[Federal Register Volume 88, Number 2 (Wednesday, January 4, 2023)]
[Notices]
[Pages 393-396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-28538]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34793; File No. 812-15420]


VanEck Russia ETF and VanEck Russia Small-Cap ETF, Series of 
VanEck ETF Trust, and Van Eck Associates Corporation; Notice of 
Application and Temporary Order

December 28, 2022.
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'').

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Summary of Application: Applicants request a temporary order to permit 
each of VanEck Russia ETF and VanEck Russia Small-Cap ETF (each, a 
``Fund,'' and collectively, the ``Funds''), series of VanEck ETF Trust 
(the ``Trust''), 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 Trust, on behalf of the Funds, and Van Eck Associates 
Corporation, the Funds' investment adviser (``Adviser'' and together 
with the Trust, the ``Applicants'').

Filing Date: The application was filed on December 28, 2022.

Hearing or Notification of Hearing: Interested persons may request a

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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 January 24, 2023, 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: 
Allison M. Fumai, Esq., Dechert LLP, 1095 Avenue of the Americas, New 
York, New York 10036-6797, with copies to Jonathan R. Simon, Esq., 
VanEck ETF Trust, 666 Third Avenue, 9th Floor, New York, New York 
10017.

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 December 28, 2022, 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.

Background

    1. The Trust is registered under the Act as an open-end series 
management investment company. Adviser is the investment adviser to the 
Funds, each of which is a series of the Trust. Adviser is registered as 
an investment adviser under the Investment Advisers Act of 1940.
    2. Each 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 each Fund are 
listed on Cboe BZX Exchange, Inc. (``Cboe'').
    3. VanEck Russia ETF's investment objective is to seek to replicate 
as closely as possible, before fees and expenses, the price and yield 
performance of the MVIS[supreg] Russia Index (the ``Russia Index''). 
VanEck Russia Small-Cap ETF's investment objective is to seek to 
replicate as closely as possible, before fees and expenses, the price 
and yield performance of the MVIS[supreg] Russia Small-Cap Index 
(together with the Russia Index, the ``Underlying Indexes''). 
MarketVector Indexes GmbH suspended future rebalances of the Underlying 
Indexes on March 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 each Fund's direct and 
indirect holdings of Russian equity securities have become illiquid and 
are fair valued at or near zero.
    5. Effective March 3, 2022 and March 2, 2022, RSX and RSXJ, 
respectively, temporarily suspended new creations of their shares until 
further notice due to concerns about newly imposed restrictions 
impacting the ability of U.S. investors to transact in securities in 
the applicable Underlying Index, among other reasons.\1\ Prior to 
market open on March 4, 2022, Cboe halted trading of each Fund's shares 
in light of ongoing issues related to Russia's invasion of Ukraine.
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    \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.'').
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    6. Applicants anticipate that each Fund's shares will be delisted 
by Cboe 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 Cboe determines in its discretion to 
delist shares of the Fund, which may occur even if the requested relief 
is not granted). If shares of a Fund are delisted by Cboe, 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 Termination of Series (the ``Plan of 
Liquidation'') approved by the Board of Trustees of the Trust (the 
``Board''), each Fund will distribute in liquidation all of its assets 
to shareholders, less a reserve in an amount estimated to meet the 
Fund's outstanding liabilities, the costs of the liquidation, taking 
into account the political and market uncertainties impacting the sale 
of Russian securities, and the expenses necessary for the continued 
limited operation of the Fund through its final termination. Following 
that distribution, each 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 each 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 a Fund. Each 
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.
    8. Applicants believe the requested relief will permit each 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 January 2023 liquidating distribution and any 
subsequent liquidating distributions. Notwithstanding the present 
inability to dispose of Russian securities held by each 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, 
each Fund will be required to satisfy redemption requests

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from APs, while other investors would be unable to trade the Fund's 
shares. Although the Funds have 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 Cboe may determine in its 
discretion to delist shares of the Funds if the requested relief is not 
granted. A Fund will not be eligible to rely on Rule 6c-11 once the 
Fund's shares are delisted by Cboe. As a consequence, to the extent 
that a 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. Each Fund therefore would not, for its 
part, initiate delisting of the Fund's shares with Cboe until after the 
requested relief is granted.\2\
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    \2\ It is not anticipated that Cboe will delist a Fund's shares 
before the Fund's requested relief is granted by the SEC.
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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 each Fund 
effective December 28, 2022, and postpone the date of payment of 
redemption proceeds with respect to redemption orders received on or 
after December 23, 2022 but not yet paid as of December 28, 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 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 each 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 
each 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 each 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 Trustees,\3\ 
will adopt or has adopted the Plan of Liquidation for the orderly 
liquidation of each Fund's assets and distribution of appropriate 
payments to the Fund's shareholders.
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    \3\ ``Independent Trustees'' means trustees who are not 
``interested persons'' of the Trust, as such term is defined in 
section 2(a)(19) of the Act.
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    2. Pending liquidating distributions, each 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. Each Fund's assets will be distributed to the Fund's 
shareholders solely in accordance with the Plan of Liquidation.
    4. Each 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. Each Fund and the Adviser will promptly make available to 
Commission staff all files, books, records and personnel, as requested, 
relating to the Fund.
    6. Each 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 Funds.
    8. Each 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. Each 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. Each 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 each Fund's shareholders. Under the circumstances 
described in the application, which require immediate action to protect 
the Funds' 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 VanEck Russia ETF and VanEck Russia 
Small-Cap ETF, series of VanEck ETF Trust, and Van Eck Associates 
Corporation (File No. 812-15420),
    It is ordered, pursuant to section 22(e)(3) of the Act, that the 
requested

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relief from section 22(e) of the Act is granted with respect to each 
Fund until it has liquidated, or until the Commission rescinds the 
order granted herein. This order shall be in effect as of December 28, 
2022, with suspension of redemption rights as requested by the 
Applicants to be effective as of December 28, 2022 and the postponement 
of payment of redemption proceeds to apply to redemption orders 
received on or after December 23, 2022 but not yet paid as of December 
28, 2022.

    By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-28538 Filed 1-3-23; 8:45 am]
BILLING CODE 8011-01-P


