[Federal Register Volume 61, Number 106 (Friday, May 31, 1996)]
[Notices]
[Pages 27375-27377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13696]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 21983; International Series Release
No. 984/812-9966]
Bankers Trust Australia Limited; Notice of Application
May 24, 1996.
Agency: Securities and Exchange Commission (``SEC'').
Action: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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Applicant: Bankers Trust Australia Limited (``BTAL'').
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Relevant Act Sections: Order requested under section 6(c) for an
exemption from section 17(f).
Summary of Application: BTAL requests an order to permit it to maintain
foreign securities and other assets of U.S. registered investment
companies in the custody of Pendal Nominees Pty. Limited (``Pendal
Nominees''), an indirect, wholly-owned subsidiary of BTAL.
Filing Date: The application was filed on January 30, 1996, and amended
on May 3, 1996.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on June 18, 1996,
and should be accompanied by proof of service on applicant, in the form
of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issues contested. Persons may request
notification of a hearing by writing to the SEC's Secretary.
Addresses: Secretary, SEC, 450 Fifth Street NW., Washington, D.C.
20549. Applicant: BTAL, The Chifley Tower, Level 15, 2 Chifley Square,
Sydney NSW 2000, Australia, with copies to Dana L. Platt, Esq.,
Kirkpatrick & Lockhart LLP, 1251 Avenue of the Americas--45th Floor,
New York, New York 10020.
For Further Information Contact: Mercer E. Bullard, Staff Attorney,
(202) 942-0565, or Allison E. Baur, Branch Chief, (202) 942-0564
(Division of Investment Management, Office of Investment Company
Regulation).
Supplementary Information: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch.
Applicant's Representations
1. BTAL is bank organized under the laws of Australia and regulated
by the Reserve Bank of Australia. As of December 31, 1995, BTAL had
shareholders' equity of approximately $770 million. BTAL is a wholly-
owned, indirect subsidiary of Bankers Trust Company (``BTCo'').
2. BTCo is a New York State chartered bank and a member of the
Federal Reserve System. As of December 31, 1995, BTCo had aggregate
capital, surplus, and undivided profits in excess of $4.9 billion.
3. Pendal Nominees, a wholly-owned, indirect subsidiary of BTAL and
BTCo, was incorporated in Australia in 1971. Although Pendal Nominees
is a distinct legal entity, it is administered as part of BTAL, shares
office space with BTAL; and all of its representatives are employees of
BTAL. Pendal Nominees has provided custody and trustee services for
BTAL's Funds Management Division since 1985. Pendal Nominees has
shareholders' equity of less than $100 million.
4. BTAL requests an order under section 6(c) of the Act granting
exemptive relief from section 17(f) of the Act for itself, Pendal
Nominees, any investment company registered under the Act other than an
investment registered under section 7(d) of the Act (``Investment
Company''), and any custodian for an Investment Company to the extent
necessary to permit BTAL, any Investment Company, or any custodian for
an Investment Company to maintain foreign securities, cash or cash
equivalents (collectively ``Assets'') in the custody of Pendal
Nominees.
Applicant's Legal Analysis
1. Section 6(c) of the Act provides that the SEC may exempt any
person, security, or transaction from any provision of the Act if and
to the extent that such exemption is necessary or appropriate in the
public interest and consistent with the protection of investors and the
purposes fairly intended by the policy and provisions of the Act.
2. Section 17(f) of the Act requires every registered management
investment company to place and maintain its securities and similar
investments in the custody of certain enumerated entities. Section
17(f) effectively restricts entities located outside of the United
States that may act as custodians for Investment Companies to overseas
branches of domestic banks.
3. Rule 17f-5 under the Act expands the group of entities located
outside the United States that are permitted to serve as custodians for
registered management investment companies. These entities, among other
things, must qualify as ``Eligible Foreign Custodians.'' Rule 17f-
5(c)(2)(ii) defines the term `'Eligible Foreign Custodian'' to include
a majority-owned direct or indirect subsidiary of a qualified U.S. bank
or bank-holding company that is incorporated or organized under the
laws of a country other than the United States and that has
shareholders' equity in excess of $100 million as of the close of its
most recently completed fiscal year. The rule defines the term
``Qualified U.S. Bank'' to include a banking institution organized
under the laws of the United States that has an aggregate capital,
surplus, and undivided profits of not less than $500,000.
4. BTAL and Pendal Nominees are incorporated under the laws of
Australia and are wholly-owned indirect subsidiaries of BTCo, which is
a ``Qualified U.S. Bank'' under rule 17f-5. BTAL has shareholders'
equity in excess of $100 million and thus qualifies as an Eligible
Foreign Custodian under rule 17f-5(c)(2)(ii). Pendal Nominees, however,
does not meet the minimum shareholders' equity requirement under rule
17f-5(c)(2)(ii). Consequently, Pendal Nominees does not qualify as an
Eligible Foreign Custodian under rule 17f-5 and, absent exemptive
relief, could not serve as custodian for an Investment Company.
5. BTAL contends that the terms of the foreign custody
arrangements, as described in the conditions set forth below, will
adequately protect Investment Companies and their shareholders against
loss. BTAL believes that the requested relief is necessary and
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policies and
provisions of the Act.
Applicant's Conditions
BTAL agrees, as conditions to the requested exemptive relief, that:
1. The foreign custody arrangements proposed with respect to Pendal
Nominees will satisfy the requirements of rule 17f-5 in all respects
other than with regard to the minimum shareholders' equity requirement
for an eligible foreign custodian.
2. BTAL currently satisfies and will continue to satisfy all
requirements of rule 17f-5, including the minimum shareholders' equity
requirement of rule 17f-5(c)(2)(ii).
3. Pendal Nominees currently satisfies all requirements of rule
17f-5, except for the minimum shareholders' equity requirement of rule
17f-5(c)(2)(ii).
4. BTAL will deposit Assets in Australia with Pendal Nominees only
in accordance with a three-party contractual agreement that will remain
in effect at all times during which Pendal Nominees fails to meet the
requirements of Rule 17f-5 relating to minimum shareholders' equity.
The agreement will be among Pendal Nominees, BTAL, and the Investment
Company or the custodian for the Investment Company for which BTAL acts
as subcustodian. Under the
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agreement, BTAL will provide specified custodial or subcustodial
services for the Investment Company or custodian and will delegate to
Pendal Nominees such of BTAL's duties and obligations as will be
necessary to permit Pendal Nominees to hold the Assets custody in
Australia. The agreement will further provide that BTAL will be liable
for any loss, damage, cost, expense, liability, or claim arising out of
or in connection with the performance by Pendal Nominees of its
responsibilities under the agreement to the same extent as if BTAL had
been required to provide custody services under such agreement.
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-13696 Filed 5-30-96; 8:45 am]
BILLING CODE 8010-01-M