[Federal Register Volume 89, Number 24 (Monday, February 5, 2024)]
[Notices]
[Pages 7756-7757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02245]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 35121; 812-15209]


Blue Tractor ETF Trust and Blue Tractor Group, LLC

January 31, 2024.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application to amend a prior order for exemptive 
relief.

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Summary of Application:  Applicants request an order (``Amended 
Order'') that would amend a prior order to permit a Fund (as defined 
below) to engage in short sales with respect to the same types of 
instruments that a Fund is permitted to hold as long positions.

Applicants:  Blue Tractor ETF Trust and Blue Tractor Group, LLC 
(``Applicants'').

Filing Dates:  The application was filed on March 19, 2021, and amended 
on August 12, 2021, February 15, 2022, June 3, 2022, June 7, 2023 and 
January 30, 2024.

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 emailing the Commission's 
Secretary at [email protected] and serving Applicants with a 
copy of the request by email, if an email address is listed for the 
relevant Applicant below, or personally or by mail, if a physical 
address is listed for the relevant Applicant below. Hearing requests 
should be received by the Commission by 5:30 p.m. on February 26, 2024 
and should be accompanied by proof of service on the Applicants, in the 
form of an affidavit, or, for lawyers, a certificate of service. 
Pursuant to rule 0-5 under the Investment Company Act of 1940 
(``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 
emailing to the Commission's Secretary.

ADDRESSES: The Commission: [email protected]. Applicants: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel; Trace 
W. Rakestraw, Senior Special Counsel, at (202) 551-6825 (Division of 
Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: For Applicants' representations, legal 
analysis, and conditions, please refer to Applicants' fifth amended and 
restated application, dated January 30, 2024, which may be obtained via 
the Commission's website by searching for the file number at the top of 
this document, or for an Applicant using the Company name search field, 
on the SEC's EDGAR system. The SEC's EDGAR system may be searched at, 
https://www.sec.gov/edgar/searchedgar/legacy/companysearch.html. You 
may also call the SEC's Public Reference Room at (202) 551-8090.

I. Introduction

    1. On December 10, 2019, the Commission issued an order \1\ (as 
subsequently amended,\2\ the ``Prior Order'') \3\ under section 6(c) of 
the Act

[[Page 7757]]

for an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of 
the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b) of 
the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the 
Act, and under section 12(d)(1)(J) of the Act for an exemption from 
sections 12(d)(1)(A) and 12(d)(1)(B) of the Act.\4\ The Prior Order 
permits Applicants to operate a novel type of actively-managed 
exchange-traded fund (``ETF'') that is not required to disclose its 
full portfolio holdings on a daily basis (each, a ``Fund''). Rather, 
pursuant to the Prior Order, each Business Day \5\ a Fund publishes a 
basket of securities and cash that, while different from the Fund's 
portfolio, is designed to closely track its daily performance (the 
``Portfolio Reference Basket'').
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    \1\ See Blue Tractor ETF Trust and Blue Tractor Group, LLC, 
Investment Company Act Release No. 33682 (Nov. 14, 2019) (notice) 
and Investment Company Act Release No. 33710 (Dec. 10, 2019) 
(order).
    \2\ See Blue Tractor ETF Trust and Blue Tractor Group, LLC, 
Investment Company Act Release No. 34194 (Feb. 10, 2021) (notice) 
and Investment Company Act Release No. 34221 (Mar. 9, 2021) (order).
    \3\ Except as specifically noted in the application for the 
Amended Order, all representations and conditions contained in the 
application first submitted with the Commission (File No. 812-
14625), as amended and restated, and filed with the Commission on 
October 23, 2019 (the ``First Application''), as modified according 
to the application for an amended order subsequently submitted with 
the Commission (File No. 812-15162), as amended and restated, and 
filed with the Commission on January 19, 2021, remain applicable to 
the operation of the Funds and will apply to any Funds relying on 
the Amended Order.
    \4\ The relief granted under section 12(d)(1)(J) of the Act for 
an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of the Act 
(the ``Section 12(d)(1) Relief''), and relief under sections 6(c) 
and 17(b) of the Act for an exemption from sections 17(a)(1) and 
17(a)(2) of the Act relating to the Section 12(d)(1) Relief, expired 
on January 19, 2022. See Fund of Funds Arrangements, Investment 
Company Act Rel. No. 10871 (Oct. 7, 2020), at III.
    \5\ See First Application at 12.
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    2. Under the Prior Order, a Fund may not borrow for investment 
purposes or hold short positions. Applicants now seek to amend the 
Prior Order to permit a Fund to engage in short selling, but only in 
the same types of instruments that a Fund is permitted to hold as long 
positions in its actual portfolio (``Portfolio Instruments'').\6\
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    \6\ See First Application at 8.
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II. The Application

A. Applicants' Proposal

    3. Upon amending the Prior Order, the Portfolio Reference Basket 
will be constructed in the same manner as described in the Prior Order, 
except that it will include a first portion corresponding to the long 
positions in the Fund's actual portfolio and a second portion 
corresponding to the short positions in the Fund's actual portfolio. 
Applicants represent that, in the aggregate, the Portfolio Reference 
Basket will provide an arbitrage tool to allow market participants to 
price and hedge their positions in the ETF shares.
    4. As described in the application, a Fund will disclose publicly 
on its website the respective aggregate weightings of the long and 
short positions in the Fund's actual portfolio. In this manner, 
Applicants represent that market participants will understand the 
overall long and short exposures in the Fund's actual portfolio even 
though the weightings of individual long and short positions in the 
Portfolio Reference Basket will be different than the weightings of 
those individual long and short positions within the Fund's actual 
portfolio. Applicants also represent that although short positions 
cannot be transferred within the Fund's creation basket, long positions 
and cash amounts representing the net value of short positions would be 
included in the Fund's creation basket, just as with ETFs relying on 
Rule 6c-11.

B. Considerations Relating to the Requested Relief

    5. Applicants represent that they do not believe that the use of 
short positions related to the Portfolio Instruments will give rise to 
any new policy concerns, stating that the disclosure of short positions 
will not change the ability of arbitrageurs and market participants to 
recognize, value, and execute on arbitrage opportunities. Applicants 
represent that the inclusion of short positions in the actual portfolio 
and disclosure of those short positions in the Portfolio Reference 
Basket will not disrupt the correlation between the performance of the 
Portfolio Reference Basket and the actual portfolio. Applicants also 
believe that the pricing of short positions in the Portfolio 
Instruments should be as readily ascertainable as the pricing of long 
positions in those same Portfolio Instruments because the pricing of 
the short positions will reflect the liquidity and pricing transparency 
of the related Portfolio Instruments. As noted above, moreover, 
Applicants have committed that the Funds would publish daily the 
aggregate short exposure of the actual portfolio and the aggregate long 
exposure of the actual portfolio so that market participants will have 
even more information about the ways in which the positions in the 
Portfolio Reference Basket relate to the actual portfolio.

III. Requested Exemptive Relief

    Applicants believe that the Prior Order, as amended, continues to 
meet the relevant standards for relief pursuant to section 6(c) of the 
Act for an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) 
of the Act and rule 22c-1 under the Act, and under sections 6(c) and 
17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) 
of the Act.\7\
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    \7\ See supra note 4.
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IV. Applicants' Conditions

    Applicants agree that the Amended Order granting the requested 
relief will be subject to all of the conditions in the Prior Order.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-02245 Filed 2-2-24; 8:45 am]
BILLING CODE 8011-01-P