[Federal Register Volume 78, Number 62 (Monday, April 1, 2013)]
[Notices]
[Pages 19542-19549]
[FR Doc No: 2013-07415]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30436; File No. 812-13848]

Neuberger Berman ETF Trust and Neuberger Berman Management LLC;
Notice of Application

March 25, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the
Investment Company Act of 1940 (``Act'') for an exemption from sections
2(a)(32), 5(a)(1), 22(d) and 22(e) of the Act and rule 22c-1 under the
Act, and under sections 6(c) and 17(b) of the Act for an exemption from
sections 17(a)(1) and (2) of the Act, and under section 12(d)(1)(J) of
the Act for an exemption from sections 12(d)(1)(A) and (B) of the Act.

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Applicants: Neuberger Berman ETF Trust (the ``Trust'') and Neuberger
Berman Management LLC (``NBM'' or

``Adviser'' or ``Distributor'') (collectively, the ``Applicants'').
SUMMARY: Summary of Application: Applicants request an order that
permits: (a) Series of certain actively-managed open-end management
investment companies to issue shares (``Shares'') redeemable in large
aggregations only (``Creation Units''); (b) secondary market
transactions in Shares to occur at negotiated market prices; (c)
certain series to pay redemption proceeds, under certain circumstances,
more than seven days after the tender of Shares for redemption; (d)
certain affiliated persons of the series to deposit securities into,
and receive securities from, the series in connection with the purchase
and redemption of Creation Units; and (e) certain registered management
investment companies and unit investment trusts outside of the same
group of investment companies as the series to acquire Shares.

DATES:  Filing Dates: The application was filed on November 19, 2010,
and amended on April 27, 2011, November 22, 2011, May 15, 2012, October
26, 2012 and March 18, 2013.

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 April 19, 2013, and should be accompanied by proof of
service on Applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants:
605 Third Avenue, New York, NY 10158.

FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at
(202) 551-6811 or Daniele Marchesani, Branch Chief, at<PHONE_NUMBER>
(Division of Investment Management, Exemptive Applications 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. The Trust will be registered as an open-end management
investment company under the Act and is organized as a Delaware
statutory trust. The Trust will initially offer one series, the
Neuberger Berman Real Return Active ETF (the ``Initial Fund''). The
investment objective of the Initial Fund will be to provide risk-
adjusted returns through investments in U.S. and foreign equity and
fixed income markets. NBM, a Delaware limited liability company, will
serve as the investment adviser to the Initial Fund. Each Adviser (as
defined below) is or will be registered as an investment adviser under
the Investment Advisers Act of 1940 (``Advisers Act'').
    2. Applicants request that the order apply to the Initial Fund and
any future series of the Trust or of any other open-end management
investment company that is an actively managed exchange-traded fund
(``ETF'') and (a) advised by NBM or an entity controlling, controlled
by, or under common control with NBM (an ``NBM Affiliate,'' and each of
NBM and such NBM Affiliates that serve as an investment adviser to a
Fund, an ``Adviser'') and (b) complies with the terms and conditions of
the application (collectively, ``Future Funds,'' and together with the
Initial Fund, the ``Funds'').\1\ An Adviser may enter into subadvisory
agreements with respect to the management of the Funds with an NBM
Affiliate or other subadviser (each, a ``Subadviser''). Any Subadviser
will be registered or not subject to registration under the Advisers
Act. NBM, also a broker-dealer registered under the Securities Exchange
Act of 1934 (``Exchange Act''), will serve as the principal underwriter
and distributor of the Funds' shares (``Distributor''). An NBM
Affiliate or another broker-dealer that is not an NBM Affiliate may
serve as a Fund's Distributor. Any Distributor to any Fund will be
registered as a broker-dealer under the Exchange Act.
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    \1\ All entities that currently intend to rely on the order are
named as Applicants. Any other entity that relies on the order in
the future will comply with the terms and conditions of the
application. An Investing Fund (as defined below) may rely on the
order only to invest in Funds and not in any other registered
investment company.
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    3. Each Fund will consist of a portfolio of securities (including
equity securities and/or fixed income securities), currencies, shares
of other ETFs and shares of money market mutual funds or other
investment companies that invest primarily in short-term fixed income
securities, and other assets traded in the U.S. or non-U.S. markets.\2\
Certain Funds may invest in equity securities or fixed income
securities traded in international markets (the ``International
Funds''). Certain Funds may also invest in ``Depositary Receipts.'' \3\
Certain Funds may also invest in future ETFs advised by an Adviser
pursuant to section 12(d)(1)(G) of the Act or as otherwise permissible
under section 12(d)(1) of the Act and the rules thereunder.
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    \2\ The Fund's portfolio securities and other assets and
positions are referred to herein as ``Portfolio Instruments.'' If a
Fund invests in derivatives: (a) The Board periodically will review
and approve (i) the Fund's use of derivatives and (ii) how the
Fund's investment adviser assesses and manages risk with respect to
the Fund's use of derivatives; and (b) the Fund's disclosure of its
use of derivatives in its offering documents and periodic reports
will be consistent with relevant Commission and staff guidance.
    \3\ Depositary Receipts are typically issued by a financial
institution, a ``depositary,'' and evidence ownership in a security
or pool of securities that have been deposited with the depositary.
A Fund will not invest in any Depositary Receipts that the Adviser
or Subadviser deems to be illiquid or for which pricing information
is not readily available. No affiliated persons of the Applicants,
any Future Fund, Adviser or Subadviser will serve as the depositary
for any Depositary Receipts held by a Fund.
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    4. Applicants anticipate that a Creation Unit will consist of at
least 50,000 Shares and that the price of a Share will range from $10
and $100. All orders to purchase Creation Units must be placed with the
Distributor by or through a party that has entered into a participant
agreement with the Trust, the Distributor and the transfer agent of the
Trust (``Authorized Participant'') with respect to the creation and
redemption of Creation Units. An Authorized Participant is either: (a)
A broker or dealer registered under the Exchange Act (``Broker'') or
other participant in the Continuous Net Settlement System of the
National Securities Clearing Corporation, a clearing agency registered
with the Commission and affiliated with the Depository Trust Company
(``DTC'') or (b) a participant in DTC (such participant, ``DTC
Participant''). The Shares will be purchased and redeemed in Creation
Units and generally on an in-kind basis. Except where the purchase or
redemption will include cash under the limited circumstances specified
below, purchasers will be required to purchase Creation Units by making
an in-kind deposit of specified instruments (``Deposit Instruments''),
and shareholders redeeming their Shares will receive an in-kind
transfer of specified instruments (``Redemption

Instruments'').\4\ On any given Business Day \5\ the names and
quantities of the instruments that constitute the Deposit Instruments
and the names and quantities of the instruments that constitute the
Redemption Instruments will be identical, and these instruments may be
referred to, in the case of either a purchase or a redemption, as the
``Creation Basket.'' In addition, the Creation Basket will correspond
pro rata to the positions in a Fund's portfolio (including cash
positions),\6\ except: (a) In the case of bonds, for minor differences
when it is impossible to break up bonds beyond certain minimum sizes
needed for transfer and settlement; (b) for minor differences when
rounding is necessary to eliminate fractional shares or lots that are
not tradeable round lots; \7\ or (c) TBA transactions,\8\ short
positions and other positions that cannot be transferred in kind \9\
will be excluded from the Creation Basket.\10\ If there is a difference
between the net asset value (``NAV'') attributable to a Creation Unit
and the aggregate market value of the Creation Basket exchanged for the
Creation Unit, the party conveying instruments with the lower value
will also pay to the other an amount in cash equal to that difference
(the ``Balancing Amount'').
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    \4\ The Funds must comply with the federal securities laws in
accepting Deposit Instruments and satisfying redemptions with
Redemption Instruments, including that the Deposit Instruments and
Redemption Instruments are sold in transactions that would be exempt
from registration under the Securities Act of 1933 (``Securities
Act''). In accepting Deposit Instruments and satisfying redemptions
with Redemption Instruments that are restricted securities eligible
for resale pursuant to rule 144A under the Securities Act, the Funds
will comply with the conditions of rule 144A.
    \5\ Each Fund will sell and redeem Creation Units on any day the
Fund is open, including as required by section 22(e) of the Act
(each, a ``Business Day'').
    \6\ The portfolio used for this purpose will be the same
portfolio used to calculate the Fund's NAV for that Business Day.
    \7\ A tradeable round lot for a security will be the standard
unit of trading in that particular type of security in its primary
market.
    \8\ A TBA transaction is a method of trading mortgage-backed
securities. In a TBA transaction, the buyer and seller agree upon
general trade parameters such as agency, settlement date, par amount
and prices. The actual pools delivered generally are determined two
days prior to the settlement date.
    \9\ This includes instruments that can be transferred in kind
only with the consent of the original counterparty to the extent the
Fund does not intend to seek such consents.
    \10\ Because these instruments will be excluded from the
Creation Basket, their value will be reflected in the determination
of the Balancing Amount (defined below).
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    5. Purchases and redemptions of Creation Units may be made in whole
or in part on a cash basis, rather than in kind solely under the
following circumstances: (a) To the extent there is a Balancing Amount,
as described above; (b) if, on a given Business Day, a Fund announces
before the open of trading that all purchases, all redemptions or all
purchases and redemptions on that day will be made entirely in cash;
(c) if, upon receiving a purchase or redemption order from an
Authorized Participant, a Fund determines to require the purchase or
redemption, as applicable, to be made entirely in cash; \11\ (d) if, on
a given Business Day, a Fund requires all Authorized Participants
purchasing or redeeming Shares on that day to deposit or receive (as
applicable) cash in lieu of some or all of the Deposit Instruments or
Redemption Instruments, respectively, solely because (i) such
instruments are not eligible for transfer through either the NSCC
Process or DTC Process; or (ii) in the case of International Funds,
such instruments are not eligible for trading due to local trading
restrictions, local restrictions on securities transfers or other
similar circumstances; or (e) if a Fund permits an Authorized
Participant to deposit or receive (as applicable) cash in lieu of some
or all of the Deposit Instruments or Redemption Instruments,
respectively, solely because (i) such instruments are, in the case of
the purchase of a Creation Unit, not available in sufficient quantity;
(ii) such instruments are not eligible for trading by an Authorized
Participant or the investor on whose behalf the Authorized Participant
is acting; or (iii) a holder of Shares of an International Fund would
be subject to unfavorable income tax treatment if the holder receives
redemption proceeds in kind.\12\
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    \11\ In determining whether a particular Fund will sell or
redeem Creation Units entirely on a cash or in-kind basis (whether
for a given day or a given order), the key consideration will be the
benefit that would accrue to the Fund and its investors. Purchases
of Creation Units either on an all cash basis or in-kind are
expected to be neutral to the Funds from a tax perspective. In
contrast, cash redemptions typically require selling portfolio
holdings, which may result in adverse tax consequences for the
remaining Fund shareholders that would not occur with an in-kind
redemption. As a result, tax considerations may warrant in-kind
redemptions.
    \12\ A ``custom order'' is any purchase or redemption of Shares
made in whole or in part on a cash basis in reliance on clause
(e)(i) or (e)(ii).
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    6. Each Business Day, before the open of trading on a national
securities exchange, as defined in section 2(a)(26) of the Act
(``Exchange''), on which Shares are listed, each Fund will cause to be
published through the NSCC the names and quantities of the instruments
comprising the Creation Basket, as well as the estimated Balancing
Amount (if any), for that day. The published Creation Basket will apply
until a new Creation Basket is announced on the following Business Day,
and there will be no intra-day changes to the Creation Basket except to
correct errors in the published Creation Basket. An Exchange will
disseminate every 15 seconds throughout the trading day through the
facilities of the Consolidated Tape Association an amount representing,
on a per Share basis, the sum of the current value of the Portfolio
Instruments that were publicly disclosed prior to the commencement of
trading in Shares on the Exchange that day.
    7. An investor purchasing or redeeming a Creation Unit from a Fund
will be charged a fee (``Transaction Fee'') to protect existing
shareholders of the Fund from the dilutive costs associated with the
purchase and redemption of Creation Units.\13\ All orders to purchase
Creation Units must be placed with the Distributor by or through an
Authorized Participant and the Distributor will transmit such orders to
the relevant Fund. The Distributor also will be responsible for
delivering a prospectus (``Prospectus'') to those persons purchasing
Creation Units and for maintaining records of both the orders placed
with it and the confirmations of acceptance furnished by it.
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    \13\ Where a Fund permits an in-kind purchaser to substitute
cash in lieu of depositing one or more of the Deposit Instruments,
the purchaser may be assessed a higher Transaction Fee to offset the
cost to the Fund of purchasing those particular Deposit Instruments.
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    8. Shares will be listed and traded at negotiated prices on an
Exchange and traded in the secondary market. Applicants expect that
Exchange specialists (``Specialists'') or market makers (``Market
Makers'') will be assigned to Shares. The price of Shares trading on
the Exchange will be based on a current bid/offer market. Transactions
involving the purchases and sales of Shares on the secondary market
will be subject to customary brokerage commissions and charges.
    9. Applicants expect that purchasers of Creation Units will include
institutional investors and arbitrageurs. Specialists, or Market
Makers, acting in their role to provide a fair and orderly secondary
market for Shares, also may purchase Creation Units for use in their
own market making activities.\14\

Applicants expect that secondary market purchasers of Shares will
include both institutional and retail investors.\15\ Applicants expect
that arbitrage opportunities created by the ability to continually
purchase or redeem Creation Units at their NAV should ensure that the
Shares will not trade at a material discount or premium in relation to
their NAV.
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    \14\ If Shares are listed on NASDAQ, no Specialist will be
contractually obligated to make a market in Shares. Rather, under
NASDAQ's listing requirements, two or more Market Makers will be
registered as Market Makers in Shares and required to make a
continuous, two-sided market or be subject to regulatory sanctions.
No Market Maker or Specialist will be an affiliated person, or an
affiliated person of an affiliated person, of the Funds, except
within the meaning of Section 2(a)(3)(A) or (C) of the Act due
solely to ownership of Shares as discussed below.
    \15\ Shares will be registered in book-entry form only. DTC or
its nominee will be the registered owner of all outstanding Shares.
Beneficial ownership of Shares will be shown on the records of DTC
or DTC Participants.
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    10. Neither the Trust nor any Fund will be marketed or otherwise
held out as a ``mutual fund.'' Instead, each Fund will be marketed as
an ``actively-managed exchange-traded fund.'' Any advertising material
where features of obtaining, buying or selling Creation Units or Shares
traded on the Exchange are described or refer to redeemability, will
prominently disclose that Shares are not individually redeemable and
will disclose that the owners of Shares may acquire those Shares from a
Fund or tender those Shares for redemption to a Fund in Creation Units
only.
    11. The Funds' Web site, which will be publicly available prior to
the public offering of Shares, will include the Prospectus and
additional quantitative information updated on a daily basis,
including, on a per Share basis for each Fund, the prior Business Day's
NAV and the market closing price or mid-point of the bid/ask spread at
the time of calculation of such NAV (``Bid/Ask Price''), and a
calculation of the premium and discount of the market closing price or
the Bid/Ask Price against such NAV. On each Business Day, before
commencement of trading in Shares on the Exchange, the Fund will
disclose on its Web site the identities and quantities of the Portfolio
Instruments held by the Fund that will form the basis for the Fund's
calculation of NAV at the end of the Business Day.\16\
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    \16\ Applicants note that under accounting procedures followed
by the Funds, trades made on the prior Business Day (``T'') will be
booked and reflected in NAV on the current Business Day (T+1).
Accordingly, the Funds will be able to disclose at the beginning of
the Business Day the portfolio that will form the basis for the NAV
calculation at the end of the Business Day.
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Applicants' Legal Analysis

    1. Applicants request an order under section 6(c) of the Act
granting an exemption from sections 2(a)(32), 5(a)(1), 22(d) and 22(e)
of the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b)
of the Act for an exemption from sections 17(a)(1) and (a)(2) of the
Act, and under section 12(d)(1)(J) of the Act for an exemption from
sections 12(d)(1)(A) and 12(d)(1)(B) of the Act.
    2. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction, or any class of persons,
securities or transactions, from any provisions of the Act, if and to
the extent that such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
Section 17(b) of the Act authorizes the Commission to exempt a proposed
transaction from section 17(a) of the Act if evidence establishes that
the terms of the transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, and the proposed transaction is
consistent with the policies of the registered investment company and
the general provisions of the Act. Section 12(d)(1)(J) of the Act
provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities or
transactions, from any provision of section 12(d)(1) if the exemption
is consistent with the public interest and the protection of investors.

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

    3. Section 5(a)(1) of the Act defines an ``open-end company'' as a
management investment company that is offering for sale or has
outstanding any redeemable security of which it is the issuer. Section
2(a)(32) of the Act defines a redeemable security as any security,
other than short-term paper, under the terms of which the holder, upon
its presentation to the issuer, is entitled to receive approximately a
proportionate share of the issuer's current net assets, or the cash
equivalent. Because Shares will not be individually redeemable,
applicants request an order that would permit the Trust (and any Fund,
if applicable) to register as an open-end management investment company
and redeem Shares in Creation Units only. Applicants state that
investors may purchase Shares in Creation Units from each Fund and
redeem Creation Units from each Fund. Applicants further state that
because the market price of Creation Units will be disciplined by
arbitrage opportunities, investors should be able to sell Shares in the
secondary market at prices that do not vary materially from their NAV.

Section 22(d) of the Act and Rule 22c-1 Under the Act

    4. Section 22(d) of the Act, among other things, prohibits a dealer
from selling a redeemable security, that is currently being offered to
the public by or through a principal underwriter, except at a current
public offering price described in the prospectus. Rule 22c-1 under the
Act generally requires that a dealer selling, redeeming, or
repurchasing a redeemable security do so only at a price based on its
NAV. Applicants state that secondary market trading in Shares will take
place at negotiated prices, not at a current offering price described
in the Prospectus, and not at a price based on NAV. Thus, purchases and
sales of Shares in the secondary market will not comply with section
22(d) of the Act and rule 22c-1 under the Act. Applicants request an
exemption under section 6(c) from these provisions.
    5. Applicants assert that the concerns sought to be addressed by
section 22(d) of the Act and rule 22c-1 under the Act with respect to
pricing are equally satisfied by the proposed method of pricing Shares.
Applicants maintain that while there is little legislative history
regarding section 22(d), its provisions, as well as those of rule 22c-
1, appear to have been designed to (a) prevent dilution caused by
certain riskless-trading schemes by principal underwriters and contract
dealers, (b) prevent unjust discrimination or preferential treatment
among buyers resulting from sales at different prices, and (c) assure
an orderly distribution of investment company shares by eliminating
price competition from Brokers offering shares at less than the
published sales price and repurchasing shares at more than the
published redemption price.
    6. Applicants believe that none of these purposes will be thwarted
by permitting Shares to trade in the secondary market at negotiated
prices. Applicants state that (a) secondary market trading in Shares
does not involve the Funds as parties and cannot result in dilution of
an investment in Shares, and (b) to the extent different prices exist
during a given trading day, or from day to day, such variances occur as
a result of third-party market forces, such as supply and demand.
Therefore, applicants assert that secondary market transactions in
Shares will not lead to discrimination or preferential treatment among
purchasers. Finally, applicants contend that the proposed distribution
system will be orderly because arbitrage activity should ensure that
the

difference between the market price of Shares and their NAV remains
narrow.

Section 22(e) of the Act

    7. Section 22(e) of the Act generally prohibits a registered
investment company from suspending the right of redemption or
postponing the date of payment of redemption proceeds for more than
seven days after the tender of a security for redemption. Applicants
observe that settlement of redemptions of the International Funds will
be contingent not only on the settlement cycle of the U.S. securities
markets but also on the delivery cycles present in foreign markets
where the International Funds invest. Applicants have been advised
that, under certain circumstances, the delivery cycles for transferring
Redemption Instruments to redeeming investors, coupled with local
market holiday schedules, will require a delivery process longer than 7
calendar days for International Funds. Applicants therefore request
relief from section 22(e) to provide payment or satisfaction of
redemptions within the maximum number of calendar days required for
such payment or satisfaction in the principal local markets where
transactions in the Portfolio Instruments of each International Fund
customarily clear and settle, up to a maximum of 14 calendar days.\17\
With respect to Future Funds that are International Funds, applicants
seek the same relief from section 22(e) only to the extent that
circumstances exist similar to those described in the application.
Except as set forth in the application or as disclosed in the SAI for a
Fund, deliveries of redemption proceeds for International Funds are
expected to be made within seven days.\18\
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    \17\ Rule 15c6-1 under the Exchange Act requires that most
transactions be settled within three business days of the trade
date. Applicants acknowledge that no relief obtained from the
requirements of section 22(e) will affect any obligations Applicants
may have under rule 15c6-1.
    \18\ Applicants state that the SAI will disclose those local
holidays (over the period of at least one year following the date of
the SAI), if any, that are expected to prevent the delivery of
redemption proceeds in seven calendar days and the maximum number of
days needed to deliver the proceeds for each International Fund.
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    8. Applicants submit that Congress adopted section 22(e) to prevent
unreasonable, undisclosed or unforeseen delays in the actual payment of
redemption proceeds. Applicants state that allowing redemption payments
for Creation Units of a Fund to be made within a maximum of 14 calendar
days would not be inconsistent with the spirit and intent of section
22(e). Applicants are not seeking relief from section 22(e) with
respect to International Funds that do not effect creations and
redemptions of Creation Units in-kind.

Section 12(d)(1) of the Act

    1. Section 12(d)(1)(A) of the Act prohibits a registered investment
company from acquiring shares of an investment company if the
securities represent more than 3% of the total outstanding voting stock
of the acquired company, more than 5% of the total assets of the
acquiring company, or, together with the securities of any other
investment companies, more than 10% of the total assets of the
acquiring company. Section 12(d)(1)(B) of the Act prohibits a
registered open-end investment company, its principal underwriter, or
any other broker or dealer from selling its shares to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock, or if the sale
will cause more than 10% of the acquired company's voting stock to be
owned by investment companies generally.
    2. Applicants request relief to permit Investing Funds (as defined
below) to acquire Shares in excess of the limits in section 12(d)(1)(A)
of the Act and to permit the Funds, their principal underwriters and
any Brokers to sell Shares to Investing Funds in excess of the limits
in section 12(d)(l)(B) of the Act (``Investing Fund Relief'').
Applicants request that these exemptions apply to each management
investment company or unit investment trust registered under the Act
that is not part of the same ``group of investment companies'' as the
Funds within the meaning of section 12(d)(1)(G)(ii) of the Act and that
enters into a Participation Agreement (as defined below) with a Fund
(such management investment companies are referred to herein as
``Investing Management Companies,'' such unit investment trusts are
referred to herein as ``Investing Trusts,'' and Investing Management
Companies and Investing Trusts together are referred to herein as
``Investing Funds''). Investing Funds do not include the Funds. Each
Investing Trust will have a sponsor (``Sponsor'') and each Investing
Management Company will have an investment adviser within the meaning
of section 2(a)(20)(A) of the Act (``Investing Fund Adviser'') that
does not control, is not controlled by or under common control with the
Adviser. Each Investing Management Company may also have one or more
investment advisers within the meaning of section 2(a)(20)(B) of the
Act (each, an ``Investing Fund Subadviser'').\19\ Each Investing Fund
Adviser and any Investing Fund Subadviser will be registered or not
subject to registration as an investment adviser under the Advisers
Act.
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    \19\ An Adviser may serve as subadviser to an Investing Fund.
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    3. Applicants submit that the proposed conditions to the requested
relief are designed to address the concerns underlying the limits in
section 12(d)(1), which include concerns about undue influence,
excessive layering of fees and overly complex structures.
    4. Applicants propose a condition to prohibit an Investing Fund or
Investing Fund Affiliate from causing an investment by an Investing
Fund in a Fund to influence the terms of services or transactions
between an Investing Fund an Investing Fund Affiliate and the Fund or
Fund Affiliate.\20\ Applicants propose a condition to limit the ability
of the Investing Fund Adviser, Sponsor, any person controlling,
controlled by, or under common control with such Adviser or Sponsor,
and any investment company or issuer that would be an investment
company but for sections 3(c)(1) or 3(c)(7) of the Act that is advised
or sponsored by the Investing Fund Adviser, the Sponsor, or any person
controlling, controlled by, or under common control with such Adviser
or Sponsor (``Investing Fund's Advisory Group'') from (individually or
in the aggregate) controlling a Fund within the meaning of section
2(a)(9) of the Act. The same prohibition would apply to any Investing
Fund Subadviser, any person controlling, controlled by, or under common
control with the Investing Fund Subadviser, and any investment company
or issuer that would be an investment company but for section 3(c)(1)
or 3(c)(7) of the Act (or portion of such investment company or issuer)
advised or sponsored by the Investing Fund Subadviser, or any person
controlling, controlled by, or under common control with the Investing
Fund Subadviser (``Investing Fund's Subadvisory Group'').
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    \20\ An ``Investing Fund Affiliate'' is any Investing Fund
Adviser, Investing Fund Subadviser, Sponsor, promoter or principal
underwriter of an Investing Fund, and any person controlling,
controlled by or under common control with any of these entities.
``Fund Affiliate'' is an investment adviser, promoter or principal
underwriter of a Fund or any person controlling, controlled by or
under common control with any of these entities.
---------------------------------------------------------------------------

    5. Applicants propose other conditions to limit the potential for
an Investing Fund and certain affiliates of an Investing Fund
(including Underwriting Affiliates) to exercise undue influence over a
Fund and

certain of its affiliates, including that no Investing Fund or
Investing Fund Affiliate (except to the extent it is acting in its
capacity as an investment adviser to a Fund) will cause a Fund to
purchase a security in an offering of securities during the existence
of an underwriting or selling syndicate of which a principal
underwriter is an Underwriting Affiliate (``Affiliated Underwriting'').
An ``Underwriting Affiliate'' is a principal underwriter in any
underwriting or selling syndicate that is an officer, director, member
of an advisory board, Investing Fund Adviser, Investing Fund
Subadviser, employee or Sponsor of the Investing Fund, or a person of
which any such officer, director, member of an advisory board,
Investing Fund Adviser, Investing Fund Subadviser, employee or Sponsor
is an affiliated person. An Underwriting Affiliate does not include any
person whose relationship to the Fund is covered by section 10(f) of
the Act.
    6. Applicants propose several conditions to address the concerns
regarding layering of fees and expenses. Applicants note that the board
of directors or trustees of any Investing Management Company, including
a majority of the directors or trustees who are not ``interested
persons'' within the meaning of section 2(a)(19) of the Act
(``disinterested directors or trustees''), will be required to find
that the advisory fees charged under the contract are based on services
provided that will be in addition to, rather than duplicative of,
services provided under the advisory contract of any Fund in which the
Investing Management Company may invest. In addition, an Investing Fund
Adviser, trustee of an Investing Trust (``Trustee'') or Sponsor, as
applicable, will waive fees otherwise payable to it by the Investing
Fund in an amount at least equal to any compensation (including fees
received pursuant to any plan adopted by a Fund under rule 12b-1 under
the Act) received from a Fund by the Investing Fund Adviser, Trustee or
Sponsor or an affiliated person of the Investing Fund Adviser, Trustee
or Sponsor, other than any advisory fees paid to the Investing Fund
Adviser, Trustee or Sponsor or its affiliated person by a Fund, in
connection with the investment by the Investing Fund in the Fund.
Applicants also propose a condition to prevent any sales charges or
service fees charged with respect to shares of an Investing Fund from
exceeding the limits applicable to a fund of funds set forth in NASD
Conduct Rule 2830.\21\
---------------------------------------------------------------------------

    \21\ Any references to NASD Conduct Rule 2830 include any
successor or replacement rule to NASD Conduct Rule 2830 that may be
adopted by the Financial Industry Regulatory Authority.
---------------------------------------------------------------------------

    7. Applicants submit that the proposed arrangement will not create
an overly complex fund structure. Applicants note that a Fund will be
prohibited from acquiring securities of any investment company or
company relying on sections 3(c)(1) or 3(c)(7) of the Act in excess of
the limits contained in section 12(d)(1)(A) of the Act, except to the
extent permitted by exemptive relief from the Commission permitting the
Fund to purchase shares of other investment companies for short-term
cash management purposes.
    8. To ensure that the Investing Funds understand and comply with
the terms and conditions of the requested order, any Investing Fund
that intends to invest in a Fund in reliance on the requested order
will be required to enter into a participation agreement
(``Participation Agreement'') with the Fund. The Participation
Agreement will include an acknowledgment from the Investing Fund that
it may rely on the order only to invest in the Funds and not in any
other investment company.

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

    9. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company, or an affiliated person of
such person (``second-tier affiliate''), from selling any security to
or purchasing any security from the company. Section 2(a)(3) of the Act
defines ``affiliated person'' to include any person directly or
indirectly owning, controlling, or holding with power to vote 5% or
more of the outstanding voting securities of the other person and any
person directly or indirectly controlling, controlled by, or under
common control with, the other person. Section 2(a)(9) of the Act
defines ``control'' as the power to exercise a controlling influence
over the management or policies of a company and provides that a
control relationship will be presumed where one person owns more than
25% of another person's voting securities. Each Fund may be deemed to
be controlled by an Adviser and hence affiliated persons of each other.
In addition, the Funds may be deemed to be under common control with
any other registered investment company (or series thereof) advised by
an Adviser (an ``Affiliated Fund'').
    10. Applicants request an exemption under sections 6(c) and 17(b)
of the Act from sections 17(a)(1) and 17(a)(2) of the Act to permit in-
kind purchases and redemptions of Creation Units from the Funds by
persons that are affiliated persons or second tier affiliates of the
Funds solely by virtue of one or more of the following: (a) Holding 5%
or more, or in excess of 25% of the outstanding Shares of one or more
Funds; (b) having an affiliation with a person with an ownership
interest described in (a); or (c) holding 5% or more, or more than 25%
of the Shares of one or more Affiliated Funds.\22\ Applicants also
request an exemption in order to permit a Fund to sell its Shares to
and redeem its Shares from, and engage in the transactions that would
accompany such sales and redemptions with, certain Investing Funds of
which the Funds are affiliated persons or second-tier affiliates.\23\
---------------------------------------------------------------------------

    \22\ Applicants are not seeking relief from section 17(a) for,
and the requested relief will not apply to, transactions where a
Fund could be deemed an affiliated person, or an affiliated person
of an affiliated person, of an Investing Fund because the Adviser to
the Funds is also an investment adviser to an Investing Fund.
    \23\ Applicants believe most Investing Funds will purchase
Shares in the secondary market and will not purchase Creation Units
directly from a Fund. To the extent that purchases and sales of
Shares occur in the secondary market and not through principal
transactions directly between an Investing Fund and a Fund, relief
from section 17(a) would not be necessary. However, the requested
relief would apply to direct sales of Shares in Creation Units by a
Fund to an Investing Fund and redemption of those Shares. The
requested relief also is intended to cover the in-kind transactions
that may accompany such sales and redemptions.
---------------------------------------------------------------------------

    11. Applicants assert that no useful purpose would be served by
prohibiting such affiliated persons from making in-kind purchases or
in-kind redemptions of Shares of a Fund in Creation Units. Except as
described above, the Deposit Instruments and the Redemption Instruments
will be the same regardless of the identity of the purchaser or
redeemer, respectively, and will correspond pro rata to the Fund's
Portfolio Instruments. Both the deposit procedures for in-kind
purchases of Creation Units and the redemption procedures for in-kind
redemptions will be the same for all purchases and redemptions. Deposit
Instruments and Redemption Instruments will be valued in the same
manner as the Portfolio Instruments held by the relevant Funds.
Therefore, applicants state that such valuation method creates no
opportunity for affiliated persons or second-tier affiliates to effect
a transaction detrimental to other holders of Shares of that Fund.
Applicants also believe that in-kind purchases and redemptions will not
result in self-dealing or overreaching of any Fund.
    12. Applicants also submit that the sale of Shares to and
redemption of Shares from an Investing Fund meets the standards for
relief under sections 17(b) and 6(c) of the Act. Applicants

note that any consideration paid for the purchase or redemption of
Creation Units directly from a Fund will be based on the NAV of the
Fund in accordance with policies and procedures set forth in the Fund's
registration statement.\24\ Applicants also state that the proposed
transactions are consistent with the general purposes of the Act and
appropriate in the public interest.
---------------------------------------------------------------------------

    \24\ Applicants acknowledge that the receipt of compensation by
(a) an affiliated person of an Investing Fund, or an affiliated
person of such person, for the purchase by the Investing Fund of
Shares of a Fund or (b) an affiliated person of a Fund, or an
affiliated person of such person, for the sale by the Fund of its
Shares to an Investing Fund, may be prohibited by section 17(e)(1)
of the Act. The Participation Agreement also will include this
acknowledgment.
---------------------------------------------------------------------------

Applicants' Conditions

    The Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:

A. ETF Relief

    1. As long as a Fund operates in reliance on the requested order,
the Shares of the Fund will be listed on an Exchange.
    2. Neither the Trust nor any Fund will be advertised or marketed as
an open-end investment company or a mutual fund. Any advertising
material that describes the purchase or sale of Creation Units or
refers to redeemability will prominently disclose that the Shares are
not individually redeemable and that owners of the Shares may acquire
those Shares from the Fund and tender those Shares for redemption to
the Fund in Creation Units only.
    3. The Web site for the Funds, which is and will be publicly
accessible at no charge, will contain, on a per Share basis, for each
Fund the prior Business Day's NAV and the market closing price or Bid/
Ask Price, and a calculation of the premium or discount of the market
closing price or Bid/Ask Price against such NAV.
    4. On each Business Day, before commencement of trading in Shares
on the Exchange, the Fund will disclose on its Web site the identities
and quantities of the Portfolio Instruments held by the Fund that will
form the basis for the Fund's calculation of NAV at the end of the
Business Day.
    5. No Adviser or Subadviser, directly or indirectly, will cause any
Authorized Participant (or any investor on whose behalf an Authorized
Participant may transact with the Fund) to acquire any Deposit
Instrument for the Fund through a transaction in which the Fund could
not engage directly.
    6. The requested relief to permit ETF operations will expire on the
effective date of any Commission rule under the Act that provides
relief permitting the operation of actively managed ETFs.

B. Section 12(d)(1) Relief

    1. The members of the Investing Fund's Advisory Group will not
control (individually or in the aggregate) a Fund within the meaning of
section 2(a)(9) of the Act. The members of the Investing Fund's
Subadvisory Group will not control (individually or in the aggregate) a
Fund within the meaning of section 2(a)(9) of the Act. If, as a result
of a decrease in the outstanding voting securities of a Fund, the
Investing Fund's Advisory Group or the Investing Fund's Subadvisory
Group, each in the aggregate, becomes a holder of more than 25 percent
of the outstanding voting securities of a Fund, it will vote its Shares
of the Fund in the same proportion as the vote of all other holders of
the Fund's Shares. This condition does not apply to the Investing
Fund's Subadvisory Group with respect to a Fund for which the Investing
Fund Subadviser or a person controlling, controlled by or under common
control with the Investing Fund Subadviser acts as the investment
adviser within the meaning of section 2(a)(20)(A) of the Act.
    2. No Investing Fund or Investing Fund Affiliate will cause any
existing or potential investment by the Investing Fund in a Fund to
influence the terms of any services or transactions between the
Investing Fund or an Investing Fund Affiliate and the Fund or a Fund
Affiliate.
    3. The board of directors or trustees of an Investing Management
Company, including a majority of the disinterested directors or
trustees, will adopt procedures reasonably designed to ensure that the
Investing Fund Adviser and any Investing Fund Subadviser are conducting
the investment program of the Investing Management Company without
taking into account any consideration received by the Investing
Management Company or an Investing Fund Affiliate from a Fund or a Fund
Affiliate in connection with any services or transactions.
    4. Once an investment by an Investing Fund in the Shares of a Fund
exceeds the limit in section 12(d)(1)(A)(i) of the Act, the Board of a
Fund, including a majority of the disinterested Board members, will
determine that any consideration paid by the Fund to the Investing Fund
or an Investing Fund Affiliate in connection with any services or
transactions: (i) Is fair and reasonable in relation to the nature and
quality of the services and benefits received by the Fund; (ii) is
within the range of consideration that the Fund would be required to
pay to another unaffiliated entity in connection with the same services
or transactions; and (iii) does not involve overreaching on the part of
any person concerned. This condition does not apply with respect to any
services or transactions between a Fund and its investment adviser(s),
or any person controlling, controlled by or under common control with
such investment adviser(s).
    5. The Investing Fund Adviser, or Trustee or Sponsor, as
applicable, will waive fees otherwise payable to it by the Investing
Fund in an amount at least equal to any compensation (including fees
received pursuant to any plan adopted by a Fund under rule 12b-1 under
the Act) received from a Fund by the Investing Fund Adviser, or Trustee
or Sponsor, or an affiliated person of the Investing Fund Adviser, or
Trustee or Sponsor, other than any advisory fees paid to the Investing
Fund Adviser, or Trustee or Sponsor, or its affiliated person by the
Fund, in connection with the investment by the Investing Fund in the
Fund. Any Investing Fund Subadviser will waive fees otherwise payable
to the Investing Fund Subadviser, directly or indirectly, by the
Investing Management Company in an amount at least equal to any
compensation received from a Fund by the Investing Fund Subadviser, or
an affiliated person of the Investing Fund Subadviser, other than any
advisory fees paid to the Investing Fund Subadviser or its affiliated
person by the Fund, in connection with the investment by the Investing
Management Company in the Fund made at the direction of the Investing
Fund Subadviser. In the event that the Investing Fund Subadviser waives
fees, the benefit of the waiver will be passed through to the Investing
Management Company.
    6. No Investing Fund or Investing Fund Affiliate (except to the
extent it is acting in its capacity as an investment adviser to a Fund)
will cause a Fund to purchase a security in an Affiliated Underwriting.
    7. The Board of a Fund, including a majority of the disinterested
Board members, will adopt procedures reasonably designed to monitor any
purchases of securities by the Fund in an Affiliated Underwriting, once
an investment by an Investing Fund in the securities of the Fund
exceeds the limit of section 12(d)(1)(A)(i) of the Act, including any
purchases made directly from an Underwriting Affiliate. The Board will
review these purchases periodically, but no less frequently than

annually, to determine whether the purchases were influenced by the
investment by the Investing Fund in the Fund. The Board will consider,
among other things: (a) Whether the purchases were consistent with the
investment objectives and policies of the Fund; (b) how the performance
of securities purchased in an Affiliated Underwriting compares to the
performance of comparable securities purchased during a comparable
period of time in underwritings other than Affiliated Underwritings or
to a benchmark such as a comparable market index; and (c) whether the
amount of securities purchased by the Fund in Affiliated Underwritings
and the amount purchased directly from an Underwriting Affiliate have
changed significantly from prior years. The Board will take any
appropriate actions based on its review, including, if appropriate, the
institution of procedures designed to assure that purchases of
securities in Affiliated Underwritings are in the best interest of
shareholders of the Fund.
    8. Each Fund will maintain and preserve permanently in an easily
accessible place a written copy of the procedures described in the
preceding condition, and any modifications to such procedures, and will
maintain and preserve for a period of not less than six years from the
end of the fiscal year in which any purchase in an Affiliated
Underwriting occurred, the first two years in an easily accessible
place, a written record of each purchase of securities in Affiliated
Underwritings once an investment by an Investing Fund in the securities
of the Fund exceeds the limit of section 12(d)(1)(A)(i) of the Act,
setting forth from whom the securities were acquired, the identity of
the underwriting syndicate's members, the terms of the purchase, and
the information or materials upon which the Board's determinations were
made.
    9. Before investing in a Fund in excess of the limit in section
12(d)(1)(A), an Investing Fund will execute a Participation Agreement
with the Fund stating, without limitation, that their respective boards
of directors or trustees and their investment advisers, or Trustee and
Sponsor, as applicable, understand the terms and conditions of the
order, and agree to fulfill their responsibilities under the order. At
the time of its investment in Shares of a Fund in excess of the limit
in section 12(d)(1)(A)(i), an Investing Fund will notify the Fund of
the investment. At such time, the Investing Fund will also transmit to
the Fund a list of the names of each Investing Fund Affiliate and
Underwriting Affiliate. The Investing Fund will notify the Fund of any
changes to the list as soon as reasonably practicable after a change
occurs. The Fund and the Investing Fund will maintain and preserve a
copy of the order, the Participation Agreement, and the list with any
updated information for the duration of the investment and for a period
of not less than six years thereafter, the first two years in an easily
accessible place.
    10. Before approving any advisory contract under section 15 of the
Act, the board of directors or trustees of each Investing Management
Company, including a majority of the disinterested directors or
trustees, will find that the advisory fees charged under such contract
are based on services provided that will be in addition to, rather than
duplicative of, the services provided under the advisory contract(s) of
any Fund in which the Investing Management Company may invest. These
findings and their basis will be recorded fully in the minute books of
the appropriate Investing Management Company.
    11. Any sales charges and/or service fees charged with respect to
shares of an Investing Fund will not exceed the limits applicable to a
fund of funds as set forth in NASD Conduct Rule 2830.
    12. No Fund relying on the section 12(d)(1) Relief will acquire
securities of any investment company or company relying on section
3(c)(1) or 3(c)(7) of the Act in excess of the limits contained in
section 12(d)(1)(A) of the Act, except to the extent permitted by
exemptive relief from the Commission permitting the Fund to purchase
shares of other investment companies for short-term cash management
purposes.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-07415 Filed 3-29-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 78, Number 128 (Wednesday, July 3, 2013)]
[Notices]
[Pages 40237-40239]
[FR Doc No: 2013-15933]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69881; File No. SR-NYSEMKT-2013-57]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and
Immediate Effectiveness of Proposed Rule Change Amending Exchange Rule
980NY To Modify the Information Disseminated at the Initiation of a
Complex Order Auction

June 27, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on June 25, 2013, NYSE MKT LLC (``NYSE MKT'' or ``Exchange'') filed
with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the Exchange. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 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 Exchange Rule 980NY to modify the
information disseminated at the initiation of a Complex Order Auction.
The text of the proposed rule change is available on the Exchange's Web
site at www.nyse.com, at the principal office of the Exchange, and at
the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend Exchange Rule 980NY to modify the
information disseminated at the initiation of a Complex Order Auction
(``COA'').
    Current Rule 980NY(e)(2) provides that upon receipt of a COA-
eligible order, as defined in Rule 980NY(e)(1), and at the direction of
the entering ATP Holder that an auction be initiated, the Exchange will
send an automated request for responses (``RFR'') message to all ATP
Holders who subscribe to RFR messages. RFR messages identify the
component series, the size of the order and any contingencies, but do
not identify the side of the market. ATP Holders then have an
opportunity to submit bids and offers with the price and size they
would be willing to participate in the execution of the COA-eligible
order (an ``RFR Response'').
    NYSE Amex Options proposes to amend Rule 980NY(e)(2) to include the
side (i.e., buy or sell) of a Complex Order entered into COA when
broadcasting automated RFRs to ATP Holders. This proposed rule change
is similar to a recent change by the Chicago Board Options Exchange,
Inc. (``CBOE'').\3\ Like the CBOE, because same-side responses to an
RFR would not trade with the COA-eligible order, the Exchange has
determined that the submission of RFR Responses on the same side as the
COA-eligible order are [sic] unnecessary.\4\ In order to reduce the
number responses on the same side of the market as the COA-eligible
order, the Exchange now proposes to amend Rule 980NY(e)(2) to include
the side of the market of the order being auctioned when sending out an
RFR. By providing the side of the market, ATP Holders will be able to
tailor their responses to RFRs and will only need to submit one order
on the contra side of the order being auctioned, as opposed to two
orders, one on each side of the COA-eligible order, as is generally the
case today. In addition, the Exchange believes that the dissemination
of the additional information about the terms of an order will
encourage more meaningful and competitively priced RFR Responses, which
could result in deeper liquidity

and better prices for market participants.
---------------------------------------------------------------------------

    \3\ See Exchange Act Release No. 68095 (October 24, 2012), 77 FR
65751 (October 30, 2012) (Order approving SR-CBOE-2012-85) (``CBOE
Filing'').
    \4\ See CBOE Filing.
---------------------------------------------------------------------------

    Because a same-side RFR Response cannot trade with a COA-eligible
order, the Exchange considers same-side RFR Responses to be unnecessary
to the COA process. Therefore, the Exchange proposes to amend Rule
980NY(e)(4) to provide that RFR Responses must be on the opposite side
of the COA-eligible order and that same-side RFR Responses will be
rejected by the Exchange. Requiring that RFR Responses be on the
opposite side of a COA-eligible order and rejecting same-side RFR
Responses is consistent with the processing of RFR Responses by the
CBOE.\5\ The Exchange believes that the proposed rule change will
improve the efficiency of the COA process by eliminating excess RFR
Responses that can never actually trade with the COA-eligible order.\6\
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    \5\ See CBOE Filing.
    \6\ The Exchange notes that only same-side Responses will be
rejected and that unrelated Complex Orders on the same side of the
market as a COA-eligible order that are received during the Response
Time Interval will continue to be processed pursuant to Rule
980NY(e)(8).
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    Pursuant to this proposed rule change, same-side RFR Responses will
be rejected, therefore incoming RFR Responses will no longer be
eligible to trade against same-side RFR Responses. Accordingly, the
Exchange proposes to delete a reference to RFR Responses in Rule
980NY(e)(7).
    The Exchange also proposes to amend Rule 980NY(e)(4) by correcting
the rule text describing how RFR Responses are treated. Existing rule
text states that RFR Responses will be ranked and displayed in the
Consolidated Book. However, in accordance with Rule 980NY(e)(7), RFR
Responses are only firm with respect to COA-eligible orders and
unrelated orders that are received during the Response Time Interval,
as defined in Rule 980NY(e)(3), and any unexecuted RFR Responses will
expire at the end of the Response Time Interval (signifying the end of
the auction). Because RFR Responses are only firm with respect to COA-
eligible orders and unrelated orders that are received during an
auction, and the fact that unexecuted RFR Responses expire at the
conclusion of the auction, RFR Responses should not be ranked and/or
displayed in the Consolidated Book. Thus, the language stating that RFR
Responses will be ranked and displayed in the Consolidated Book is
inaccurate. The Exchange therefore proposes to delete language in Rule
980NY(e)(4) stating that RFR Responses will be ranked and displayed in
the Consolidated Book and affirmatively state in Rule 980NY(e)(7) that
RFR Responses will not be displayed in the Consolidated Book.
    The Exchange also proposes to make non-substantive changes to Rule
980NY subsections (e)(2) and (e)(7) by correcting minor typographical
errors in the existing rule text.
    The Exchange will announce the implementation date of the systems
functionality associated with the proposed rule change by Trader Update
to be published no later than 90 days following the effective date. The
implementation date will be no later than 90 days following the
issuance of the Trader Update.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) \7\ of the
Securities Exchange Act of 1934 (the ``Act''), in general, and furthers
the objectives of Section 6(b)(5),\8\ in that it is designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in facilitating transactions in securities, and to
remove impediments to and perfect the mechanisms of a free and open
market and a national market system. In particular, the Exchange
believes the proposed rule change protects investors and is in the
public interest because it will eliminate unnecessary RFR Responses on
the same side of the market as a COA-eligible order, which will
ultimately make the COA process more efficient. In addition, the
Exchange believes that including the side of the market in the RFR will
encourage more meaningful and competitively priced RFR Responses, which
could result in deeper liquidity and better prices for market
participants. Disseminating additional information regarding the terms
of an order should reduce confusion and provide for a less disruptive
COA process, thus aiding in perfecting the mechanisms of the open
market.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Also, by amending Rule 980NY(e)(4) and (7) the Exchange is
correcting inaccurate language describing the functionality of the COA
for the reasons set forth above. Correcting inaccurate rule language
will provide clarity as to the functionality of the COA. The Exchange
believes that having clear and precise rules furthers the objectives of
the Act by removing of impediments to and helping to perfect the
mechanisms of a free and open market and a national market system.

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. Specifically, the proposal
is structured to offer the same enhancement to all market participants,
regardless of account type, and will not impose a competitive burden on
any participant. The Exchange believes that adopting similar COA rules
to those of other exchanges will allow NYSE Amex Options to more
efficiently compete for complex order business. In addition, by
disseminating enhanced RFRs, ATP Holders will be able to provide more
efficient responses thus creating a more competitive market. The
Exchange does not believe that requiring RFR responses to be on the
opposite side of a COA eligible order and/or rejecting same-side
Responses will impose any burden on market participants because market
participants will still have the ability to submit unrelated same-side
Complex Orders to the Exchange.
    Because this proposal adopts a rule that is already in effect at a
competing exchange, the Exchange does not believe that the proposed
changes will impose a burden on other options exchanges. Rather, making
this functionality available to market participants on the Exchange may
foster more competition, thus improving the overall efficacy of the
options markets.

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

    Because the foregoing proposed rule change: (1) Does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms does not become operative for 30 days after the
date of this filing, or such shorter time as the Commission may
designate if consistent with the protection of investors and the public
interest, the proposed rule change has become effective pursuant to
Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to provide the Commission
with written notice of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change,
at least five business days prior to the date of filing of the
proposed rule change, or such shorter time as designated by the
Commission. The Exchange has fulfilled this requirement.

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    At any time within 60 days of the filing of the 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.

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-2013-57 on the subject line.

Paper Comments

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

    All submissions should refer to File Number SR-NYSEMKT-2013-57.
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 Room, 100 F
Street NE., Washington, DC 20549, on official business days between the
hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be
available for inspection and copying at the principal office of the
Exchange. 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-2013-57 and should be submitted on or before July 24, 2013.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-15933 Filed 7-2-13; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 120 (Friday, June 21, 2019)]
[Notices]
[Pages 29191-29192]
[FR Doc No: 2019-13234]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. CP19-475-000]

Gulfstream Natural Gas System, L.L.C.; Notice of Application

    Take notice that on June 3, 2019, Gulfstream Natural Gas System,
L.L.C. (Gulfstream), 2701 North Rocky Point Drive, Suite 1050, Tampa,
Florida 33607, filed an application pursuant to section 7(b) and 7(c)
of the Natural Gas Act (NGA) and Part 157 of the Commission's
regulations seeking authorization for its Phase VI Expansion Project.
Gulfstream states the proposed project is designed to create
approximately 78,000 dekatherms per day of mainline capacity from
existing points of receipt in Mississippi and Alabama to an existing
point of delivery in Manatee County, Florida, all as more fully
described in the application which is on file with the Commission and
open to public inspection. The filing may also be viewed on the web at
http://www.ferc.gov using the ``eLibrary'' link. Enter the docket
number excluding the last three digits in the docket number field to
access the document. For assistance, contact FERC at
<EMAIL_ADDRESS>or call toll-free,<PHONE_NUMBER> or TTY,
(202) 502-8659.
    Any questions regarding this application should be directed to Lisa
A. Connolly, Director, Rates and Certificates, Gulfstream Natural Gas
System, L.L.C., P.O. Box 1642, Houston, Texas 77251, by calling (713)
627-4102, by fax at<PHONE_NUMBER>, or by email
<EMAIL_ADDRESS>    Specifically, Gulfstream seeks authorization to: (i) Install one
16,000 horsepower turbine driven compressor unit at its existing
Compressor Station 410 located in Mobile County, Alabama; (ii) abandon
in place approximately 4 miles of 36-inch-diameter pipeline in Mobile
County, Alabama; (iii) construct approximately 4 miles of thicker
walled 36-inch-diameter pipeline to replace the abandoned pipeline;
(iv) increase the maximum allowable operating pressure of approximately
59 miles of 36-inch-diameter onshore and offshore pipeline; (v)
construct metering equipment at its existing Compressor Station 420 in
Manatee County, Florida; (vi) construct other related auxiliary
facilities; and (vii) establish and charge initial incremental recourse
rates and system fuel retainage for firm service. Gulfstream estimates
the cost of the proposed project to be approximately $155 million.
Gulfstream requests that the Commission issue an order granting
authorization by June 1, 2020, to allow Gulfstream to obtain a special
permit for the increased pipeline pressure from the Pipeline and
Hazardous Materials Safety Administration and commence construction by
November 1, 2021, to meet the requested in service date of December 1,
2022.
    Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9,
within 90 days of this Notice the Commission staff will either:
Complete its environmental assessment (EA) and place it into the
Commission's public record (eLibrary) for this proceeding; or issue a
Notice of Schedule for Environmental Review. If a Notice of Schedule
for Environmental Review is issued, it will indicate, among other
milestones, the anticipated date for the Commission staff's issuance of
the EA for this proposal. The filing of the EA in the Commission's
public record for this proceeding or the issuance of a Notice of
Schedule for Environmental Review will serve to notify federal and
state agencies of the timing for the completion of all necessary
reviews, and the subsequent need to complete all federal authorizations
within 90 days of the date of issuance of the Commission staff's EA.
    There are two ways to become involved in the Commission's review of
this project. First, any person wishing to obtain legal status by
becoming a party to the proceedings for this project should, on or
before the comment date stated below file with the Federal Energy
Regulatory Commission, 888 First Street NE, Washington, DC 20426, a
motion to intervene in accordance with the requirements of the
Commission's Rules of Practice and Procedure (18 CFR 385.214 or
385.211) and the Regulations under the NGA (18 CFR 157.10). A person
obtaining party status will be placed on the service list maintained by
the Secretary of the Commission and will receive copies of all
documents filed by the applicant and by all other parties. A party must
submit 3 copies of filings made in the proceeding with the Commission
and must provide a copy to the applicant and to every other party. Only
parties to the proceeding can ask for court review of Commission orders
in the proceeding.
    However, a person does not have to intervene in order to have
comments considered. The second way to participate is by filing with
the Secretary of the Commission, as soon as possible, an original and
two copies of comments in support of or in opposition to this project.
The Commission will consider these comments in determining the
appropriate action to be taken, but the filing of a comment alone will
not serve to make the filer a party to the proceeding. The Commission's
rules require that persons filing comments in opposition to the project
provide copies of their protests only to the party or parties directly
involved in the protest.
    Persons who wish to comment only on the environmental review of
this project should submit an original and two copies of their comments
to the Secretary of the Commission. Environmental commentors will be
placed on the Commission's environmental mailing list and will be
notified of any meetings associated with the Commission's environmental
review process. Environmental commentors will not be required to serve
copies of filed documents on all other parties. However, the non-party
commentors will not receive copies of all documents filed by other
parties or issued by the Commission and will not have the right to seek
court review of the Commission's final order.
    As of the February 27, 2018 date of the Commission's order in
Docket No. CP16-4-001, the Commission will apply its revised practice
concerning out-of-time motions to intervene in any new Natural Gas Act
section 3 or section 7 proceeding.\1\ Persons desiring to become a
party to a certificate proceeding are to intervene in a timely manner.
If seeking to intervene out-of-time, the movant is required to ``show

good cause why the time limitation should be waived,'' and should
provide justification by reference to factors set forth in Rule
214(d)(1) (18 CFR 385.214(d)(1)) of the Commission's Rules and
Regulations.
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    \1\ Tennessee Gas Pipeline Company, L.L.C., 162 FERC ] 61,167 at
P 50 (2018).
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    The Commission strongly encourages electronic filings of comments,
protests, and interventions in lieu of paper using the ``eFiling'' link
at http://www.ferc.gov. Persons unable to file electronically should
submit an original and 3 copies of the protest or intervention to the
Federal Energy regulatory Commission, 888 First Street NE, Washington,
DC 20426.
    Comment Date: 5:00 p.m. Eastern Time on July 8, 2019.

    Dated: June 17, 2019.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2019-13234 Filed 6-20-19; 8:45 am]
BILLING CODE 6717-01-P