[Federal Register Volume 83, Number 169 (Thursday, August 30, 2018)]
[Notices]
[Pages 44322-44330]
[FR Doc No: 2018-18780]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33213; File No. 812-14807]

THL Credit, Inc., et al.

August 24, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under sections 17(d) and 57(i)
of the Investment Company Act of 1940 (the ``Act'') and rule 17d-1
under the Act to permit certain joint transactions otherwise prohibited
by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.

SUMMARY OF APPLICATION: Applicants request an order to permit certain
business development companies (``BDCs'') and closed-end management
investment companies to co-invest in portfolio companies with each
other and with certain affiliated investment funds and accounts.

APPLICANTS: THL Credit, Inc. (``TCRD''), THL Credit Advisors LLC
(``THLCA''), THL Credit Senior Loan Strategies LLC (``SLS,'' together
with THLCA, the ``THL Advisers''), THL Credit Holdings, Inc. (``TCRD
Subsidiary''), THL Credit Bank Loan Select Fund, THL Credit Wind River
2012-1 CLO Ltd., THL Credit Wind River 2013-1 CLO Ltd., THL Credit Wind
River 2013-2 CLO Ltd., THL Credit Wind River 2014-1 CLO Ltd., THL
Credit Wind River 2014-2 CLO Ltd., THL Credit Wind River 2014-3 CLO
Ltd., THL Credit Wind River 2015-1 CLO Ltd., THL Credit Wind River
2015-2 CLO Ltd., THL Credit Wind River 2016-1 CLO Ltd., THL Credit Wind
River 2016-2 CLO Ltd., THL Credit Wind River 2017-1 CLO Ltd., THL
Credit Wind River 2017-2 CLO Ltd., THL Credit Wind River 2017-3 CLO
Ltd., THL Credit Wind River 2017-4 CLO Ltd., THL Credit Wind River
2018-1 CLO Ltd., THL Credit Lake Shore MM CLO 2017-1, Ltd., THL Credit
Direct Lending Fund III LLC, THL Credit Direct Lending Co-Invest III
(E) LLC, THL Credit Direct Lending Co-Invest III LLC, THL Credit Direct
Lending Fund III (A) LLC, THL Credit Bank Loan Select Fund (Offshore),
THL Credit Wind River 2018-2 CLO Ltd., THL Credit Wind River 2018-3 CLO
Ltd., THL Credit Lake Shore MM CLO II, Ltd., and THL Credit Strategic
Funding LLC.

FILING DATES: The application was filed on August 9, 2017, and amended
on July 23, 2018, and August 20, 2018.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on September 18, 2018, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, the reason
for the request, and the issues contested. Persons who wish to be
notified of a hearing may request notification by writing to the
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
St. NE, Washington, DC 20549-1090. Applicants: 100 Federal Street, 31st
Floor, Boston, MA 02110.

FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817 or Kaitlin C. Bottock, Branch Chief, at<PHONE_NUMBER>
(Chief Counsel's Office, Division of Investment Management).

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

Introduction

    1. The applicants request an order of the Commission under sections
17(d) and 57(i) and rule 17d-1 thereunder (the ``Order'') to permit,
subject to the terms and conditions set forth in the application (the
``Conditions''), a Regulated Fund \1\ and one or more other Regulated
Funds and/or one or more Affiliated Funds \2\ to enter into Co-

Investment Transactions with each other. ``Co-Investment Transaction''
means any transaction in which a Regulated Fund (or its Wholly-Owned
Investment Sub) participated together with one or more Affiliated Funds
and/or one or more other Regulated Funds in reliance on the Order.
Potential Co-Investment Transaction'' means any investment opportunity
in which a Regulated Fund (or its Wholly-Owned Investment Sub) could
not participate together with one or more Affiliated Funds and/or one
or more other Regulated Funds without obtaining and relying on the
Order.\3\
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    \1\ ``Regulated Funds'' means TCRD, the Future Regulated Funds
and the BDC Downstream Funds (defined below). ``Future Regulated
Fund'' means a closed-end management investment company (a) that is
registered under the Act or has elected to be regulated as a BDC,
(b) whose investment adviser is an Adviser, and (c) intends to
participate in the Co-investment Program.
    ``Adviser'' means THLCA and SLS, together with any future
investment adviser that (i) controls, is controlled by or is under
common control with THLCA or SLS, as applicable, (ii) is registered
as an investment adviser under the Investment Advisers Act of 1940
(``Advisers Act''), and (iii) is not a Regulated Fund or a
subsidiary of a Regulated Fund.
    \2\ ``Affiliated Fund'' means any Existing Affiliated Fund
(identified in Appendix A to the application), Existing THL
Proprietary Accounts (as defined below), Future THL Proprietary
Accounts, and any entity (a) whose investment adviser is an Adviser,
(b) that either (i) would be an investment company but for section
3(c)(1), 3(c)(5)(C) or 3(c)(7) of the Act or (ii) relies on rule 3a-
7 under the Act, (c) that intends to participate in the Co-
Investment Program, and (d) that is not a BDC Downstream Fund.
Applicants represent that no Existing Affiliated Fund is a BDC
Downstream Fund. ``Future THL Proprietary Account'' means any direct
or indirect, wholly- or majority-owned subsidiary of THLCA, or any
other Adviser, that is formed in the future that, from time to time,
may hold various financial assets in a principal capacity.
    ``BDC Downstream Fund'' means, with respect to any Regulated
Fund that is a BDC, an entity (i) that the BDC directly or
indirectly controls, (ii) that is not controlled by any person other
than the BDC (except a person that indirectly controls the entity
solely because it controls the BDC), (iii) that would be an
investment company but for section 3(c)(1) or 3(c)(7) of the Act,
(iv) whose investment adviser is an Adviser, (v) that is not a
Wholly-Owned Investment Sub and (vi) is not a Greenway Entity or
Logan JV (each defined below).
    Affiliated Funds may include funds that are ultimately
structured as collateralized loan obligation funds (``CLOs''). Such
CLOs would be investment companies but for the exception provided in
section 3(c)(7) of the Act or their ability to rely on rule 3a-7 of
the Act. During the investment period of a CLO, the CLO may engage
in customary transactions with another Affiliated Fund on a
secondary basis at fair market value. For purposes of the Order, any
securities that were acquired by an Affiliated Fund in a Co-
Investment Transaction that are then transferred to an Affiliated
Fund that is or will become a CLO (an ``Affiliated Fund CLO'') will
be treated as if the Affiliated Fund CLO acquired such securities in
a Co-Investment Transaction and such securities will remain subject
to the Order.
    \3\ All existing entities that currently intend to rely on the
Order have been named as applicants and any existing or future
entities that may rely on the Order in the future will comply with
its terms and Conditions set forth in the application. TCRD manages
two limited term investment funds, THL Credit Greenway Fund LLC and
THL Credit Greenway Fund II LLC (each, a ``Greenway Entity,'' and
together, the ``Greenway Entities''). TCRD and the Greenway Entities
previously agreed to conditions that would apply to any co-
investment transactions between them, but the Greenway Entities are
not applicants to the Order. Accordingly, the Greenway Entities
would not be able to rely on the requested Order to participate in
Co-Investment Transactions pursuant to the Order. Moreover, the
Greenway Entities will not be making any new or follow-on co-
investments with TCRD because the Greenway Entities are fully
invested and do not, and will not at any point, have any capital to
invest. No Greenway Entity will have an interest in any issuer that
is the subject of a Co-Investment Transaction completed pursuant to
the Order, and TCRD will not form or manage another entity
structured in the same manner as the Greenway Entities.
Additionally, THL Credit Logan JV LLC (``Logan JV''), a joint
venture with TCRD and Perspecta Trust LLC, would not be able to rely
on the requested Order and, accordingly, would not participate in
Co-Investment Transactions pursuant to the Order. No entity that
holds an interest in Logan JV is or would be an affiliated person,
or an affiliated person of an affiliated person, of TCRD within the
meaning of section 2(a)(3) of the Act, other than by virtue of its
ownership interest in Logan JV.
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Applicants

    2. TCRD is a closed-end management investment company incorporated
in Delaware that has elected to be regulated as a BDC under the Act.\4\
TCRD's Board \5\ currently consists of seven directors, five of whom
are Independent Directors.\6\ TCRD Subsidiary, a Delaware corporation,
is a wholly-owned subsidiary of TCRD and holds equity or equity-like
investments in portfolio companies organized as limited liability
companies (or other forms of pass-through entities). TCRD Subsidiary is
excluded from the definition of ``investment company'' by section
3(c)(7) of the Act.
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    \4\ Section 2(a)(48) defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in section 55(a)(1) through
55(a)(3) and makes available significant managerial assistance with
respect to the issuers of such securities.
    \5\ ``Board'' means (i) with respect to a Regulated Fund other
than a BDC Downstream Fund, the board of directors (or the
equivalent) of the Regulated Fund and (ii) with respect to a BDC
Downstream Fund, the Independent Party of the BDC Downstream Fund.
    ``Independent Party'' means, with respect to a BDC Downstream
Fund, (i) if the BDC Downstream Fund has a board of directors (or
the equivalent), the board or (ii) if the BDC Downstream Fund does
not have a board of directors (or the equivalent), a transaction
committee or advisory committee of the BDC Downstream Fund.
    \6\ ``Independent Director'' means a member of the Board of any
relevant entity who is not an ``interested person'' as defined in
2(a)(19) of the Act. No Independent Director of a Regulated Fund
(including any non-interested member of an Independent Party) will
have a financial interest in any Co-Investment Transaction, other
than indirectly through share ownership in one of the Regulated
Funds.
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    3. THLCA, a Delaware limited liability company that is registered
under the the Advisers Act, serves as the investment adviser to TCRD
and to certain Existing Affiliated Funds. SLS, a Delaware limited
liability company that is registered as an investment adviser under the
Advisers Act, serves as investment adviser to certain Existing
Affiliated Funds. SLS is a wholly-owned subsidiary of THLCA. THLCA and
its direct and indirect wholly-owned subsidiaries may hold various
financial assets in a principal capacity (the ``Existing THL
Proprietary Accounts'' and together with any Future THL Proprietary
Account, the ``THL Proprietary Accounts'').
    4. The Existing Affiliated Funds are the investment funds
identified in Appendix A to the application. Applicants represent that
each Existing Affiliated Fund is a separate and distinct legal entity
and each would be an investment company but for section 3(c)(1),
3(c)(5)(C) or 3(c)(7) of the Act.
    5. Each of the applicants may be deemed to be controlled by THLP
Debt Partners L.P. (``THLP''). THLP owns controlling interests in the
Advisers and, thus, may be deemed to control the Regulated Funds and
the Affiliated Funds. Applicants state that THLP does not currently
offer investment advisory services to any person and is not expected to
do so in the future. Applicants state that as a result, THLP has not
been included as an applicant.
    6. Applicants state that a Regulated Fund may, from time to time,
form one or more Wholly-Owned Investment Subs.\7\ Such a subsidiary may
be prohibited from investing in a Co-Investment Transaction with a
Regulated Fund (other than its parent) or any Affiliated Fund because
it would be a company controlled by its parent Regulated Fund for
purposes of section 57(a)(4) and rule 17d-1. Applicants request that
each Wholly-Owned Investment Sub be permitted to participate in Co-
Investment Transactions in lieu of the Regulated Fund that owns it and
that the Wholly-Owned Investment Sub's participation in any such
transaction be treated, for purposes of the Order, as though the parent
Regulated Fund were participating directly. Applicants represent that
this treatment is justified because a Wholly-Owned Investment Sub would
have no purpose other than serving as a holding vehicle for the
Regulated Fund's investments and, therefore, no conflicts of interest
could arise between the parent Regulated Fund and the Wholly-Owned
Investment Sub. The Board of the parent Regulated Fund would make all
relevant determinations under the Conditions with regard to a Wholly-
Owned Investment Sub's participation in a Co-Investment Transaction,
and the Board would be informed of, and take into consideration, any
proposed use of a Wholly-Owned Investment Sub in the Regulated Fund's
place. If the parent Regulated Fund proposes to participate in the same
Co-Investment Transaction with any of its Wholly-Owned Investment Subs,
the Board of the parent Regulated Fund will also be informed of, and
take into consideration, the relative participation of the Regulated
Fund and the Wholly-Owned Investment Sub.
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    \7\ ``Wholly-Owned Investment Sub'' means an entity (i) that is
wholly-owned by TCRD or a Future Regulated Fund (with such Regulated
Fund at all times holding, beneficially and of record, 100% of the
voting and economic interests); (ii) whose sole business purpose is
to hold one or more investments on behalf of such Regulated Fund;
(iii) with respect to which such Regulated Fund's Board has the sole
authority to make all determinations with respect to the entity's
participation under the Conditions; and (iv) that would be an
investment company but for section 3(c)(1) or 3(c)(7) of the Act.
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Applicants' Representations

A. Allocation Process

    7. Applicants state that the Advisers are presented with thousands
of investment opportunities each year on behalf of their clients and
must determine how to allocate those opportunities in a manner that,
over time, is fair and equitable to all of their clients. Such
investment opportunities may be Potential Co-Investment Transactions.
    8. Applicants represent that they have established processes for
allocating

initial investment opportunities, opportunities for subsequent
investments in an issuer and dispositions of securities holdings
reasonably designed to treat all clients fairly and equitably. Further,
applicants represent that these processes will be extended and modified
in a manner reasonably designed to ensure that the additional
transactions permitted under the Order will both (i) be fair and
equitable to the Regulated Funds and the Affiliated Funds and (ii)
comply with the Conditions.
    9. Specifically, applicants state that the Advisers are organized
and managed such that teams and investment committees (``Investment
Teams'' and ``Investment Committees''), responsible for evaluating
investment opportunities and making investment decisions on behalf of
clients are promptly notified of the opportunities. If the requested
Order is granted, the Advisers will establish, maintain and implement
policies and procedures reasonably designed to ensure that, when such
opportunities arise, the Advisers to the relevant Regulated Funds are
promptly notified and receive the same information about the
opportunity as any other Advisers considering the opportunity for their
clients. In particular, consistent with Condition 1, if a Potential Co-
Investment Transaction falls within the then-current Objectives and
Strategies \8\ and any Board-Established Criteria \9\ of a Regulated
Fund, the policies and procedures will require that the relevant
Investment Teams and Investment Committees responsible for that
Regulated Fund receive sufficient information to allow the Regulated
Fund's Adviser to make its independent determination and
recommendations under the Conditions.
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    \8\ ``Objectives and Strategies'' means (i) with respect to any
Regulated Fund other than a BDC Downstream Fund, its investment
objectives and strategies, as described in its most current
registration statement on Form N-2, other current filings with the
Commission under the Securities Act of 1933 (the ``Securities Act'')
or under the Securities Exchange Act of 1934, as amended, and its
most current report to stockholders, and (ii) with respect to any
BDC Downstream Fund, those investment objectives and strategies
described in its disclosure documents (including private placement
memoranda and reports to equity holders) and organizational
documents (including operating agreements).
    \9\ ``Board-Established Criteria'' means criteria that the Board
of a Regulated Fund may establish from time to time to describe the
characteristics of Potential Co-Investment Transactions regarding
which the Adviser to the Regulated Fund should be notified under
Condition 1. The Board-Established Criteria will be consistent with
the Regulated Fund's Objectives and Strategies. If no Board-
Established Criteria are in effect, then the Regulated Fund's
Adviser will be notified of all Potential Co-Investment Transactions
that fall within the Regulated Fund's then-current Objectives and
Strategies. Board-Established Criteria will be objective and
testable, meaning that they will be based on observable information,
such as industry/sector of the issuer, minimum EBITDA of the issuer,
asset class of the investment opportunity or required commitment
size, and not on characteristics that involve a discretionary
assessment. The Adviser to the Regulated Fund may from time to time
recommend criteria for the Board's consideration, but Board-
Established Criteria will only become effective if approved by a
majority of the Independent Directors. The Independent Directors of
a Regulated Fund may at any time rescind, suspend or qualify its
approval of any Board-Established Criteria, though applicants
anticipate that, under normal circumstances, the Board would not
modify these criteria more often than quarterly.
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    10. The Adviser to each applicable Regulated Fund will then make an
independent determination of the appropriateness of the investment for
the Regulated Fund in light of the Regulated Fund's then-current
circumstances. If the Adviser to a Regulated Fund deems the Regulated
Fund's participation in such Potential Co-Investment Transaction to be
appropriate, then it will formulate a recommendation regarding the
proposed order amount for the Regulated Fund.
    11. Applicants state that, for each Regulated Fund and Affiliated
Fund whose Adviser recommends participating in a Potential Co-
Investment Transaction, the applicable Investment Committee will
approve the investment and the investment amount. Applicants state
further that the applicable Investment Committee will notify the
allocation committee that coordinates and facilitates an order
submission process with a designated representative of each applicable
investment committee of a Regulated Fund and Affiliated Fund to the
extent such investment is consistent with its Board-Established
Criteria and/or falls within its then-current Objectives and
Strategies. Prior to the External Submission (as defined below), each
proposed order or investment amount may be reviewed and adjusted, in
accordance with the applicable Advisers' written allocation policies
and procedures, by both the allocation committee, consisting of legal,
compliance, and operations personnel and/or applicable investment
committee of the Adviser (e.g., tradable credit, or direct
lending).\10\ The order of a Regulated Fund or Affiliated Fund
resulting from this process is referred to as its ``Internal Order.''
The Internal Order will be submitted for approval by the Required
Majority of any participating Regulated Funds in accordance with the
Conditions.\11\
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    \10\ The reason for any such adjustment to a proposed order
amount will be documented in writing and preserved in the records of
the Advisers.
    \11\ ``Required Majority'' means a required majority, as defined
in section 57(o) of the Act. In the case of a Regulated Fund that is
a registered closed-end fund, the Board members that make up the
Required Majority will be determined as if the Regulated Fund were a
BDC subject to section 57(o). In the case of a BDC Downstream Fund
with a board of directors (or the equivalent), the members that make
up the Required Majority will be determined as if the BDC Downstream
Fund were a BDC subject to section 57(o). In the case of a BDC
Downstream Fund with a transaction committee or advisory committee,
the committee members that make up the Required Majority will be
determined as if the BDC Downstream Fund were a BDC subject to
section 57(o) and as if the committee members were directors of the
fund.
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    12. Applicants acknowledge that some of the Affiliated Funds may
not be funds advised by Advisers to Affiliated Funds because they are
THL Proprietary Accounts. Applicants do not believe these THL
Proprietary Accounts should raise issues under the Conditions because
the allocation policies and procedures of the Advisers provide that
investment opportunities are offered to client accounts before they are
offered to THL Proprietary Accounts.
    13. If the aggregate Internal Orders for a Potential Co-Investment
Transaction do not exceed the size of the investment opportunity
immediately prior to the submission of the orders to the underwriter,
broker, dealer or issuer, as applicable (the ``External Submission''),
then each Internal Order will be fulfilled as placed and to the extent
there is excess amount available to invest, the THL Proprietary
Accounts will be permitted to invest. If, on the other hand, the
aggregate Internal Orders for a Potential Co-Investment Transaction
exceed the size of the investment opportunity immediately prior to the
External Submission, then the allocation of the opportunity will be
made pro rata on the basis of the size of the Internal Orders and the
THL Proprietary Accounts will not be permitted to invest.\12\ If,
subsequent to such External Submission, the size of the opportunity is
increased or decreased, or if the terms of such opportunity, or the
facts and circumstances applicable to the

Regulated Funds' or the Affiliated Funds' consideration of the
opportunity, change, the participants will be permitted to submit
revised Internal Orders in accordance with written allocation policies
and procedures that the Advisers will establish, implement and
maintain.\13\
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    \12\ The Advisers will maintain records of all proposed order
amounts, Internal Orders and External Submissions in conjunction
with Potential Co-Investment Transactions. Each applicable Adviser
will provide the Eligible Directors with information concerning the
Affiliated Funds' and Regulated Funds' order sizes to assist the
Eligible Directors with their review of the applicable Regulated
Fund's investments for compliance with the Conditions.
    ``Eligible Directors'' means, with respect to a Regulated Fund
and a Potential Co-Investment Transaction, the members of the
Regulated Fund's Board eligible to vote on that Potential Co-
Investment Transaction under section 57(o) of the Act.
    \13\ However, if the size of the opportunity is decreased such
that the aggregate of the original Internal Orders would exceed the
amount of the remaining investment opportunity, then upon submitting
any revised order amount to the Board of a Regulated Fund for
approval, the Adviser to the Regulated Fund will also notify the
Board promptly of the amount that the Regulated Fund would receive
if the remaining investment opportunity were allocated pro rata on
the basis of the size of the original Internal Orders. The Board of
the Regulated Fund will then either approve or disapprove of the
investment opportunity in accordance with Condition 2, 6, 7, 8 or 9,
as applicable.
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B. Follow-On Investments

    14. Applicants state that from time to time the Regulated Funds and
Affiliated Funds may have opportunities to make Follow-On Investments
\14\ in an issuer in which a Regulated Fund and one or more other
Regulated Funds and/or Affiliated Funds previously have invested.
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    \14\ ``Follow-On Investment'' means an additional investment in
the same issuer, including, but not limited to, through the exercise
of warrants, conversion privileges or other rights to purchase
securities of the issuer.
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    15. Applicants propose that Follow-On Investments would be divided
into two categories depending on whether the prior investment was a Co-
Investment Transaction or a Pre-Boarding Investment.\15\ If the
Regulated Funds and Affiliated Funds had previously participated in a
Co-Investment Transaction with respect to the issuer, then the terms
and approval of the Follow-On Investment would be subject to the
Standard Review Follow-Ons described in Condition 8. If the Regulated
Funds and Affiliated Funds have not previously participated in a Co-
Investment Transaction with respect to the issuer but hold a Pre-
Boarding Investment, then the terms and approval of the Follow-On
Investment would be subject to the Enhanced-Review Follow-Ons described
in Condition 9. All Enhanced Review Follow-Ons require the approval of
the Required Majority. For a given issuer, the participating Regulated
Funds and Affiliated Funds would need to comply with the requirements
of Enhanced-Review Follow-Ons only for the first Co-Investment
Transaction. Subsequent Co-Investment Transactions with respect to the
issuer would be governed by the requirements of Standard Review Follow-
Ons.
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    \15\ ``Pre-Boarding Investments'' are investments in an issuer
held by a Regulated Fund as well as one or more Affiliated Funds
and/or one or more other Regulated Funds that were acquired prior to
participating in any Co-Investment Transaction: (i) In transactions
in which the only term negotiated by or on behalf of such funds was
price in reliance on one of the JT No-Action Letters (defined
below); or (ii) in transactions occurring at least 90 days apart and
without coordination between the Regulated Fund and any Affiliated
Fund or other Regulated Fund.
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    16. A Regulated Fund would be permitted to invest in Standard
Review Follow-Ons either with the approval of the Required Majority
under Condition 8(c) or without Board approval under Condition 8(b) if
it is (i) a Pro Rata Follow-On Investment \16\ or (ii) a Non-Negotiated
Follow-On Investment.\17\ Applicants believe that these Pro Rata and
Non-Negotiated Follow-On Investments do not present a significant
opportunity for overreaching on the part of any Adviser and thus do not
warrant the time or the attention of the Board. Pro Rata Follow-On
Investments and Non-Negotiated Follow-On Investments remain subject to
the Board's periodic review in accordance with Condition 10.
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    \16\ A ``Pro Rata Follow-On Investment'' is a Follow-On
Investment (i) in which the participation of each Affiliated Fund
and each Regulated Fund is proportionate to its outstanding
investments in the issuer or security, as appropriate, immediately
preceding the Follow-On Investment, and (ii) in the case of a
Regulated Fund, a majority of the Board has approved the Regulated
Fund's participation in the pro rata Follow-On Investments as being
in the best interests of the Regulated Fund. The Regulated Fund's
Board may refuse to approve, or at any time rescind, suspend or
qualify, its approval of Pro Rata Follow-On Investments, in which
case all subsequent Follow-On Investments will be submitted to the
Regulated Fund's Eligible Directors in accordance with Condition
8(c).
    \17\ A ``Non-Negotiated Follow-On Investment'' is a Follow-On
Investment in which a Regulated Fund participates together with one
or more Affiliated Funds and/or one or more other Regulated Funds
(i) in which the only term negotiated by or on behalf of the funds
is price and (ii) with respect to which, if the transaction were
considered on its own, the funds would be entitled to rely on one of
the JT No-Action Letters.
    ``JT No-Action Letters'' means SMC Capital, Inc., SEC No-Action
Letter (pub. avail. Sept. 5, 1995) and Massachusetts Mutual Life
Insurance Company, SEC No-Action Letter (pub. avail. June 7, 2000).
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C. Dispositions

    17. Applicants propose that Dispositions \18\ would be divided into
two categories. If the Regulated Funds and Affiliated Funds holding
investments in the issuer had previously participated in a Co-
Investment Transaction with respect to the issuer, then the terms and
approval of the Disposition would be subject to the Standard Review
Dispositions described in Condition 6. If the Regulated Funds and
Affiliated Funds have not previously participated in a Co-Investment
Transaction with respect to the issuer but hold a Pre-Boarding
Investment, then the terms and approval of the Disposition would be
subject to the Enhanced Review Dispositions described in Condition 7.
Subsequent Dispositions with respect to the same issuer would be
governed by Condition 6 under the Standard Review Dispositions.\19\
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    \18\ ``Disposition'' means the sale, exchange or other
disposition of an interest in a security of an issuer.
    \19\ However, with respect to an issuer, if a Regulated Fund's
first Co-Investment Transaction is an Enhanced Review Disposition,
and the Regulated Fund does not dispose of its entire position in
the Enhanced Review Disposition, then before such Regulated Fund may
complete its first Standard Review Follow-On in such issuer, the
Eligible Directors must review the proposed Follow-On Investment not
only on a stand-alone basis but also in relation to the total
economic exposure in such issuer (i.e., in combination with the
portion of the Pre-Boarding Investment not disposed of in the
Enhanced Review Disposition), and the other terms of the
investments. This additional review would be required because such
findings would not have been required in connection with the prior
Enhanced Review Disposition, but they would have been required had
the first Co-Investment Transaction been an Enhanced Review Follow-
On.
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    18. A Regulated Fund may participate in a Standard Review
Disposition either with the approval of the Required Majority under
Condition 6(d) or without Board approval under Condition 6(c) if (i)
the Disposition is a Pro Rata Disposition \20\ or (ii) the securities
are Tradable Securities \21\ and the Disposition meets the other
requirements of Condition 6(c)(ii). Pro Rata Dispositions and
Dispositions of a Tradable Security remain subject to the Board's
periodic review in accordance with Condition 10.
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    \20\ A ``Pro Rata Disposition'' is a Disposition (i) in which
the participation of each Affiliated Fund and each Regulated Fund is
proportionate to its outstanding investment in the security subject
to Disposition immediately preceding the Disposition; and (ii) in
the case of a Regulated Fund, a majority of the Board has approved
the Regulated Fund's participation in pro rata Dispositions as being
in the best interests of the Regulated Fund. The Regulated Fund's
Board may refuse to approve, or at any time rescind, suspend or
qualify, its approval of Pro Rata Dispositions, in which case all
subsequent Dispositions will be submitted to the Regulated Fund's
Eligible Directors.
    \21\ ``Tradable Security'' means a security that meets the
following criteria at the time of Disposition: (i) It trades on a
national securities exchange or designated offshore securities
market as defined in rule 902(b) under the Securities Act; (ii) it
is not subject to restrictive agreements with the issuer or other
security holders; and (iii) it trades with sufficient volume and
liquidity (findings as to which are documented by the Advisers to
any Regulated Funds holding investments in the issuer and retained
for the life of the Regulated Fund) to allow each Regulated Fund to
dispose of its entire position remaining after the proposed
Disposition within a short period of time not exceeding 30 days at
approximately the value (as defined by section 2(a)(41) of the Act)
at which the Regulated Fund has valued the investment.

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D. Delayed Settlement

    19. Applicants represent that under the terms and Conditions of the
application, all Regulated Funds and Affiliated Funds participating in
a Co-Investment Transaction will invest at the same time, for the same
price and with the same terms, conditions, class, registration rights
and any other rights, so that none of them receives terms more
favorable than any other. However, the settlement date for an
Affiliated Fund in a Co-Investment Transaction may occur up to ten
business days after the settlement date for the Regulated Fund, and
vice versa.\22\ Nevertheless, in all cases, (i) the date on which the
commitment of the Affiliated Funds and Regulated Funds is made will be
the same even where the settlement date is not and (ii) the earliest
settlement date and the latest settlement date of any Affiliated Fund
or Regulated Fund participating in the transaction will occur within
ten business days of each other.
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    \22\ Applicants state this may occur for two reasons. First,
when the Affiliated Fund or Regulated Fund is not yet fully funded
because, when the Affiliated Fund or Regulated Fund desires to make
an investment, it must call capital from its investors to obtain the
financing to make the investment, and in these instances, the notice
requirement to call capital could be as much as ten business days.
Second, where, for tax or regulatory reasons, an Affiliated Fund or
Regulated Fund does not purchase new issuances immediately upon
issuance but only after a short seasoning period of up to ten
business days.
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E. Holders

    20. Under Condition 15, if an Adviser, its principals, or any
person controlling, controlled by, or under common control with the
Adviser or its principals, and the Affiliated Funds (collectively, the
``Holders'') own in the aggregate more than 25 percent of the
outstanding voting shares of a Regulated Fund (the ``Shares''), then
the Holders will vote such Shares as directed by an independent third
party when voting on matters specified in the Condition. Applicants
believe that this Condition will ensure that the Independent Directors
will act independently in evaluating Co-Investment Transactions,
because the ability of the Adviser or its principals to influence the
Independent Directors by a suggestion, explicit or implied, that the
Independent Directors can be removed will be limited significantly. The
Independent Directors shall evaluate and approve any independent party,
taking into account its qualifications, reputation for independence,
cost to the shareholders, and other factors that they deem relevant.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
participation by a registered investment company and an affiliated
person in any ``joint enterprise or other joint arrangement or profit-
sharing plan,'' as defined in the rule, without prior approval by the
Commission by order upon application. Section 17(d) of the Act and rule
17d-1 under the Act are applicable to Regulated Funds that are
registered closed-end investment companies.
    2. Similarly, with regard to BDCs, section 57(a)(4) of the Act
generally prohibits certain persons specified in section 57(b) from
participating in joint transactions with the BDC or a company
controlled by the BDC in contravention of rules as prescribed by the
Commission. Section 57(i) of the Act provides that, until the
Commission prescribes rules under section 57(a)(4), the Commission's
rules under section 17(d) of the Act applicable to registered closed-
end investment companies will be deemed to apply to transactions
subject to section 57(a)(4). Because the Commission has not adopted any
rules under section 57(a)(4), rule 17d-1 also applies to joint
transactions with Regulated Funds that are BDCs.
    3. Co-Investment Transactions are prohibited by either or both of
rule 17d-1 and section 57(a)(4) without a prior exemptive order of the
Commission to the extent that the Affiliated Funds and the Regulated
Funds participating in such transactions fall within the category of
persons described by rule 17d-1 and/or section 57(b), as applicable,
vis-[agrave]-vis each participating Regulated Fund. Each of the
participating Regulated Funds and Affiliated Funds may be deemed to be
affiliated persons vis-[agrave]-vis a Regulated Fund within the meaning
of section 2(a)(3) by reason of common control because (i) the THL
Advisers to Affiliated Funds manage, and may be deemed to control, each
of the Existing Affiliated Funds and any other Affiliated Fund will be
managed by, and may be deemed to be controlled by an Adviser to
Affiliated Funds; (ii) THLCA is the investment adviser to, and may be
deemed to control, TCRD and an Adviser to Regulated Funds will be the
investment adviser to, and may be deemed to control, any Future
Regulated Fund, (iii) each BDC Downstream Fund will be deemed to be
controlled by its BDC parent and/or its BDC parent's investment
adviser; and (iv) the Advisers to Affiliated Funds and the Advisers to
Regulated Funds are under common control. Thus, each of the Affiliated
Funds could be deemed to be a person related to the Regulated Funds,
including any BDC Downstream Fund, in a manner described by section
57(b) and related to the other Regulated Funds in a manner described by
rule 17d-1; and therefore the prohibitions of rule 17d-1 and section
57(a)(4) would apply respectively to prohibit the Affiliated Funds from
participating in Co-Investment Transactions with the Regulated Funds.
In addition, because the THL Proprietary Accounts are controlled by
THLCA and, therefore, may be under common control with TCRD, SLS, any
future Advisers, and any Future Regulated Funds, the THL Proprietary
Accounts could be deemed to be persons related to the Regulated Funds
(or a company controlled by the Regulated Funds) in a manner described
by section 57(b) and also prohibited from participating in the Co-
Investment Program.
    4. In passing upon applications under rule 17d-1, the Commission
considers whether the company's participation in the joint transaction
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 other participants.
    5. Applicants state that in the absence of the requested relief, in
many circumstances the Regulated Funds would be limited in their
ability to participate in attractive and appropriate investment
opportunities. Applicants state that, as required by rule 17d-1(b), the
Conditions ensure that the terms on which Co-Investment Transactions
may be made will be consistent with the participation of the Regulated
Funds being on a basis that it is neither different from nor less
advantageous than other participants, thus protecting the equity
holders of any participant from being disadvantaged. Applicants further
state that the Conditions ensure that all Co-Investment Transactions
are reasonable and fair to the Regulated Funds and their shareholders
and do not involve overreaching by any person concerned, including the
Advisers. Applicants state that the Regulated Funds' participation in
the Co-Investment Transactions in accordance with the Conditions will
be consistent with the provisions, policies, and purposes of the Act
and would be done in a manner that is not different from, or less
advantageous than, that of other participants.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following
Conditions:

    1. Identification and Referral of Potential Co-Investment
Transactions.
    (a) The Advisers will establish, maintain and implement policies
and procedures reasonably designed to ensure that each Adviser is
promptly notified of all Potential Co-Investment Transactions that fall
within the then-current Objectives and Strategies and Board-Established
Criteria of any Regulated Fund the Adviser manages.
    (b) When an Adviser to a Regulated Fund is notified of a Potential
Co-Investment Transaction under Condition 1(a), the Adviser will make
an independent determination of the appropriateness of the investment
for the Regulated Fund in light of the Regulated Fund's then-current
circumstances.
    2. Board Approvals of Co-Investment Transactions.
    (a) If the Adviser deems a Regulated Fund's participation in any
Potential Co-Investment Transaction to be appropriate for the Regulated
Fund, it will then determine an appropriate level of investment for the
Regulated Fund.
    (b) If the aggregate amount recommended by the Advisers to be
invested in the Potential Co-Investment Transaction by the
participating Regulated Funds and any participating Affiliated Funds,
collectively, exceeds the amount of the investment opportunity, the
investment opportunity will be allocated among them pro rata based on
the size of the Internal Orders, as described in section III.A.1.b. of
the application. Each Adviser to a participating Regulated Fund will
promptly notify and provide the Eligible Directors with information
concerning the Affiliated Funds' and Regulated Funds' order sizes to
assist the Eligible Directors with their review of the applicable
Regulated Fund's investments for compliance with these Conditions.
    (c) After making the determinations required in Condition 1(b)
above, each Adviser to a participating Regulated Fund will distribute
written information concerning the Potential Co-Investment Transaction
(including the amount proposed to be invested by each participating
Regulated Fund and each participating Affiliated Fund) to the Eligible
Directors of its participating Regulated Fund(s) for their
consideration. A Regulated Fund will enter into a Co-Investment
Transaction with one or more other Regulated Funds or Affiliated Funds
only if, prior to the Regulated Fund's participation in the Potential
Co-Investment Transaction, a Required Majority concludes that:
    (i) The terms of the transaction, including the consideration to be
paid, are reasonable and fair to the Regulated Fund and its equity
holders and do not involve overreaching in respect of the Regulated
Fund or its equity holders on the part of any person concerned;
    (ii) the transaction is consistent with:
    (A) The interests of the Regulated Fund's equity holders; and
    (B) the Regulated Fund's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Fund(s) or Affiliated
Fund(s) would not disadvantage the Regulated Fund, and participation by
the Regulated Fund would not be on a basis different from, or less
advantageous than, that of any other Regulated Fund(s) or Affiliated
Fund(s) participating in the transaction; provided that the Required
Majority shall not be prohibited from reaching the conclusions required
by this Condition 2(c)(iii) if:
    (A) The settlement date for another Regulated Fund or an Affiliated
Fund in a Co-Investment Transaction is later than the settlement date
for the Regulated Fund by no more than ten business days or earlier
than the settlement date for the Regulated Fund by no more than ten
business days, in either case, so long as: (x) The date on which the
commitment of the Affiliated Funds and Regulated Funds is made is the
same; and (y) the earliest settlement date and the latest settlement
date of any Affiliated Fund or Regulated Fund participating in the
transaction will occur within ten business days of each other; or
    (B) any other Regulated Fund or Affiliated Fund, but not the
Regulated Fund itself, gains the right to nominate a director for
election to a portfolio company's board of directors, the right to have
a board observer or any similar right to participate in the governance
or management of the portfolio company so long as: (x) The Eligible
Directors will have the right to ratify the selection of such director
or board observer, if any; (y) the Adviser agrees to, and does, provide
periodic reports to the Regulated Fund's Board with respect to the
actions of such director or the information received by such board
observer or obtained through the exercise of any similar right to
participate in the governance or management of the portfolio company;
and (z) any fees or other compensation that any other Regulated Fund or
Affiliated Fund or any affiliated person of any other Regulated Fund or
Affiliated Fund receives in connection with the right of one or more
Regulated Funds or Affiliated Funds to nominate a director or appoint a
board observer or otherwise to participate in the governance or
management of the portfolio company will be shared proportionately
among any participating Affiliated Funds (who may, in turn, share their
portion with their affiliated persons) and any participating Regulated
Fund(s) in accordance with the amount of each such party's investment;
and
    (iv) the proposed investment by the Regulated Fund will not involve
compensation, remuneration or a direct or indirect \23\ financial
benefit to the Advisers, any other Regulated Fund, the Affiliated Funds
or any affiliated person of any of them (other than the parties to the
Co-Investment Transaction), except (A) to the extent permitted by
Condition 14, (B) to the extent permitted by section 17(e) or 57(k), as
applicable, (C) indirectly, as a result of an interest in the
securities issued by one of the parties to the Co-Investment
Transaction, or (D) in the case of fees or other compensation described
in Condition 2(c)(iii)(B)(z).
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    \23\ For example, procuring the Regulated Fund's investment in a
Potential Co-Investment Transaction to permit an affiliate to
complete or obtain better terms in a separate transaction would
constitute an indirect financial benefit.
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    3. Right to Decline. Each Regulated Fund has the right to decline
to participate in any Potential Co-Investment Transaction or to invest
less than the amount proposed.
    4. General Limitation. Except for Follow-On Investments made in
accordance with Conditions 8 and 9 below,\24\ a Regulated Fund will not
invest in reliance on the Order in any issuer in which a Related Party
has an investment.\25\
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    \24\ This exception applies only to Follow-On Investments by a
Regulated Fund in issuers in which that Regulated Fund already holds
investments.
    \25\ ``Related Party'' means (i) any Close Affiliate and (ii) in
respect of matters as to which any Adviser has knowledge, any Remote
Affiliate. ``Close Affiliate'' means the Advisers, the Regulated
Funds, the Affiliated Funds and any other person described in
Section 57(b) (after giving effect to Rule 57b-1) in respect of any
Regulated Fund (treating any registered investment company or series
thereof as a BDC for this purpose) except for limited partners
included solely by reason of the reference in Section 57(b) to
Section 2(a)(3)(D). ``Remote Affiliate'' means any person described
in Section 57(e) in respect of any Regulated Fund (treating any
registered investment company or series thereof as a BDC for this
purpose) and any limited partner holding 5% or more of the relevant
limited partner interests that would be a Close Affiliate but for
the exclusion in that definition.
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    5. Same Terms and Conditions. A Regulated Fund will not participate
in any Potential Co-Investment Transaction unless (i) the terms,
conditions, price, class of securities to be purchased, date on which
the commitment is entered into and registration rights (if any) will be
the

same for each participating Regulated Fund and Affiliated Fund and (ii)
the earliest settlement date and the latest settlement date of any
participating Regulated Fund or Affiliated Fund will occur as close in
time as practicable and in no event more than ten business days apart.
The grant to one or more Regulated Funds or Affiliated Funds, but not
the respective Regulated Fund, of the right to nominate a director for
election to a portfolio company's board of directors, the right to have
an observer on the board of directors or similar rights to participate
in the governance or management of the portfolio company will not be
interpreted so as to violate this Condition 5, if Condition
2(c)(iii)(B) is met.
    6. Standard Review Dispositions.
    (a) General. If any Regulated Fund or Affiliated Fund elects to
sell, exchange or otherwise dispose of an interest in a security and
one or more Regulated Funds and Affiliated Funds have previously
participated in a Co-Investment Transaction with respect to the issuer,
then:
    (i) The Adviser to such Regulated Fund or Affiliated Fund \26\ will
notify each Regulated Fund that holds an investment in the issuer of
the proposed Disposition at the earliest practical time; and
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    \26\ Any THL Proprietary Account that is not advised by an
Adviser is itself deemed to be an Adviser for purposes of Conditions
6(a)(i), 7(a)(i), 8(a)(i) and 9(a)(i).
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    (ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to participation by such
Regulated Fund in the Disposition.
    (b) Same Terms and Conditions. Each Regulated Fund will have the
right to participate in such Disposition on a proportionate basis, at
the same price and on the same terms and conditions as those applicable
to the Affiliated Funds and any other Regulated Fund.
    (c) No Board Approval Required. A Regulated Fund may participate in
such a Disposition without obtaining prior approval of the Required
Majority if:
    (i) (A) The participation of each Regulated Fund and Affiliated
Fund in such Disposition is proportionate to its then-current holding
of the security (or securities) of the issuer that is (or are) the
subject of the Disposition; \27\ (B) the Board of the Regulated Fund
has approved as being in the best interests of the Regulated Fund the
ability to participate in such Dispositions on a pro rata basis (as
described in greater detail in the application); and (C) the Board of
the Regulated Fund is provided on a quarterly basis with a list of all
Dispositions made in accordance with this Condition; or
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    \27\ In the case of any Disposition, proportionality will be
measured by each participating Regulated Fund's and Affiliated
Fund's outstanding investment in the security in question
immediately preceding the Disposition.
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    (ii) each security is a Tradable Security and (A) the Disposition
is not to the issuer or any affiliated person of the issuer; and (B)
the security is sold for cash in a transaction in which the only term
negotiated by or on behalf of the participating Regulated Funds and
Affiliated Funds is price.
    (d) Standard Board Approval. In all other cases, the Adviser will
provide its written recommendation as to the Regulated Fund's
participation to the Eligible Directors and the Regulated Fund will
participate in such Disposition solely to the extent that a Required
Majority determines that it is in the Regulated Fund's best interests.
    7. Enhanced Review Dispositions.
    (a) General. If any Regulated Fund or Affiliated Fund elects to
sell, exchange or otherwise dispose of a Pre-Boarding Investment in a
Potential Co-Investment Transaction and the Regulated Funds and
Affiliated Funds have not previously participated in a Co-Investment
Transaction with respect to the issuer:
    (i) The Adviser to such Regulated Fund or Affiliated Fund will
notify each Regulated Fund that holds an investment in the issuer of
the proposed Disposition at the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to participation by such
Regulated Fund in the Disposition; and
    (iii) the Advisers will provide to the Board of each Regulated Fund
that holds an investment in the issuer all information relating to the
existing investments in the issuer of the Regulated Funds and
Affiliated Funds, including the terms of such investments and how they
were made, that is necessary for the Required Majority to make the
findings required by this Condition.
    (b) Enhanced Board Approval. The Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Directors, and the Regulated Fund will participate in such Disposition
solely to the extent that a Required Majority determines that:
    (i) The Disposition complies with Condition 2(c)(i), (ii),
(iii)(A), and (iv).
    (ii) the making and holding of the Pre-Boarding Investments were
not prohibited by section 57 or rule 17d-1, as applicable, and records
the basis for the finding in the Board minutes.
    (c) Additional Requirements: The Disposition may only be completed
in reliance on the Order if:
    (i) Same Terms and Conditions. Each Regulated Fund has the right to
participate in such Disposition on a proportionate basis, at the same
price and on the same terms and Conditions as those applicable to the
Affiliated Funds and any other Regulated Fund;
    (ii) Original Investments. All of the Affiliated Funds' and
Regulated Funds' investments in the issuer are Pre-Boarding
Investments;
    (iii) Advice of counsel. Independent counsel to the Board advises
that the making and holding of the investments in the Pre-Boarding
Investments were not prohibited by section 57 (as modified by rule 57b-
1) or rule 17d-1, as applicable;
    (iv) Multiple Classes of Securities. All Regulated Funds and
Affiliated Funds that hold Pre-Boarding Investments in the issuer
immediately before the time of completion of the Co-Investment
Transaction hold the same security or securities of the issuer. For the
purpose of determining whether the Regulated Funds and Affiliated Funds
hold the same security or securities, they may disregard any security
held by some but not all of them if, prior to relying on the Order, the
Required Majority is presented with all information necessary to make a
finding, and finds, that: (x) Any Regulated Fund's or Affiliated Fund's
holding of a different class of securities (including for this purpose
a security with a different maturity date) is immaterial \28\ in
amount, including immaterial relative to the size of the issuer; and
(y) the Board records the basis for any such finding in its minutes. In
addition, securities that differ only in respect of issuance date,
currency, or denominations may be treated as the same security; and
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    \28\ In determining whether a holding is ``immaterial'' for
purposes of the Order, the Required Majority will consider whether
the nature and extent of the interest in the transaction or
arrangement is sufficiently small that a reasonable person would not
believe that the interest affected the determination of whether to
enter into the transaction or arrangement or the terms of the
transaction or arrangement.
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    (v) No control. The Affiliated Funds, the other Regulated Funds and
their affiliated persons (within the meaning of section 2(a)(3)(C) of
the Act), individually or in the aggregate, do not control the issuer
of the securities (within the meaning of section 2(a)(9) of the Act).
    8. Standard Review Follow-Ons.
    (a) General. If any Regulated Fund or Affiliated Fund desires to
make a

Follow-On Investment in an issuer and the Regulated Funds and
Affiliated Funds holding investments in the issuer previously
participated in a Co-Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund or Affiliated Fund will
notify each Regulated Fund that holds securities of the portfolio
company of the proposed transaction at the earliest practical time; and
    (ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to the proposed
participation, including the amount of the proposed investment, by such
Regulated Fund.
    (b) No Board Approval Required. A Regulated Fund may participate in
the Follow-On Investment without obtaining prior approval of the
Required Majority if:
    (i) (A) The proposed participation of each Regulated Fund and each
Affiliated Fund in such investment is proportionate to its outstanding
investments in the issuer or the security at issue, as appropriate,\29\
immediately preceding the Follow-On Investment; and (B) the Board of
the Regulated Fund has approved as being in the best interests of the
Regulated Fund the ability to participate in Follow-On Investments on a
pro rata basis (as described in greater detail in the application); or
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    \29\ To the extent that a Follow-On Investment opportunity is in
a security or arises in respect of a security held by the
participating Regulated Funds and Affiliated Funds, proportionality
will be measured by each participating Regulated Fund's and
Affiliated Fund's outstanding investment in the security in question
immediately preceding the Follow-On Investment using the most recent
available valuation thereof. To the extent that a Follow-On
Investment opportunity relates to an opportunity to invest in a
security that is not in respect of any security held by any of the
participating Regulated Funds or Affiliated Funds, proportionality
will be measured by each participating Regulated Fund's and
Affiliated Fund's outstanding investment in the issuer immediately
preceding the Follow-On Investment using the most recent available
valuation thereof.
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    (ii) it is a Non-Negotiated Follow-On Investment.
    (c) Standard Board Approval. In all other cases, the Adviser will
provide its written recommendation as to the Regulated Fund's
participation to the Eligible Directors and the Regulated Fund will
participate in such Follow-On Investment solely to the extent that a
Required Majority makes the determinations set forth in Condition 2(c).
If the only previous Co-Investment Transaction with respect to the
issuer was an Enhanced Review Disposition the Eligible Directors must
complete this review of the proposed Follow-On Investment both on a
stand-alone basis and together with the Pre-Boarding Investments in
relation to the total economic exposure and other terms of the
investment.
    (d) Allocation. If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to
any Regulated Fund is not based on the Regulated Funds' and the
Affiliated Funds' outstanding investments in the issuer or the security
at issue, as appropriate, immediately preceding the Follow-On
Investment; and
    (ii) the aggregate amount recommended by the Advisers to be
invested in the Follow-On Investment by the participating Regulated
Funds and any participating Affiliated Funds, collectively, exceeds the
amount of the investment opportunity, then the Follow-On Investment
opportunity will be allocated among them pro rata based on the size of
the Internal Orders, as described in section III.A.1.b. of the
application.
    (e) Other Conditions. The acquisition of Follow-On Investments as
permitted by this Condition will be considered a Co-Investment
Transaction for all purposes and subject to the other Conditions set
forth in this application.
    9. Enhanced Review Follow-Ons.
    (a) General. If any Regulated Fund or Affiliated Fund desires to
make a Follow-On Investment in an issuer that is a Potential Co-
Investment Transaction and the Regulated Funds and Affiliated Funds
holding investments in the issuer have not previously participated in a
Co-Investment Transaction with respect to the issuer:
    (i) The Adviser to each such Regulated Fund or Affiliated Fund will
notify each Regulated Fund that holds securities of the portfolio
company of the proposed transaction at the earliest practical time;
    (ii) the Adviser to each Regulated Fund that holds an investment in
the issuer will formulate a recommendation as to the proposed
participation, including the amount of the proposed investment, by such
Regulated Fund; and
    (iii) the Advisers will provide to the Board of each Regulated Fund
that holds an investment in the issuer all information relating to the
existing investments in the issuer of the Regulated Funds and
Affiliated Funds, including the terms of such investments and how they
were made, that is necessary for the Required Majority to make the
findings required by this Condition.
    (b) Enhanced Board Approval. The Adviser will provide its written
recommendation as to the Regulated Fund's participation to the Eligible
Directors, and the Regulated Fund will participate in such Follow-On
Investment solely to the extent that a Required Majority reviews the
proposed Follow-On Investment both on a stand-alone basis and together
with the Pre-Boarding Investments in relation to the total economic
exposure and other terms and makes the determinations set forth in
Condition 2(c). In addition, the Follow-On Investment may only be
completed in reliance on the Order if the Required Majority of each
participating Regulated Fund determines that the making and holding of
the Pre-Boarding Investments were not prohibited by section 57 (as
modified by rule 57b-1) or rule 17d-1, as applicable. The basis for the
Board's findings will be recorded in its minutes.
    (c) Additional Requirements. The Follow-On Investment may only be
completed in reliance on the Order if:
    (i) Original Investments. All of the Affiliated Funds' and
Regulated Funds' investments in the issuer are Pre-Boarding
Investments;
    (ii) Advice of counsel. Independent counsel to the Board advises
that the making and holding of the investments in the Pre-Boarding
Investments were not prohibited by section 57 (as modified by rule 57b-
1) or rule 17d-1, as applicable;
    (iii) Multiple Classes of Securities. All Regulated Funds and
Affiliated Funds that hold Pre-Boarding Investments in the issuer
immediately before the time of completion of the Co-Investment
Transaction hold the same security or securities of the issuer. For the
purpose of determining whether the Regulated Funds and Affiliated Funds
hold the same security or securities, they may disregard any security
held by some but not all of them if, prior to relying on the Order, the
Required Majority is presented with all information necessary to make a
finding, and finds, that: (x) Any Regulated Fund's or Affiliated Fund's
holding of a different class of securities (including for this purpose
a security with a different maturity date) is immaterial in amount,
including immaterial relative to the size of the issuer; and (y) the
Board records the basis for any such finding in its minutes. In
addition, securities that differ only in respect of issuance date,
currency, or denominations may be treated as the same security; and
    (iv) No control. The Affiliated Funds, the other Regulated Funds
and their affiliated persons (within the meaning of section 2(a)(3)(C)
of the Act), individually or in the aggregate, do not control the
issuer of the securities

(within the meaning of section 2(a)(9) of the Act).
    (d) Allocation. If, with respect to any such Follow-On Investment:
    (i) The amount of the opportunity proposed to be made available to
any Regulated Fund is not based on the Regulated Funds' and the
Affiliated Funds' outstanding investments in the issuer or the security
at issue, as appropriate, immediately preceding the Follow-On
Investment; and
    (ii) the aggregate amount recommended by the Advisers to be
invested in the Follow-On Investment by the participating Regulated
Funds and any participating Affiliated Funds, collectively, exceeds the
amount of the investment opportunity, then the Follow-On Investment
opportunity will be allocated among them pro rata based on the size of
the Internal Orders, as described in section III.A.1.b. of the
application.
    (e) Other Conditions. The acquisition of Follow-On Investments as
permitted by this Condition will be considered a Co-Investment
Transaction for all purposes and subject to the other Conditions set
forth in the application.
    10. Board Reporting, Compliance and Annual Re-Approval.
    (a) Each Adviser to a Regulated Fund will present to the Board of
each Regulated Fund, on a quarterly basis, and at such other times as
the Board may request, (i) a record of all investments in Potential Co-
Investment Transactions made by any of the other Regulated Funds or any
of the Affiliated Funds during the preceding quarter that fell within
the Regulated Fund's then-current Objectives and Strategies and Board-
Established Criteria that were not made available to the Regulated
Fund, and an explanation of why such investment opportunities were not
made available to the Regulated Fund; (ii) a record of all Follow-On
Investments in and Dispositions of investments in any issuer in which
the Regulated Fund holds any investments by any Affiliated Fund or
other Regulated Fund during the prior quarter; and (iii) all
information concerning Potential Co-Investment Transactions and Co-
Investment Transactions, including investments made by other Regulated
Funds or Affiliated Funds that the Regulated Fund considered but
declined to participate in, so that the Independent Directors, may
determine whether all Potential Co-Investment Transactions and Co-
Investment Transactions during the preceding quarter, including those
investments that the Regulated Fund considered but declined to
participate in, comply with the Conditions.
    (b) All information presented to the Regulated Fund's Board
pursuant to this Condition will be kept for the life of the Regulated
Fund and at least two years thereafter, and will be subject to
examination by the Commission and its staff.
    (c) Each Regulated Fund's chief compliance officer, as defined in
rule 38a-1(a)(4), will prepare an annual report for its Board each year
that evaluates (and documents the basis of that evaluation) the
Regulated Fund's compliance with the terms and Conditions of the
application and the procedures established to achieve such compliance.
In the case of a BDC Downstream Fund that does not have a chief
compliance officer, the chief compliance officer of the BDC that
controls the BDC Downstream Fund will prepare the report for the
relevant Independent Party.
    (d) The Independent Directors (including the non-interested members
of each Independent Party) will consider at least annually whether
continued participation in new and existing Co-Investment Transactions
is in the Regulated Fund's best interests.
    11. Record Keeping. Each Regulated Fund will maintain the records
required by section 57(f)(3) of the Act as if each of the Regulated
Funds were a BDC and each of the investments permitted under these
Conditions were approved by the Required Majority under section 57(f).
    12. Director Independence. No Independent Director (including the
non-interested members of any Independent Party) of a Regulated Fund
will also be a director, general partner, managing member or principal,
or otherwise be an ``affiliated person'' (as defined in the Act) of any
Affiliated Fund.
    13. Expenses. The expenses, if any, associated with acquiring,
holding or disposing of any securities acquired in a Co-Investment
Transaction (including, without limitation, the expenses of the
distribution of any such securities registered for sale under the
Securities Act) will, to the extent not payable by the Advisers under
their respective advisory agreements with the Regulated Funds and the
Affiliated Funds, be shared by the Regulated Funds and the
participating Affiliated Funds in proportion to the relative amounts of
the securities held or being acquired or disposed of, as the case may
be.
    14. Transaction Fees.\30\ Any transaction fee (including break-up,
structuring, monitoring or commitment fees but excluding brokerage or
underwriting compensation permitted by section 17(e) or 57(k)) received
in connection with any Co-Investment Transaction will be distributed to
the participants on a pro rata basis based on the amounts they invested
or committed, as the case may be, in such Co-Investment Transaction. If
any transaction fee is to be held by an Adviser pending consummation of
the transaction, the fee will be deposited into an account maintained
by the Adviser at a bank or banks having the qualifications prescribed
in section 26(a)(1), and the account will earn a competitive rate of
interest that will also be divided pro rata among the participants.
None of the Advisers, the Affiliated Funds, the other Regulated Funds
or any affiliated person of the Affiliated Funds or the Regulated Funds
will receive any additional compensation or remuneration of any kind as
a result of or in connection with a Co-Investment Transaction other
than (i) in the case of the Regulated Funds and the Affiliated Funds,
the pro rata transaction fees described above and fees or other
compensation described in Condition 2(c)(iii)(B)(z), (ii) brokerage or
underwriting compensation permitted by section 17(e) or 57(k) or (iii)
in the case of the Advisers, investment advisory compensation paid in
accordance with investment advisory agreements between the applicable
Regulated Fund(s) or Affiliated Fund(s) and its Adviser.
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    \30\ Applicants are not requesting and the Commission is not
providing any relief for transaction fees received in connection
with any Co-Investment Transaction.
---------------------------------------------------------------------------

    15. Independence. If the Holders own in the aggregate more than 25
percent of the Shares of a Regulated Fund, then the Holders will vote
such Shares as directed by an independent third party when voting on
(1) the election of directors; (2) the removal of one or more
directors; or (3) any other matter under either the Act or applicable
State law affecting the Board's composition, size or manner of
election.
    16. Proprietary Accounts. The THL Proprietary Accounts will not be
permitted to invest in a Potential Co-Investment Transaction except to
the extent the aggregate demand from the Regulated Funds and the other
Affiliated Funds is less than the total investment opportunity.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18780 Filed 8-29-18; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: April 16, 2010 (Volume 75, Number 73)]
[Notices]
[Page 20018-20021]
[DOCID:fr16ap10-138]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61885; File No. SR-BATS-2010-002]

Self-Regulatory Organizations; BATS Exchange, Inc.; Order
Approving a Proposed Rule Change, As Amended, To Offer Certain BATS
Exchange Data Products

April 9, 2010.

I. Introduction

    On February 2, 2010, BATS Exchange, Inc. (``BATS'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 \2\
thereunder, a proposed rule change to offer certain new Exchange data
products to Exchange Members \3\ and other market data recipients. On
February 22, 2010, BATS filed Amendment No. 1 to the proposed rule
change. The proposed rule change, as modified by Amendment No. 1, was
published for comment in the Federal Register on March 5, 2010.\4\ The
Commission received one comment letter in response to the proposed rule
change.\5\ On April 8 , 2010, BATS filed Amendment No. 2 to the
proposed rule change.\6\ This order approves the proposed rule change,
as modified by Amendment Nos. 1 and 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ A Member is any registered broker or dealer that has been
admitted to membership in the Exchange.
    \4\ See Securities Exchange Act Release No. 61592 (March 5,
2010), 75 FR 10332 (``Notice'').
    \5\ See letter to Elizabeth M. Murphy, Secretary, SEC, from Joan
C. Conley, Senior Vice President and Corporate Secretary, The NASDAQ
OMX Group, Inc., dated March 26, 2009 (``NASDAQ OMX Letter'').
    \6\ See Amendment No. 2 dated April 8, 2010 (``Amendment No.
2''). The text of Amendment No. 2 is available on the Exchange's Web
site at http://www.batstrading.com, at the principal office of BATS,
and on the Commission's Web site (http://www.sec.gov/rules/
sro.shtml). Amendment No. 2 is a non-substantive, clarifying
amendment.
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II. Description of the Proposal

    The Exchange proposes to offer several new market data products:
BATS Last Sale Feed; BATS Historical Data Products; and BATS Market
Insight (``New Market Data Products''). In connection with making
available the New Market Data Products, the Exchange proposes to amend
its fee schedule applicable to Members and non-members of the Exchange
pursuant to BATS Rules 15.1(a) and (c).\7\
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    \7\ The Exchange currently offers other data products to Members
and other data recipients free of charge. The Exchange states that
such data products include, but are not limited to, TCP PITCH,
Multicast PITCH, and TCP FAST PITCH, which are depth of book data
feeds containing real-time quotation and transaction data from the
Exchange; TCP DROP, which contains order execution and other
information (e.g., modifications and cancellations) specific to the
Exchange activity of one or more Users; and TCP TOP, which contains
real-time top of book quotation and transaction information from the
Exchange. The Exchange represents that BATS will file a proposed
rule change pursuant to Section 19(b)(1) of the Act and Rule 19b-4
thereunder to describe its existing free data feeds. See Amendment
No. 2, supra note 6.

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    BATS Last Sale Feed. The BATS Last Sale Feed will be a direct data
feed product that provides real-time, intraday trade information,
including price, volume, and time of executions.\8\ The BATS Last Sale
Feed will include last sale information regarding all NYSE-listed
securities (``Tape A Securities''), NASDAQ-listed securities (``Tape C
Securities''), and securities listed on exchanges other than NYSE or
NASDAQ (``Tape B Securities'') with respect to activity occurring
solely on the Exchange.\9\
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    \8\ The BATS Last Sale feed will not include quotation
information.
    \9\ Currently, under the joint-industry plans that provide for
the dissemination of last sale information for equity securities,
the Exchange and other self-regulatory organizations (``SROs'')
provide real-time last sale information to a Security Information
Processor (``SIP''), which then consolidates the information into a
single stream for dissemination to the public, including market data
vendors.
---------------------------------------------------------------------------

    No market participant will be required to subscribe to the BATS
Last Sale Feed and the same last sale prices will continue to be
available in the Exchange's other data feeds.\10\ The Exchange
represents that it will not distribute the BATS Last Sale Feed sooner
than it makes available the data that is provided to the SIPs for
consolidation and dissemination.\11\ BATS proposes to charge $5,000 per
month for the BATS Last Sale Feed for any data recipient that chooses
to receive the data feed for internal use only (``Internal
Distributor''). The Exchange will not require data recipients that wish
to redistribute the BATS Last Sale Feed to count, classify (e.g.,
professional or non-professional), or report to the Exchange
information regarding the customers to which they provide the data.
Instead, the Exchange proposes a flat fee of $25,000 per month for any
data recipient that wishes to redistribute the BATS Last Sale Feed
externally (``External Distributor''). End users will not have to pay
the Exchange for the BATS Last Sale Feed or enter into contracts with
the Exchange.
---------------------------------------------------------------------------

    \10\ See supra note 7.
    \11\ See Notice, supra note 4, at 10333.
---------------------------------------------------------------------------

    BATS Historical Data Products. The Exchange proposes to offer data
recipients upon request the following three products: (1) Historical
top of book data from the Exchange's TOP data feed (``Historical TOP
Data''); (2) historical quotation and transaction data from the
Exchange's PITCH data feed (``Historical PITCH Data''); and (3)
historical transaction data from the Exchange's Last Sale Feed
(``Historical Last Sale Data'').\12\ BATS Historical TOP Data, BATS
Historical PITCH Data and BATS Historical Last Sale Data will be
provided to data recipients for internal use only, and thus, no
redistribution will be permitted.\13\
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    \12\ The Exchange proposes to provide data recipients with the
requested historical data on an external hard drive provided by the
Exchange. As an alternative means to obtain historical data, the
Exchange proposes to provide market participants with access to a
database from which they can download data that is up to three
months old.
    \13\ The Exchange currently provides historical data upon
request on an ad hoc basis, but proposes to begin charging a fee due
to the infrastructure costs of storing and providing such data.
---------------------------------------------------------------------------

    The proposed cost of user-accessible BATS Historical TOP Data, BATS
Historical PITCH Data or BATS Historical Last Sale Data is $500 per
month of data accessed by any individual user. For data that the
Exchange provides on an external hard drive to a market participant the
proposed cost is $2,500 per 1 terabyte (TB) drive generated by the
Exchange.\14\
---------------------------------------------------------------------------

    \14\ For a more detailed description of how the proposed fees
operate, see Notice, supra note 4, at 10334.
---------------------------------------------------------------------------

    BATS Market Insight. The Exchange proposes to begin offering BATS
Market Insight that can be used to analyze the depth of liquidity of
the Exchange's book, including reserve and hidden interest, on a
historical basis. BATS Market Insight will provide a market participant
with information regarding the depth of the market at the Exchange in
minute increments. Data will become available for access by market
participants 10 days following each trade date (T + 10) and will be
available for 30 days.\15\ BATS Market Insight will be provided to data
recipients for internal use only, and thus, no redistribution will be
permitted. The proposed cost for access to BATS Market Insight is
$1,000 per user per month.
---------------------------------------------------------------------------

    \15\ Specifically, a participant using BATS Market Insight will
be able to obtain data regarding total order interest, displayed
order interest and hidden order interest at each price point in
specific Tape A, B, and C securities traded on the Exchange.
---------------------------------------------------------------------------

III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule
change is consistent with the Act and the rules and regulations
thereunder applicable to a national securities exchange.\16\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(4) of the Act,\17\ which requires that the
rules of a national securities exchange provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and issuers and other parties using its facilities, and Section
6(b)(5) of the Act,\18\ which requires, among other things, that the
rules of an exchange not be designed to permit unfair discrimination
between customers, issuers, brokers, or dealers. The Commission also
finds that the proposed rule change is consistent with Section 6(b)(8)
of the Act\19\ in that it does not impose any burden on competition not
necessary or appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \16\ In approving this proposal, the Commission has considered
the proposed rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
    \17\ 15 U.S.C. 78f(b)(4).
    \18\ 15 U.S.C. 78f(b)(5).
    \19\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Commission has reviewed the proposal using the approach set
forth by the Commission for non-core market data fees.\20\ In the NYSE
Arca Order, the Commission stated that ``when possible, reliance on
competitive forces is the most appropriate and effective means to
assess whether the terms for the distribution of non-core data are
equitable, fair and reasonable, and not unreasonably discriminatory.''
\21\ It noted that the ``existence of significant competition provides
a substantial basis for finding that the terms of an exchange's fee
proposal are equitable, fair, reasonable, and not unreasonably or
unfairly discriminatory.'' \22\ If an exchange ``was subject to
significant competitive forces in setting the terms of a proposal,''
the Commission will approve a proposal unless it determines that
``there is a substantial countervailing basis to find that the terms
nevertheless fail to meet an applicable requirement of the Exchange Act
or the rules thereunder.'' \23\
---------------------------------------------------------------------------

    \20\ See Securities Exchange Act Release No. 59039 (December 2,
2008), 73 FR 74770 (December 9, 2008) (SR-NYSEArca-2006-21) (``NYSE
Arca Order'').
    \21\ Id. at 74771.
    \22\ Id. at 74782.
    \23\ Id. at 74781.
---------------------------------------------------------------------------

    As noted in the NYSE Arca Order, the standards in Section 6 of the
Act do not differentiate between types of data and therefore apply to
exchange proposals to distribute both core data and non-core data.\24\
All U.S. exchanges trading NMS

stocks are required pursuant to Rule 603(b) \25\ of the Act to provide
``core data''--the best-priced quotations and comprehensive last sale
reports--to a SIP to consolidate and disseminate to the public pursuant
to joint-SRO plans.\26\ In contrast, individual exchanges and other
market participants distribute non-core data voluntarily.\27\ The
mandatory nature of the core data disclosure regime leaves little room
for competitive forces to determine products and fees.\28\ Non-core
data products and their fees are, by contrast, much more sensitive to
competitive forces. The Commission therefore is able to rely on
competitive forces in its determination of whether an exchange's
proposal to distribute non-core data meets the standards of Section
6.\29\
---------------------------------------------------------------------------

    \24\ Id. at 74779.
    \25\ 17 CFR 242.603(b).
    \26\ See Consolidated Tape Association Plan (``CTA Plan'') and
Consolidated Quotation Plan (``CQ Plan). The two plans, which have
been approved by the Commission, are available at http://
www.nysedata.com. See also the Joint-Self-Regulatory Organization
Plan Governing the Collection, Consolidation and Dissemination of
Quotation and Transaction Information for Nasdaq-Listed Securities
Traded on Exchanges on an Unlisted Trading Privileges Basis
(``Nasdaq UTP Plan''). The Nasdaq UTP Plan, which has been approved
by the Commission, is available at http://www.utpdata.com.
    \27\ See NYSE Arca Order, supra note 20, at 74779.
    \28\ Id.
    \29\ Id.
---------------------------------------------------------------------------

    Because the instant proposal to offer New Market Data Products
relates to the distribution of non-core data, the Commission will apply
the market-based approach set forth in the NYSE Arca Order. Pursuant to
this approach, the first step is to determine whether BATS was subject
to significant competitive forces in setting the terms of its non-core
market data proposal, including the level of any fees. As in the NYSE
Arca Order, in determining whether BATS was subject to significant
competitive forces in setting the terms of New Market Data Products,
the Commission has analyzed BATS' compelling need to attract order flow
from market participants, and the availability to market participants
of alternatives to purchasing BATS' non-core market data.
    Attracting order flow is the core competitive concern of any equity
exchange. Given the competitive pressures that currently characterize
the U.S. equity markets, no exchange can afford to take its market
share percentages for granted--they can change significantly over time,
either up or down.\30\ BATS competes with the other national securities
exchanges that currently trade equities, with electronic communication
networks, with quotes posted in FINRA's Alternative Display Facility,
with alternative trading systems, and with securities firms that
primarily trade as principal with their customer order flow.\31\
---------------------------------------------------------------------------

    \30\ Id. at 74782.
    \31\ See Notice, supra note 4, at 10334.
---------------------------------------------------------------------------

    In addition to the need to attract order flow, the availability of
alternatives to New Market Data Products significantly affect the terms
on which BATS can distribute this market data.\32\ In setting the fees
for New Market Data Products, BATS must consider the extent to which
market participants would choose one or more alternatives instead of
purchasing its data.\33\ With respect to BATS Last Sale Feed, market
participants can also gain access to BATS last sale prices through free
data feeds provided by the Exchange or those integrated with the prices
that other markets make available through the SIPs.\34\ Further, other
national securities exchanges, the several Trade Reporting Facilities
of FINRA, and ECNs can produce last sale information products, and thus
are sources of potential competition for BATS.\35\ With respect to BATS
Market Insight, BATS states that a market participant could gain access
to the same information through a combination of: (1) Existing, free
data feeds from the Exchange (for displayed trading interest); and (2)
information gathered by the market participant through its trading
activities on the Exchange and/or through the consolidated data
published by the SIPs reporting executions that occurred on the
Exchange (for non-displayed trading interest).\36\ With respect to BATS
Historical Data Products, the Exchange notes that market participants
can gain access to the same information that BATS proposes to make
available through BATS Historical Data Products feed through existing,
free data feeds from the Exchange. Further, the Commission notes that
BATS last sale and quotation information also is available through the
consolidated data feed disseminated by the SIPs. The Exchange also
notes that a similar product is offered by Nasdaq.\37\
---------------------------------------------------------------------------

    \32\ See NYSE Arca Order supra, note 20, at 74784.
    \33\ Id. at 74783.
    \34\ See Notice, supra note 4, at 10334.
    \35\ BATS represented that many other market centers, including
Nasdaq and the New York Stock Exchange LLC, do in fact currently
produce last sale information products. Id.
    \36\ See Notice, supra note 4, at 10334.
    \37\ See Nasdaq Rule 7022.
---------------------------------------------------------------------------

    The Commission believes that there are a number of alternative
sources of information that impose significant competitive pressures on
BATS in setting the terms for distributing the New Market Data
Products. The Commission believes that the availability of those
alternatives, as well as BATS' compelling need to attract order flow,
imposed significant competitive pressure on BATS to act equitably,
fairly, and reasonably in setting the terms of its proposal.
    Because BATS was subject to significant competitive forces in
setting the terms of the proposal, the Commission will approve the
proposal in the absence of a substantial countervailing basis to find
that the terms of the proposal fail to meet the applicable requirements
of the Act or the rules thereunder. An analysis of the proposal does
not provide such a basis. The Commission notes that the proposed fees
for BATS Last Sale Feed are lower for Internal Distributors than for
External Distributors. Because Internal Distributors are by definition
more limited in the scope of their distribution of BATS Last Sale Feed
than External Distributors, it is reasonable to expect that Internal
Distributors will provide BATS Last Sale Feed to a smaller number of
internal recipients.\38\ The Commission notes that the fees for BATS
Historical Data Products and BATS Market Insight are the same for all
persons. The fees therefore do not unreasonably discriminate among
types of recipients.
---------------------------------------------------------------------------

    \38\ Conversely, External Distributors can reasonably be
expected to distribute BATS Last Sale Feed to a higher number of
recipients because they do not have the same limitation.
Accordingly, the Exchange will charge a higher fee to External
Distributors than to Internal Distributors. The Exchange noted in
its filing that ``[r]egardless of a data recipient's reasons for
subscribing to the BATS Last Sale Feed, the fee for such feed
applies equally to all data recipients that wish to use the feed for
internal use only and equally to all data recipients that wish to
redistribute the feed.'' See Notice, supra note 4, at 10333. For a
similar distinction, see, e.g., Securities Exchange Act Release No.
60459 (August 7, 2009), 74 FR 41466 (August 17, 2009) (SR-Phlx-2009-
54) (order approving a proposed rule change to establish fees for
the Top of Phlx Options direct data feed product).
---------------------------------------------------------------------------

    As noted above, the Commission received one comment letter on the
proposed rule change.\39\ The commenter questions whether the Act and
the rules thereunder require SROs to file a proposed rule change to
offer at no charge electronic data feeds of transaction information
generated by an SRO. In response to this comment, BATS filed Amendment
No. 2, in which it represents that BATS will file a proposed rule
change pursuant to Section 19(b)(1) of the Act and Rule 19b-4\40\
thereunder describing its current free data feeds.\41\
---------------------------------------------------------------------------

    \39\ See supra note 5.
    \40\ 17 CFR 240.19b-4.
    \41\ See supra note 6.
---------------------------------------------------------------------------

    Further, NASDAQ OMX asserts that the proposal raises the question
of

whether the Act permits an exchange to offer the same transaction
information via two different delivery mechanisms for two different
prices.\42\ NASDAQ OMX then cites two of its own proposed rule changes
and attempts to analogize them with the instant proposal, stating that
the instant proposal implicates issues of what constitutes fair versus
unfair discrimination with respect to the fees charged for market data.
The Commission believes that the two proposed rule changes cited by
NASDAQ OMX are factually different than the BATS' proposed rule change.
As discussed above, the Commission believes that BATS offering of New
Market Data Products is not unfairly discriminatory.
---------------------------------------------------------------------------

    \42\ NASDAQ OMX was referring to the BATS Last Sale Feed that
contains last sale information that is also offered via PITCH free
of charge.
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (SR-BATS-2010-002), as modified by
Amendments No. 1 and 2, be, and hereby is, approved.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\43\
---------------------------------------------------------------------------

    \43\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-8689 Filed 4-15-10; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 84, Number 112 (Tuesday, June 11, 2019)]
[Notices]
[Page 27109]
[FR Doc No: 2019-12248]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket Nos. CP17-495-000, CP17-494-000]

Notice of Meeting: Jordan Cove Energy Project, L.P.; Pacific
Connector Gas Pipeline, L.P.

    The environmental staff of the Federal Energy Regulatory Commission
(Commission) along with other federal agency staff will meet with
representatives of the Cow Creek Band of Umpqua Tribe of Indians to
discuss the proposed Jordan Cove Energy Project. The meeting will be
held at the location and time listed below:

Tribal Government Office, 2371 NE Stephens Street, Roseburg, Oregon
97470, Wednesday, June 12, 2019, 2:30 p.m. PDT

    Members of the public and intervenors in the referenced proceeding
may attend and observe this meeting; however, participation will be
limited to tribal representatives and agency staff. If tribal
representatives choose to disclose information about a specific
location which could create a risk or harm to an archeological site or
Native American cultural resource, the public will be excused for that
portion of the meeting. A summary of the meeting will be entered into
the Commission's administrative record.
    If you plan to attend this meeting, please contact Mr. John
Peconom, Environmental Project Manager at<PHONE_NUMBER> or
<EMAIL_ADDRESS>
    Dated: June 4, 2019.
Kimberly D. Bose,
Secretary.
[FR Doc. 2019-12248 Filed 6-10-19; 8:45 am]
BILLING CODE 6717-01-P