds to 10% or less of its total assets; or (c) secure each
outstanding Interfund Loan to other Funds by the pledge of segregated
collateral with a market value at least equal to 102% of the
outstanding principal value of the loan until the Fund's total
outstanding borrowings cease to exceed 10% of its total assets, at
which time the collateral called for by this condition 5 shall no
longer be required. Until each Interfund Loan that is outstanding at
any time that a Fund's total outstanding borrowings exceed 10% of its
total assets is repaid or the Fund's total outstanding borrowings cease
to exceed 10% of its total assets, the Fund will mark the value of the
collateral to market each day and will pledge such additional
collateral as is necessary to maintain the market value of the
collateral that secures each outstanding Interfund Loan to Funds at
least equal to 102% of the outstanding principal value of the Interfund
Loans.
    6. No Fund may lend to another Fund through the InterFund Program
if the loan would cause the lending Fund's aggregate outstanding loans
through the InterFund Program to exceed 15% of its current net assets
at the time of the loan.
    7. A Fund's Interfund Loans to any one Fund shall not exceed 5% of
the lending Fund's net assets.
    8. The duration of Interfund Loans will be limited to the time
required to receive payment for securities sold, but in no event more
than seven days. Loans effected within seven days of each other will be
treated as separate loan transactions for purposes of this condition.

    9. A Fund's borrowings through the InterFund Program, as measured
on the day when the most recent loan was made, will not exceed the
greater of 125% of the Fund's total net cash redemptions for the
preceding seven calendar days or 102% of a Fund's sales fails for the
preceding seven calendar days.
    10. Each Interfund Loan may be called on one business day's notice
by a lending Fund and may be repaid on any day by a borrowing Fund.
    11. A Fund's participation in the InterFund Program must be
consistent with its investment restrictions, policies, limitations and
organizational documents.
    12. The InterFund Program Team will calculate total Fund borrowing
and lending demand through the InterFund Program, and allocate
Interfund Loans on an equitable basis among the Funds, without the
intervention of any portfolio manager. The InterFund Program Team will
not solicit cash for the InterFund Program from any Fund or
prospectively publish or disseminate loan demand data to portfolio
managers. The InterFund Program Team will invest all amounts remaining
after satisfaction of borrowing demand in accordance with the standing
instructions of the relevant portfolio manager or such remaining
amounts will be invested directly by the portfolio managers of the
Funds.
    13. The InterFund Program Team will monitor the Interfund Loan Rate
charged and the other terms and conditions of the Interfund Loans and
will make a quarterly report to the Boards concerning the participation
of the Funds in the InterFund Program and the terms and other
conditions of any extensions of credit under the InterFund Program.
    14. Each Board, including a majority of its Independent Board
Members, will:
    (a) Review, no less frequently than quarterly, the participation of
each Fund it oversees in the InterFund Program during the preceding
quarter for compliance with the conditions of any order permitting such
participation;
    (b) establish the Bank Loan Rate formula used to determine the
interest rate on Interfund Loans;
    (c) review, no less frequently than annually, the continuing
appropriateness of the Bank Loan Rate formula; and
    (d) review, no less frequently than annually, the continuing
appropriateness of the participation in the InterFund Program by each
Fund it oversees.
    15. Each Fund will maintain and preserve for a period of not less
than six years from the end of the fiscal year in which any transaction
by it under the InterFund Program occurred, the first two years in an
easily accessible place, written records of all such transactions
setting forth a description of the terms of the transaction, including
the amount, the maturity and the Interfund Loan Rate, the rate of
interest available at the time each Interfund Loan is made on overnight
repurchase agreements and Bank Borrowings, and such other information
presented to the Boards of the Funds in connection with the review
required by conditions 13 and 14.
    16. In the event an Interfund Loan is not paid according to its
terms and the default is not cured within two business days from its
maturity or from the time the lending Fund makes a demand for payment
under the provisions of the interfund lending agreement, the Adviser to
the lending Fund promptly will refer the loan for arbitration to an
independent arbitrator selected by the Board of any Fund involved in
the loan who will serve as arbitrator of disputes concerning Interfund
Loans.\3\ The arbitrator will resolve any problem promptly, and the
arbitrator's decision will be binding on both Funds. The arbitrator
will submit, at least annually, a written report to the Board of each
Fund setting forth a description of the nature of any dispute and the
actions taken by the Funds to resolve the dispute.
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    \3\ If the dispute involves Funds that do not have a common
Board, the Board of each affected Fund will select an independent
arbitrator that is satisfactory to each Fund.
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    17. The Advisers will prepare and submit to the Board for review an
initial report describing the operations of the InterFund Program and
the procedures to be implemented to ensure that all Funds are treated
fairly. After the commencement of the InterFund Program, the Advisers
will report on the operations of the InterFund Program at each Board's
quarterly meetings. Each Fund's chief compliance officer, as defined in
rule 38a-1(a)(4) under the Act, shall prepare an annual report for its
Board each year that the Fund participates in the InterFund Program,
that evaluates the Fund's compliance with the terms and conditions of
the application and the procedures established to achieve such
compliance. Each Fund's chief compliance officer will also annually
file a certification pursuant to Item 77Q3 of Form N-SAR as such form
may be revised, amended or superseded from time to time, for each year
that the Fund participates in the InterFund Program, that certifies
that the Fund and its Adviser have implemented procedures reasonably
designed to achieve compliance with the terms and conditions of the
order. In particular, such certification will address procedures
designed to achieve the following objectives:
    (a) That the Interfund Loan Rate will be higher than the Repo Rate
but lower than the Bank Loan Rate;
    (b) compliance with the collateral requirements as set forth in the
application;
    (c) compliance with the percentage limitations on interfund
borrowing and lending;
    (d) allocation of interfund borrowing and lending demand in an
equitable manner and in accordance with procedures established by the
Board; and
    (e) that the Interfund Loan Rate does not exceed the interest rate
on any third party borrowings of a borrowing Fund at the time of the
Interfund Loan.
    Additionally, each Fund's independent registered public
accountants, in connection with their audit examination of the Fund,
will review the operation of the InterFund Program for compliance with
the conditions of the application and their review will form the basis,
in part, of the auditor's report on internal accounting controls in
Form N-SAR.
    18. No Fund will participate in the InterFund Program, upon receipt
of requisite regulatory approval, unless it has fully disclosed in its
registration statement on Form N-1A (or any successor form adopted by
the Commission) all material facts about its intended participation.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-11534 Filed 5-16-16; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 238 (Tuesday, December 11, 2012)]
[Notices]
[Page 73654]
[FR Doc No: 2012-29795]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 10078-053]

Eau Galle Renewable Energy Company, Eau Galle Hydro, LLC; Notice
of Transfer of Exemption

    1. By letter filed October 12, 2012, Eau Galle Renewable Energy
Company informed the Commission that its exemption from licensing for
the Eau Galle Hydroelectric Project, FERC No. 10078, originally issued
March 10, 1987,\1\ and transferred to Eau Galle Renewable Energy
Company by letter.\2\ The project is located on the Eau Galle River in
Dunn County, Wisconsin. The transfer of an exemption does not require
Commission approval.
---------------------------------------------------------------------------

    \1\ 38 FERC ] 62,225, Order Granting Exemption From Licensing (5
MW or Less) And Dismissing Preliminary Permit Application With
Prejudice.
    \2\ Letter notifying the Commission of the Transfer of Exemption
for Project No. 10078, filed July 13, 2000.
---------------------------------------------------------------------------

    2. Mr. Jason Kreuscher, Eau Galle Hydro, LLC, P.O. Box 264, 100 S.
State Street, Neshkoro, WI 54960 is now the exemptee of the Eau Galle
Hydroelectric Project, FERC No. 10078.

    Dated: December 4, 2012.
Kimberly D. Bose,
Secretary.
[FR Doc. 2012-29795 Filed 12-10-12; 8:45 am]
BILLING CODE 6717-01-P


[Federal Register Volume 86, Number 236 (Monday, December 13, 2021)]
[Proposed Rules]
[Pages 70773-70774]
[FR Doc No: 2021-26836]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Docket No. FAA-2021-1057; Airspace Docket No. 21-ASO-38]
RIN 2120-AA66

Proposed Amendment of Class E Airspace; Peachtree City, GA

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: This action proposes to amend Class E airspace extending
upward from 700 feet above the surface for Atlanta Regional Airport
Falcon Field (formerly Peachtree City, Falcon Field Airport). This
action would update the airport's name and geographical coordinates to
coincide with the FAA's database. Also, this action would increase the
airport's radius and remove excessive verbiage from the legal
description. Controlled airspace is necessary for the safety and
management of instrument flight rules (IFR) operations in the area.

DATES: Comments must be received on or before January 27, 2022.

ADDRESSES: Send comments on this proposal to: The U.S. Department of
Transportation, Docket Operations, 1200 New Jersey Avenue SE, West
Building Ground Floor, Room W12-140, Washington, DC 20590-0001;
Telephone:<PHONE_NUMBER>, or<PHONE_NUMBER>. You must identify the
Docket No. FAA-2021-1057; Airspace Docket No. 21-ASO-38, at the
beginning of your comments. You may also submit comments through the
internet at https://www.regulations.gov.
    FAA Order JO 7400.11F, Airspace Designations and Reporting Points,
and subsequent amendments can be viewed online at https://www.faa.gov/air_traffic/publications/. For further information, you can contact the
Airspace Policy Group, Federal Aviation Administration, 800
Independence Avenue SW, Washington, DC 20591; Telephone: (202) 267-
8783. FAA Order JO 7400.11F is also available for inspection at the
National Archives and Records Administration (NARA). For information on
the availability of FAA Order JO 7400.11F at NARA, email
[email protected] or go to https://www.archives.gov/federal-register/cfr/ibr-locations.html.

FOR FURTHER INFORMATION CONTACT:  John Goodson, Operations Support
Group, Eastern Service Center, Federal Aviation Administration, 1701
Columbia Avenue, College Park, GA 30337; Telephone<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

    The FAA's authority to issue rules regarding aviation safety is
found in Title 49 of the United States Code. Subtitle I, Section 106
describes the authority of the FAA Administrator. Subtitle VII,
Aviation Programs, describes in more detail the scope of the agency's
authority. This rulemaking is promulgated under the authority described
in Subtitle VII, Part A, Subpart I, Section 40103. Under that section,
the FAA is charged with prescribing regulations to assign the use of
airspace necessary to ensure the safety of aircraft and the efficient
use of airspace. This regulation is within the scope of that authority,
as it would amend Class E airspace for Peachtree City, GA to support
IFR operations in the area.

Comments Invited

    Interested persons are invited to comment on this proposed
rulemaking by submitting such written data, views, or arguments, as
they may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy-related aspects of the proposal.
    Communications should identify both docket numbers (Docket No. FAA-
2021-1057 and Airspace Docket No. 21-ASO-38) and be submitted in
triplicate to DOT Docket Operations (see ADDRESSES section for the
address and phone number). You may also submit comments through the
internet at https://www.regulations.gov.
    Persons wishing the FAA to acknowledge receipt of their comments on
this action must submit with those comments a self-addressed stamped
postcard on which the following statement is made: ``Comments to FAA
Docket No. FAA-2021-1057; Airspace Docket No. 21-ASO-38.'' The postcard
will be date/time stamped and returned to the commenter.
    All communications received before the specified closing date for
comments will be considered before taking action on the proposed rule.
The proposal contained in this document may be changed in light of the
comments received. All comments submitted will be available for
examination in the public docket both before and after the

comment closing date. A report summarizing each substantive public
contact with FAA personnel concerned with this rulemaking will be filed
in the docket.

Availability of NPRMs

    An electronic copy of this document may be downloaded through the
internet at https://www.regulations.gov. Recently published rulemaking
documents can also be accessed through the FAA's web page at https://www.faa.gov/air_traffic/publications/airspace_amendments/.
    You may review the public docket containing the proposal, any
comments received and any final disposition in person in the Dockets
Office (see the ADDRESSES section for address and phone number) between
9:00 a.m. and 5:00 p.m., Monday through Friday, except federal
holidays. An informal docket may also be examined between 8:00 a.m. and
4:30 p.m., Monday through Friday, except federal holidays, at the
office of the Eastern Service Center, Federal Aviation Administration,
Room 350, 1701 Columbia Avenue, College Park, GA 30337.

Availability and Summary of Documents for Incorporation by Reference

    This document proposes to amend FAA Order JO 7400.11F, Airspace
Designations and Reporting Points, dated August 10, 2021, and effective
September 15, 2021. FAA Order JO 7400.11F is publicly available as
listed in the ADDRESSES section of this document. FAA Order JO 7400.11F
lists Class A, B, C, D, and E airspace areas, air traffic service
routes, and reporting points.

The Proposal

    The FAA proposes an amendment to 14 CFR part 71 to amend Class E
airspace extending upward from 700 feet above the surface at Atlanta
Regional Airport Falcon Field, Peachtree City, GA (formerly Peachtree
City, Falcon Field Airport) by updating the airports name and
geographical coordinates of the airport to coincide with the FAA's
database, increasing the radius of the airport to 8.7 miles (formerly
6.5 miles), and removing excessive verbiage from the legal description
of the airport.
    Class E airspace designations are published in Paragraphs 6005 of
FAA Order JO 7400.11F, dated August 10, 2021, and effective September
15, 2021, which is incorporated by reference in 14 CFR 71.1. The Class
E airspace designations listed in this document will be published
subsequently in FAA Order JO 7400.11.
    FAA Order JO 7400.11, Airspace Designations and Reporting Points,
is published yearly and effective on September 15.

Regulatory Notices and Analyses

    The FAA has determined that this proposed regulation only involves
an established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore: (1) Is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a Regulatory Evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
will only affect air traffic procedures and air navigation, it is
certified that this proposed rule, when promulgated, will not have a
significant economic impact on a substantial number of small entities
under the criteria of the Regulatory Flexibility Act.

Environmental Review

    This proposal will be subject to an environmental analysis in
accordance with FAA Order 1050.1F, ``Environmental Impacts: Policies
and Procedures'', prior to any FAA final regulatory action.

Lists of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

The Proposed Amendment

    In consideration of the foregoing, the Federal Aviation
Administration proposes to amend 14 CFR part 71 as follows:

PART 71--DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR
TRAFFIC SERVICE ROUTES; AND REPORTING POINTS

0
1. The authority citation for part 71 continues to read as follows:

    Authority: 49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O.
10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

Sec.  71.1   [Amended]

0
2. The incorporation by reference in 14 CFR 71.1 of FAA Order JO
7400.11F, Airspace Designations and Reporting Points, dated August 10,
2021, and effective September 15, 2021, is amended as follows:

Paragraph 6005 Class E Airspace Areas Extending Upward From 700
Feet or More Above the Surface of the Earth.

* * * * *

ASO GA E5 Peachtree City, GA [Amended]

Atlanta Regional Airport Falcon Field, GA
    (Lat. 33[deg]21'28'' N, long. 84[deg]34'21'' W)

    That airspace extending upward from 700 feet above the surface
within a 8.7-mile radius of Atlanta Regional Airport Falcon Field.

    Issued in College Park, Georgia, on December 6, 2021.
Andreese C. Davis,
Manager, Airspace & Procedures Team South, Eastern Service Center, Air
Traffic Organization.
[FR Doc. 2021-26836 Filed 12-10-21; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 86, Number 78 (Monday, April 26, 2021)]
[Notices]
[Pages 22082-22083]
[FR Doc No: 2021-08565]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91614; File No. SR-Phlx-2021-10]

Self-Regulatory Organizations; Nasdaq PHLX LLC; Order Approving a
Proposed Rule Change To Permit Monday and Wednesday Expirations for
Options Listed Pursuant to the Short Term Options Program on the
Invesco QQQ Trust\SM\ Series ETF Trust

April 20, 2021.

I. Introduction

    On February 22, 2021, Nasdaq PHLX LLC (``Phlx'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission''),
pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to
amend Phlx Options 4, Section 5 at Commentary .11 to allow Monday and
Wednesday expirations for options listed pursuant to the Exchange's
short term option series program (``Short Term Option Series Program'')
on the Invesco QQQ Trust\SM\ Series (``QQQ'') ETF Trust. The proposed
rule change was published for comment in the Federal Register on March
8, 2021.\3\ The Commission received no comments on the proposal. This
order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 91238 (March 2,
2021), 86 FR 13404 (``Notice'').
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II. Description of the Proposal

    Under the terms of the current Short Term Option Series Program,
after an option class has been approved for listing and trading on the
Exchange, the Exchange may open for trading on any Thursday or Friday
that is a business day series of options on that class that expire on
each of the next five consecutive Fridays that are business days,\4\
provided that such Friday does not occur in the same week in which
monthly options series on the same class expire or is not a Friday on
which Quarterly Options Series on the same class expire.\5\ If the
Exchange is not open for business on the Friday of the following
business week, the series will expire on the first business day
immediately prior to that Friday.\6\ In addition, the Exchange may open
for

trading on any Friday or Monday that is a business day series of
options on the SPDR S&P 500 ETF Trust (``SPY'') to expire on any Monday
of the month that is a business day and is not a Monday in which
Quarterly Options Series expire, provided that expirations that are
listed on a Friday must be listed at least one business week and one
business day prior to the expiration.\7\ The Exchange also may open for
trading on any Tuesday or Wednesday that is a business day series of
options on SPY to expire on any Wednesday of the month that is a
business day and is not a Wednesday in which Quarterly Options Series
expire.\8\
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    \4\ See Commentary .11 to Phlx Options 4, Section 5.
    \5\ See Commentary .11(b) to Phlx Options 4, Section 5.
    \6\ See Commentary .11 to Phlx Options 4, Section 5.
    \7\ See id.
    \8\ See id.
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    The Exchange proposes to expand the Short Term Option Series
Program to permit Phlx to open for trading, on any Monday or Friday
that is a business day, series of options on QQQ that expire on any
Monday of the month that is a business day and is not a Monday in which
Quarterly Options Series on the same class expire (``Monday QQQ
Expirations''). In the case of a series that is listed on a Friday and
expires on a Monday, it must be listed at least one business week and
one business day prior to that Monday expiration. If the Monday QQQ
Expiration falls on a Monday that is not a business day, the series
shall expire on the first business day immediately following that
Monday.
    Similarly, the Exchange also proposes to expand the Short Term
Option Series Program to permit Phlx to open for trading, on any
Tuesday or Wednesday that is a business day, series of options on QQQ
to expire on any Wednesday of the month that is a business day and is
not a Wednesday in which Quarterly Options Series on the same class
expire (``Wednesday QQQ Expirations''). If the Wednesday QQQ Expiration
falls on a Wednesday that is not a business day, the series shall
expire on the first business day immediately prior to that Wednesday.
    In addition, the Exchange proposes to amend Commentary .11 to
Options 4, Section 5, to state that it may list up to five consecutive
Monday QQQ Expirations at one time and up to five consecutive Wednesday
QQQ Expirations at one time, and that there may be no more than a total
of five Monday QQQ Expirations and no more than a total of five
Wednesday QQQ Expirations. The Exchange also proposes to amend
Commentary .11(b) to Options 4, Section 5 to permit Monday QQQ
Expirations and Wednesday QQQ Expirations to expire in the same week in
which monthly options series on the same class expire. Otherwise,
Monday QQQ Expirations and Wednesday QQQ Expirations will be subject to
the same rules as standard Short Term Option Series.\9\
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    \9\ For example, the Monday QQQ Expirations and Wednesday QQQ
Expirations would be subject to the same series limitations and
strike interval rules as standard Short Term Option Series. See
Notice, supra note 3, at 13404-5.
---------------------------------------------------------------------------

III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and
finds that it is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
exchange and, in particular, the requirements of Section 6(b) of the
Act.\10\ Specifically, the Commission finds that the proposal is
consistent with the requirements of Sections 6(b)(5) of the Act,\11\
which requires, among other things, that a national securities exchange
have rules designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and in general, to protect investors and the public interest.
The Commission believes that the proposed rule change may provide the
investing public and other market participants more flexibility to
closely tailor their investment and hedging decisions in QQQ options,
thus allowing them to better manage their risk exposure. In addition,
the Commission notes that the Exchange has similar rules permitting the
listing and trading of Monday and Wednesday expirations on SPY.\12\
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    \10\ 15 U.S.C. 78f. In approving this proposed rule change, the
Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ See Commentary .11 to Phlx Options 4, Section 5.
---------------------------------------------------------------------------

    In approving the proposal, the Commission notes that the Exchange
has represented that it has an adequate surveillance program in place
to detect manipulative trading in Monday QQQ Expirations and Wednesday
QQQ Expirations.\13\ The Exchange further states that it has the
necessary systems capacity to support the new options series.\14\
---------------------------------------------------------------------------

    \13\ See Notice, supra note 3, at 13406.
    \14\ Id.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered that pursuant to Section 19(b)(2) of the
Act \15\ that the proposed rule change (SR-Phlx-2021-10) be, and hereby
is, approved.
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    \15\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.300-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-08565 Filed 4-23-21; 8:45 am]
BILLING CODE 8011-01-P