[Federal Register Volume 87, Number 152 (Tuesday, August 9, 2022)]
[Notices]
[Pages 48521-48523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17001]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34661; File No. 812-15377]


iShares MSCI Russia ETF, a Series of iShares Inc., and BlackRock 
Fund Advisors; Notice of Application and Temporary Order

AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application and a temporary order under section 
22(e)(3) of the Investment Company Act of 1940 (the ``Act'').

-----------------------------------------------------------------------

    Summary of Application: Applicants request a temporary order to 
permit iShares MSCI Russia ETF (the ``Fund''), a series of iShares Inc. 
(the ``Company''), to suspend the right of redemption of its 
outstanding redeemable securities and postpone the date of payment of 
redemption proceeds with respect to redemption orders received but not 
yet paid.
    Applicants: The Company, on behalf of the Fund, and BlackRock Fund 
Advisors, the Fund's investment adviser (``Adviser'' and together with 
the Company, the ``Applicants'').
    Filing Date: The application was filed on August 3, 2022.
    Hearing or Notification of Hearing: Interested persons may request 
a hearing by emailing to 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 August 29, 2022, 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 at [email protected].

ADDRESSES: The Commission: [email protected]. Applicants: 
Benjamin J. Haskin, Esq. and Anne C. Choe, Esq., Willkie Farr & 
Gallagher LLP, 1875 K Street NW, Washington, DC 20006-1238, with copies 
to Marisa Rolland, Esq., BlackRock Fund Advisors, 400 Howard Street, 
San Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT: Christopher D. Carlson, Senior 
Counsel, Trace W. Rakestraw, Branch Chief, or Daniele Marchesani, 
Assistant Chief 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' application, 
dated August 3, 2022, which may be obtained via the

[[Page 48522]]

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.

Background

    1. The Company is registered under the Act as an open-end series 
management investment company. Adviser is the investment adviser to the 
Fund, a series of the Company. Adviser is registered as an investment 
adviser under the Investment Advisers Act of 1940.
    2. The Fund is a non-diversified exchange-traded fund (``ETF'') 
that operates pursuant to Rule 6c-11 under the Act, which provides that 
shares of an ETF can be purchased or redeemed directly from the ETF at 
net asset value solely by authorized participants (``APs'') and only in 
aggregations of a specified number of shares. Shares of the Fund are 
listed on NYSE Arca, Inc. (``NYSE Arca'').
    3. Prior to the events described in the Application, the Fund was 
managed by Adviser according to an investment objective of seeking to 
track the investment results of an index composed of Russian equities. 
MSCI, Inc. discontinued the Fund's underlying index (the ``Underlying 
Index'') on June 1, 2022.
    4. Applicants state that the request for relief arises from the 
effect of geopolitical affairs on transactions in the Russian equity 
markets and on the relevant markets for Russian equity securities 
generally, and on related clearance and payment systems. As a result of 
these geopolitical affairs, virtually all of the Fund's direct and 
indirect holdings of Russian equity securities have become illiquid and 
are fair valued at or near zero.
    5. Effective March 1, 2022, the Fund temporarily suspended new 
creations of its shares until further notice due to concerns about 
newly imposed restrictions impacting the ability of U.S. investors to 
transact in securities in the Underlying Index, among other reasons.\1\ 
Prior to market open on March 4, 2022, NYSE Arca halted trading of the 
Fund's shares in light of ongoing issues related to Russia's invasion 
of Ukraine.
---------------------------------------------------------------------------

    \1\ See Exchange-Traded Funds, Investment Company Act Release 
Number 33646 (Sept. 25, 2019) (``[A]n ETF generally may suspend the 
issuance of creation units only for a limited time and only due to 
extraordinary circumstances, such as when the markets on which the 
ETF's portfolio holdings are traded are closed for a limited period 
of time.'').
---------------------------------------------------------------------------

    6. Applicants anticipate that the Fund's shares will be delisted by 
NYSE Arca on a date 15 days after the requested relief is granted and 
coinciding with the payment of the initial liquidating distribution by 
the Fund (or an earlier date if NYSE Arca determines in its discretion 
to delist shares of the Fund, which may occur even if the requested 
relief is not granted). If shares of the Fund are delisted by NYSE 
Arca, the Fund will not be able to continue to operate as an ETF, 
pursuant to Rule 6c-11.
    7. If the order requested in the Application is granted, pursuant 
to the Plan of Liquidation and Dissolution of Series (the ``Plan of 
Liquidation'') approved by the Board of Directors of the Company (the 
``Board''), the Fund will distribute in liquidation all of its liquid 
assets to shareholders, less a reserve in an amount estimated to meet 
the costs of the liquidation that would be borne by the Fund. Following 
that distribution, the Fund will have no assets of realizable value 
(other than the amount so held in reserve), and the Fund's positions in 
Russian securities will not be transferable by the Fund. If some or all 
of those Russian securities were at some point before the Fund's final 
termination determined to have a greater value, it is possible that 
they would continue not to be transferable at that time. In addition, 
it is possible that even if Russian securities were able to be sold, 
local regulations may not permit the proceeds of any such sale(s) to be 
converted to U.S. dollars which are freely available to the Fund. The 
Fund's remaining portfolio assets--the Russian equity securities--will 
therefore remain in the Fund until they can be sold and converted into 
U.S. dollars (with the proceeds distributed to the Fund's shareholders) 
or are permanently written off, in each case as determined by the 
Adviser and approved by the Board of Directors of the Company (the 
``Board'').
    8. Applicants believe the requested relief will permit the Fund to 
liquidate its holdings in the manner described above without the risk 
that it might be required to meet redemption requests submitted 
potentially out of the reserve or otherwise when the Fund would have no 
or few assets to meet the redemption requests. In addition, applicants 
state that suspension of redemptions prior to the initial distribution 
in liquidation will ensure that shareholders submitting such redemption 
requests will participate in the liquidation and also will be entitled 
to share both in the August 2022 liquidating distribution and any 
subsequent liquidating distribution. Notwithstanding the present 
inability to dispose of Russian securities held by the Fund, Applicants 
have determined to seek the requested order at this time because 
Applicants believe that liquidation of the Fund is in the best 
interests of the Fund's shareholders. Without the requested relief, the 
Fund will be required to satisfy redemption requests from APs, while 
other investors would be unable to trade the Fund's shares. Although 
the Fund has received no redemption orders since the invasion began, it 
is possible that redemption orders could be received at any time.
    9. In addition, as noted above, the NYSE Arca may determine in its 
discretion to delist shares of the Fund if the requested relief is not 
granted. The Fund will not be eligible to rely on Rule 6c-11 once the 
Fund's shares are delisted by NYSE Arca. As a consequence, to the 
extent that the Fund is obligated to satisfy any individual redemption 
requests received from non-AP shareholders of the Fund, the Fund would 
be unable to accept or process such redemption requests from an 
operational perspective because the Fund and its service providers do 
not have the operational infrastructure to enable the Fund to engage in 
non-AP primary market transactions. The Fund therefore would not, for 
its part, initiate delisting of the Fund's shares with NYSE Arca until 
after the requested relief is granted.\2\
---------------------------------------------------------------------------

    \2\ It is not anticipated that NYSE Arca will delist the Fund's 
shares before the Fund's requested relief is granted by the SEC.
---------------------------------------------------------------------------

Relief Requested

    1. Applicants request an order pursuant to Section 22(e) of the Act 
to suspend the right of redemption with respect to shares of the Fund 
effective August 3, 2022, and postpone the date of payment of 
redemption proceeds with respect to redemption orders received on or 
after August 1, 2022 but not yet paid as of August 3, 2022, for more 
than seven days after the tender of securities to the Fund, until the 
Fund completes the liquidation of its portfolio and distributes all its 
assets to the shareholders, or until the Commission rescinds the order 
granted herein. Applicants believe that the relief requested is 
appropriate for the protection of shareholders of the Fund.

Applicants' Legal Analysis

    1. Section 22(e)(1) of the Act provides that a registered 
investment company may not suspend the right of redemption or postpone 
the date of

[[Page 48523]]

payment or satisfaction upon redemption of any redeemable security in 
accordance with its terms for more than seven days after the tender of 
such security to the company or its designated agent except for any 
period during which the New York Stock Exchange (``NYSE'') is closed 
other than customary week-end and holiday closings, or during which 
trading on the NYSE is restricted.
    2. Section 22(e)(3) of the Act provides that redemptions may be 
suspended by a registered investment company for such other periods as 
the Commission may by order permit for the protection of security 
holders of the registered investment company.
    3. Applicants submit that granting the requested relief would be 
for the protection of the shareholders of the Fund, as provided in 
Section 22(e)(3) of the Act. Applicants assert that, in requesting an 
order by the Commission, the Applicants' goal is to ensure that all of 
the Fund's shareholders will be treated appropriately and fairly in 
view of the otherwise detrimental effect on the Fund of the illiquidity 
of the Fund's investments and the ongoing uncertainty surrounding the 
Russian equity markets. The requested relief is intended to permit an 
orderly liquidation of the Fund's portfolio and ensure that all of the 
Fund's shareholders are protected in the process.

Applicants' Conditions

    Applicants agree that any order of the Commission granting the 
requested relief will be subject to the following conditions:
    1. The Board, including a majority of the Independent Directors,\3\ 
will adopt or has adopted the Plan of Liquidation for the orderly 
liquidation of Fund assets and distribution of appropriate payments to 
Fund shareholders.
---------------------------------------------------------------------------

    \3\ ``Independent Directors'' means directors who are not 
``interested persons'' of the Company, as such term is defined in 
Section 2(a)(19) of the Act.
---------------------------------------------------------------------------

    2. Pending liquidating distributions, the Fund will invest proceeds 
of cash dispositions of portfolio securities solely in U.S. government 
securities, money market funds that are registered under the Act and 
comply with the requirements of Rule 2a-7 under that Act, cash 
equivalents, securities eligible for purchase by a registered money 
market fund meeting the requirements of Rule 2a-7 under the Act with 
legal maturities not in excess of 90 days and, if determined to be 
necessary to protect the value of a portfolio position in a rights 
offering or other dilutive transaction, additional securities of the 
affected issuer.
    3. The Fund's assets will be distributed to the Fund's shareholders 
solely in accordance with the Plan of Liquidation.
    4. The Fund and the Adviser will make and keep true, accurate and 
current all appropriate records, including but not limited to those 
surrounding the events leading to the requested relief, the Plan of 
Liquidation, the sale of Fund portfolio securities, the distribution of 
Fund assets, and communications with shareholders (including any 
complaints from shareholders and responses thereto).
    5. The Fund and the Adviser will promptly make available to 
Commission staff all files, books, records and personnel, as requested, 
relating to the Fund.
    6. The Fund and the Adviser will provide periodic reporting to 
Commission staff regarding their activities carried out pursuant to the 
Plan of Liquidation.
    7. The Adviser, its affiliates, and its and their associated 
persons will not receive any fee for managing the Fund.
    8. The Fund will be in liquidation and will not be engaged and does 
not propose to engage in any business activities other than those 
necessary for the protection of its assets, the protection of 
shareholders and the winding-up of its affairs, as contemplated by the 
Plan of Liquidation.
    9. The Fund and the Adviser will appropriately convey accurate and 
timely information to shareholders of the Fund, before or promptly 
following the effective date of the liquidation, with regard to the 
status of the Fund and its liquidation (including posting such 
information on the Fund's website), and will thereafter from time to 
time do so to reflect material developments relating to the Fund or its 
status, including, without limitation, information concerning the dates 
and amounts of distributions, and press releases and periodic reports, 
and will maintain a toll-free number to respond to shareholder 
inquiries.
    10. The Fund and the Adviser shall consult with Commission staff 
prior to making any material amendments to the Plan of Liquidation.

Commission Finding

    Based on the representations and conditions in the application, the 
Commission permits the temporary suspension of the right of redemption 
for the protection of the Fund's shareholders. Under the circumstances 
described in the application, which require immediate action to protect 
the Fund's shareholders, the Commission concludes that it is not 
practicable to give notice or an opportunity to request a hearing 
before issuing the order.
    Accordingly, in the matter of iShares MSCI Russia ETF, a series of 
iShares Inc., and BlackRock Fund Advisors (File No. 812-15377),
    It is ordered, pursuant to Section 22(e)(3) of the Act, that the 
requested relief from Section 22(e) of the Act is granted with respect 
to the Fund until it has liquidated, or until the Commission rescinds 
the order granted herein. This order shall be in effect as of August 3, 
2022, with suspension of redemption rights as requested by the 
Applicants to be effective as of August 3, 2022 and the postponement of 
payment of redemption proceeds to apply to redemption orders received 
on or after August 1, 2022 but not yet paid as of August 3, 2022.

    By the Commission.

    Dated: August 3, 2022.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17001 Filed 8-8-22; 8:45 am]
BILLING CODE 8011-01-P


