Unassociated Document
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
File
No. 812-________
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In
the matter of:
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x
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Global
X Funds and
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Global
X Management Company LLC
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x
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Application
for an Order to Amend a Prior Order under (i) Section 6(c) of the Investment
Company Act of 1940, as amended (“1940 Act”) for an exemption from Sections
2(a)(32), 5(a)(1), 22(d), 22(e) and 24(d) of the 1940 Act and Rule
22c-1 under the 1940 Act; (ii) Sections 6(c) and 17(b) of the 1940
Act for an exemption from Sections 17(a)(1) and 17(a)(2) of the 1940
Act; and (iii) Section 12(d)(1)(J) of the 1940 Act for an exemption
from Sections 12(d)(1)(A) and 12(d)(1)(B) of the 1940 Act.
Please
send all communications to:
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Bruno
del Ama
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Daphne
Tippens Chisolm, Esq.
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Global
X Management Company LLC
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Law
Offices of DT Chisolm, P.C.
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410
Park Avenue, 4th Floor
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11508
H-236 Providence Road
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New
York, NY 10022
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Charlotte,
NC 28277
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Page 1 of
25 Pages, including Exhibits
Exhibit
Index appears on Page 21
As filed
with the Securities and Exchange Commission on October 1, 2010
Table of
Contents
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I.
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Introduction
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2
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II.
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The
Investment Products
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3
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A.
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The
Applicants
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3
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B.
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The
New Funds and their Indexes
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4
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C.
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Investment
Objectives
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4
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D.
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Exchange
Listing
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6
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E.
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Purchases
and Redemptions of Shares and Creation Units
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6
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F.
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Pricing
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13
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G.
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Availability
of Information Regarding Shares and Underlying Indexes
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13
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H.
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Sales
and Marketing Materials; Prospectus Disclosure
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16
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I.
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Deletion
of Relief in the Prior Order from Section 24(d) Under the 1940
Act and Changes to Disclosure Requirements
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16
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III.
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Request
for Exemptive Relief and Legal Analysis
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17
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IV.
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Conditions
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18
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V.
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Names
and Addresses
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18
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VI.
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Authorization
and Signatures
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19
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VII.
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Exhibit
Index
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20
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I. Introduction
Global X
Management Company, LLC (“Adviser”) and Global X Funds (“Trust”) (collectively,
“Applicants”) hereby apply for and request an order (“Order”) to amend a prior
order under (i) Section 6(c) of the Investment Company Act of 1940, as amended
(“1940 Act”), for an exemption from Sections 2(a)(32), 5(a)(1), 22(d), 22(e) and
24(d) of the 1940 Act and Rule 22c-1 under the 1940 Act ; (ii) Sections
6(c) and 17(b) of the 1940 Act for an exemption from Sections
17(a)(1) and (a)(2) of the 1940 Act ; and (iii) Section 12(d)(1)(J) of the
1940 Act for an exemption from Sections 12(d)(1)(A) and 12(d)(1) of
the 1940 Act (“Prior Order”).1
The
requested relief is substantially similar to relief previously granted by the
Securities and Exchange Commission (“SEC” or “Commission”) in the Prior Order
that permits the Trust to establish, create and operate one or more registered
open-end investment companies and/or separate series of such investment company
or companies, with each such investment company or separate series of such
investment company offering separate investment portfolios comprised primarily
of equity securities (each such investment company or portfolio a “Equity Fund,”
and collectively, the “Equity Funds”) that offer exchange traded shares
(“Shares”). Each Equity Fund is, or will be, permitted to hold
certain equity securities and financial instruments selected to correspond,
before fees and expenses, generally to the price and yield performance of a
specified equity securities index (“Equity Index”). The Shares of
each Equity Fund are, or will be, purchased only in large aggregations of a
specified number referred to as a “Creation Unit.” Creation Units
are, or would be separable, upon issue into individual Shares, which are, or
would be, listed and traded at negotiated prices on a national securities
exchange. The Shares themselves are not, or would not be, redeemable
unless combined into a Creation Unit. Applicants requested and
received in relief in the Prior Order to offer additional Equity Funds in the
future as well as any series of any existing or future Equity Funds registered
under the 1940 Act.
The
Applicants hereby request relief similar to that received with respect to Equity
Funds for new or additional investment portfolios of the Trust (“New Funds”)
that will offer Shares that can be redeemed only in large aggregations (i.e.,
Creation Units) that would invest in fixed-income securities and fixed-income
related securities (“Portfolio Securities”) and financial instruments selected
to correspond, before fees and expenses, generally to the price and yield
performance of specified fixed income and/or fixed income related index (each an
“Index” and, collectively, “Indexes”).
Applicants
also seek to amend the Prior Order by deleting the relief granted from the
requirements of Section 24(d) of the 1940 Act. The requested relief
granted would extend to one or more future investment portfolios of the Trust or
future registered open-end investment companies and/or separate series of such
investment company or companies, with each such future investment portfolio of
the Trust or future investment company or separate series of such investment
company offering separate investment portfolios whose Portfolio Securities and
financial instruments are selected to correspond, before fees and expenses,
generally to the price and yield performance of one or more specified Equity
Indexes and/or the Indexes (“Future Funds”).2 The Applicants believe the
requested relief is appropriate, in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy and
provisions of the 1940 Act.
The
requested relief is substantially similar to the relief granted to the
Applicants by the Commission in the Prior Order. The requested relief
is also substantially similar to that granted to other fixed-income
exchange-traded funds (hereinafter, “ETFs”).3 The Equity Funds, the New Funds and
the Future Funds, together, are referred to herein as the “Funds.”
No form
having been specifically prescribed for this Application, the Applicants proceed
under Rule 0-2 of the General Rules and Regulations of the SEC.
II. The
Investment Products
A. The
Applicants
The Trust – Global X Funds is
a statutory trust organized under the laws of Delaware and registered with the
SEC as an open-end management investment company. The Trust is
managed by a board of trustees (“Board”). The New Funds will be
series of the Trust and will be advised by the Adviser. Each Future
Fund will be advised by the Adviser or an entity controlled by, or under common
control with, the Adviser.
The Adviser – Global X
Management Company, LLC (“GXMC”) is the investment adviser to the
Trust. GXMC is a Delaware limited liability company, with its
principal office located at 410 Park Avenue, 4th Floor, New York, NY
10022. GXMC is registered with the Commission as an investment
adviser under the Investment Advisers Act of 1940, as amended (“Advisers
Act”). The Adviser may retain one or more sub-advisers
(“Sub-Advisers”) for managing the assets of a Fund for which it is the
investment adviser. Any Sub-Adviser to a Fund will be registered
under the Advisers Act.
The Distributor – SEI
Investments Distribution Company, a broker-dealer that is registered with the
Commission under the Securities Exchange Act of 1934 (“Exchange Act”) and is a
member of the Financial Industry Regulatory Authority (“FINRA”), will serve as
the principal underwriter for the Trust (“Distributor”). The
Distributor will distribute Shares of the New Funds on an agency
basis. The Distributor will not be affiliated with the Adviser, any
Sub-Adviser, the Trust’s custodian (“Custodian”), or a national securities
exchange pursuant to Section 6 of the Exchange Act (an “Exchange”).
3 See Barclays Global Fund
Advisors, et
al., Investment Company Act Release No. 25622 (June 25, 2002), as
subsequently amended by iShares Trust, et
al., Investment Company Act Release No. 26006 (Apr. 15, 2003), Barclays Global Fund
Advisors, et
al., Investment Company
Act Release
No. 26175 (Sept. 8, 2003), and Barclays Global Fund
Advisors, et
al., Investment Company Act Release No. 27417 (June 23, 2006); Van Eck Associates,
et
al., Investment Company Act Release No. 27742 (Feb. 27, 2007); SSgA Funds Management,
Inc., et
al., Investment Company Act Release No. 27839 (May 25, 2007); PowerShares Exchange-Traded
Fund Trust, et
al., Investment Company Act Release No. 27841 (May 25, 2007); Pacific Investment
Management Company LLC and PIMCO ETF Trust, Investment Company Act
Release No. 28752 (June 1, 2009); Charles Schwab Investment
Management Inc., et
al., Investment Company Act Release No. 28983 (Oct. 23,
2009).
The New
Funds, except as noted herein, will operate in a manner identical to that of the
Equity Funds that were the subject of the Prior Order. Each New Fund
primarily will invest in Portfolio Securities and financial instruments selected
to correspond, before fees and expenses, generally to the price and yield
performance of an Index.
Each New
Fund’s Index will be comprised of Portfolio Securities traded in U.S. and
foreign markets. Index of the each Future Fund may be a domestic or
foreign fixed-income index or a domestic or foreign equity index. No
entity that creates, compiles, sponsors or maintains an Index is or will be an
“affiliated person”, as defined in section 2(a)(3) of the 1940 Act, or an
affiliated person of an affiliated person of the Trust, the Adviser, the
Distributor, any Sub-Adviser, or the promoter of a Fund.
The
investment objective of each New Fund or Future Fund will be to provide
investment results that correspond, before expenses, generally to the price and
yield performance of the relevant Index. In seeking to achieve the
respective investment objective of each New Fund or Future Fund, the Adviser may
utilize a “replication” strategy or a “representative sampling” strategy to
track its Index. A Fund using a replication strategy will invest in
substantially all of the component securities in its relevant Equity Index or
Index (“Component Securities”) in the same approximate proportions as in the
relevant Equity Index or Index. A Fund that utilizes a representative
sampling strategy will hold a basket of the Component Securities of its relevant
Equity Index or Index, but it may not hold all of the Component Securities of
its relevant Equity Index or Index. Except as noted herein, this
sampling strategy is similar to that employed by the Adviser when it manages
certain of the Equity Funds.
When
using a sampling strategy, the Adviser attempts to match the risk and return
characteristic of the portfolio of a New Fund or Future Fund to the risk and
return characteristic of the Index. For each New Fund or Future Fund,
the Adviser subdivides each Index into categories of securities with similar
features and characteristics. The Adviser generally divides the Index
into parameters that determine a particular bond’s risk and expected return:
e.g., duration,
maturity, sector, credit rating, coupon, date of issue, the presence of embedded
options (if any) and other investment or fundamental characteristics that the
Adviser may deem relevant for such purposes. After each security in
the Index is assigned to a category designed to reflect a combination of such
parameters, the Adviser begins to construct the portfolio of a New Fund or
Future Fund by selecting representative fixed-income securities from each
category. The representative sample of fixed-income securities chosen
from each category is intended to closely correlate with the investment and
fundamental characteristics of the Index as a whole. The Adviser may
include or exclude certain fixed-income securities to create a more tradable
portfolio and improve arbitrage opportunities.
There are
many benefits to the employment of a sampling strategy with respect to a New
Fund or Future Fund. For example, the Adviser can avoid fixed-income
securities that are relatively expensive (i.e., fixed-income securities
that trade at perceived higher prices or lower yields due to supply demand) but
have the same relative risk, value, duration and other characteristics as less
expensive bonds. In addition, the use of sampling techniques permit
the Adviser to exclude fixed-income securities that it believes will soon be
deleted from the Index. The Adviser can also avoid holding fixed-income
securities it deems less liquid than other bonds with similar characteristics
which facilitates a more tradable portfolio. Lastly, the Adviser can
develop a basket of Component Securities with respect to an Index that is easier
to construct and cheaper to trade, thereby potentially improving arbitrage
opportunities.
The use
of sampling strategies may prevent a New Fund or Future Fund from tracking its
Index with the same degree of accuracy as would an investment fund that invested
in every Component Security of the Index with the same weighting as the Index
(i.e., replication).
However, the Applicants anticipate that, over time, the Adviser will be able to
manage a New Fund or Future Fund such that the expected tracking error of the
New Fund or Future Fund relative to the performance of its Index will be less
than 5%. Adjustments will be made in the portfolio of a New Fund or
Future Fund in accordance with changes in the composition of its
Index.
Under the
Prior Order, the applicants provided that each Equity Fund would invest at least
80% of its assets in Component Securities of its relevant Equity
Index. In the case of an Foreign Fund, at least 80% of the Foreign
Fund’s investments would be invested in Component Securities and depository
receipts4 representing such securities. The
application for the Prior Order states that an Equity Fund may invest up to 20%
of its assets in certain futures, options and swap contracts, cash and cash
equivalents, as well as in stocks not included in its Equity Index but which the
Adviser (or applicable Sub-Adviser) believes would help an Equity Fund track its
Equity Index.
Each New
Fund and Future Fund also will invest at least 80% of its total assets
(exclusive of collateral held from securities lending), as disclosed in the
relevant summary and/or statutory prospectus (“Prospectus”) or statement of
additional information (“SAI”) for each New Fund or Future Fund, in Component
Securities and, as applicable, Depositary Receipts, or “to-be-announced
transactions” or “TBA Transactions” (as described below). In
addition, each Fund may at times invest up to 20% of its total assets in certain
derivatives (including without limitation futures, options and swap contracts),
currencies, commodities, cash and cash equivalents, including U.S. and non-U.S.
money market funds, other ETFs5, including other Funds, as well as securities
not included in its Index, but which the Adviser (or applicable Sub-Adviser)
believes will help the Fund track its Index (collectively, “Other
Investments”).
4 “Depositary
Receipts” will typically be American Depositary Receipts, but may include Global
Depositary Receipts, and Euro Depositary Receipts.
5 Each
Fund is permitted to invest in shares of other ETFs (including other Funds) to
the extent that such investment is consistent with the Fund’s investment
objective, registration statement, and any applicable investment restrictions.
Such investments would be made within the limits of Section 12(d)(1) of the
1940 Act and would be made through purchases of shares in the secondary market
or through receipt of shares as part of the securities contributed to a Fund
through the in-kind purchase of one or more Creation Units, as defined
below. A Fund would only hold shares of another ETF if doing so was
in the best interest of the investing Fund such as, for example, where doing so
would improve the liquidity, tradability or settlement of the portfolio
securities, thereby potentially reducing the costs of creation and redemption
activity, or help the Fund track its Equity Index or Index. For
example, a Fund might invest in shares of a single ETF instead of shares of one
or more Component Securities in its Equity Index or Index. The
ability to submit or receive a single easily tradable security (i.e., shares of
an ETF) as a substitute for a group of portfolio securities is expected to
decrease the costs of creation and redemption activity, particularly for Funds
that invest in multiple non-U.S. markets and especially for non-U.S. securities
subject to transfer restrictions or stamp (transaction) taxes in their home
markets. The decreased costs should improve the efficiency of the creation and
redemption process and facilitate more efficient arbitrage activity, while at
the same time permitting the Fund to obtain exposure to Component Securities in
its Equity Index or Index through its investment in a single ETF holding similar
securities. See
iShares
Trust, et
al.,
(Oct. 22, 2008).
The
Shares will be listed on an Exchange (“Listing Exchange”) and traded in the
secondary market in the same manner as other equity securities. The
Distributor will not maintain a secondary market in the Shares. As
long as the Trust or other registered open-end investment company and/or
separate series of such investment company operates in reliance on the Order,
the Shares will be listed on a Listing Exchange.
Each Fund
will offer, issue and sell its Shares to investors only in Creation Units
through the Distributor on a continuous basis at the net asset value (“NAV”) per
share next determined after an order, in proper form, is
received. The NAV of each Fund is expected to be determined as of the
close of the regular trading session on the NYSE (ordinarily 4:00 p.m. Eastern
Time (“ET”) (“Closing Time”) on each day that the NYSE is open. Each
Fund will sell and redeem Creation Units only on a “Business Day” which is
defined as any day that the NYSE, the relevant Listing Exchange, the Trust and
the Custodian are open for business and includes any day that a Fund is required
to be open under Section 22(e) of the 1940 Act. The NAV of a
Fund that invests in fixed-income or foreign securities may be determined prior
to 4:00 p.m., ET on each Business Day.
(1) Placement of Orders to Purchase
Creation Units
(a) General
The New
Funds and Future Funds will generally be purchased and redeemed by means of an
in-kind tender of specified securities (referred to as “Deposit Securities” for
purposes of purchases, and referred to as “Redemption Securities” for purposes
of redemptions) with any cash portion of the purchase price and redemption
proceeds to be kept to a minimum, all in the manner described herein.6 While a New Fund will generally
operate on an in-kind basis, in order for the Trust to preserve maximum
efficiency and flexibility, a New Fund and any Future Fund reserve the right to
accept and deliver Creation Units of the New Fund and any Future Fund entirely
for cash (“All-Cash Payment”).
6 The
Funds must comply with the federal securities laws in accepting Deposit
Securities and satisfying redemptions with Redemption Securities, including that
the Deposit Securities and Redemption Securities are sold in transactions that
would be exempt from registration under the Securities Act. In
accepting Deposit Securities and satisfying redemptions with Redemption
Securities that are restricted securities eligible for resale pursuant to rule
144A under the Securities Act, the Funds will comply with the conditions of rule
144A. The Prospectus for a Fund will also state that an Authorized
Participant that is not a ‘Qualified Institutional Buyer,’ as defined in rule
144A under the Securities Act, will not be able to receive, as part of a
redemption, restricted securities eligible for resale under rule
144A. A Creation Unit Aggregation is usually purchased or redeemed
from a Fund for a basket of Deposit Securities or Redemption Securities that
corresponds pro rata, to the extent practicable, to the Portfolio Securities
plus a specified cash payment. In some cases, because it is often
impossible to break up bonds beyond certain minimum sizes needed for transfer
and settlement, there may be minor differences between a basket of Deposit
Securities or Redemption Securities and a true pro rata slice of a Fund
portfolio.
The
in-kind approach will minimize the need to liquidate Portfolio Securities to
meet redemptions of Creation Units and may permit each applicable New Fund or
Future Fund to more closely achieve the desired correlation to its
Index. However, over time, the Trust may conclude that operating on
an exclusively in-kind basis for one or more New Funds or Future Funds may
present operational problems for such Funds. Therefore, the Trust may
permit, in its discretion, an in-kind purchaser to substitute cash in lieu of
depositing some or all of the requisite Deposit
Securities. Substitution might be permitted or required, for example,
in circumstances where one or more Deposit Securities may not be available in
the quantity needed to make a Creation Deposit (defined below), may not be
eligible for transfer through the DTC Process (defined below), may not be
eligible for trading by an Authorized Participant (defined below) or the
investor on whose behalf the Authorized Participant is acting. In the
case of certain New Funds or Future Funds that invest in foreign securities, one
or more Deposit Securities may not be eligible for trading due to local trading
restrictions, local restrictions on securities transfers or other similar
circumstances. Brokerage commissions incurred by a New Fund or Future
Fund to acquire any Deposit Securities not part of a Creation Deposit are
expected to be immaterial, and in any event the Adviser may adjust the relevant
Transaction Fee (as defined below) to ensure that the Fund collects the extra
expense from the purchaser.
Each New
Fund or Future Fund intends to substitute a cash-in-lieu amount to replace any
Deposit Security or Redemption Security that is a TBA Transaction. A
TBA Transaction is a method of trading mortgage-backed securities. In
a TBA Transaction, the buyer and seller agree upon general trade parameters such
as agency, settlement date, par amount and price. The actual pools
delivered generally are determined two days prior to the settlement
date. The amount of substituted cash in the case of TBA Transactions
will be equivalent to the value of the TBA Transaction listed as a Deposit
Security or Redemption Security.
All
orders to purchase Creation Units must be placed with the Distributor by or
through an “Authorized Participant,” which is either (1) a “Participating
Party,” i.e., a
broker-dealer or other participant in the Shares Clearing Process through the
Continuous Net Settlement System of the National Securities Clearing Corporation
(“NSCC”) or a clearing agency that is registered with the SEC, or (2) a DTC
Participant that has executed a participant agreement with the Distributor
(“Participant Agreement”). An investor does not have to be an
Authorized Participant, but in order to purchase a Creation Unit, an investor
must place an order through, and make appropriate arrangements with, an
Authorized Participant.
(b) DTC
Process and Process for the Funds
Purchase
orders for creations and redemptions of each New Fund or Future Fund’s Creation
Units will be processed either through (i) an enhanced clearing process or (ii)
a manual clearing process, as described below. The “DTC Process”
involves a non-automatic line-by-line position movement of the underlying
Portfolio Securities and Shares. Settlement and clearing of foreign
securities presently cannot be made using the DTC Process. This is
true for current ETFs that hold foreign securities.
For New
Funds or Future Funds that invest in foreign securities, once a purchase order
has been placed with the Distributor, the Distributor will inform the Adviser
and the Custodian. The Custodian will then inform the appropriate
sub-custodians. The Authorized Participant will deliver to the
appropriate sub-custodians, on behalf of itself or the owner of the beneficial
interest in Shares (“Beneficial Owner”), the relevant Deposit Securities and/or
the cash value of all or a part of such securities, in the case of a permitted
or required “cash in lieu” amount, with any appropriate adjustments as
determined by the Fund. Deposit Securities and All-Cash Payments must
be delivered to the accounts maintained at the Custodian or applicable
sub-custodians. If applicable, the sub-custodians will confirm to the
Custodian that the required securities and/or cash have been delivered, and the
Custodian will notify the Adviser and Distributor that the required securities
and/or cash have been delivered. The Distributor will then furnish to
those persons purchasing Creation Units a confirmation and
Prospectus.
The
Shares will clear and settle in the same manner as the shares of other ETFs, and
Deposit Securities will clear and settle in the same manner as the applicable
fixed-income securities.7 Deposit Securities that are U.S.
government or U.S. agency securities and any cash will settle via free delivery
through the Federal Reserve System. U.S. corporate and non-corporate
fixed-income securities (other than U.S. government and agency securities) will
settle through the DTC. Non-U.S. fixed-income securities will settle
in accordance with the normal rules for settlement of such securities in the
applicable non-U.S. market. The Shares will settle through the
DTC.8 The Custodian will monitor the
movement of the underlying Deposit Securities or cash and will instruct the
movement of the Shares only upon validation that Deposit Securities or cash have
settled correctly. The settlement of the Shares will be aligned with
the settlement of the underlying Deposit Securities or cash and, except as
discussed below with respect to Portfolio Securities traded in foreign markets,
will generally occur on a settlement cycle of T+3 Business Days or shorter, at
the sole discretion of the Trust on behalf of each Fund. Applicants
do not believe the issuance and settlement of Creation Units in the manner
described above will have any material impact on the arbitrage efficiency or the
secondary market trading of the Shares. Each Fund may recoup the
settlement costs charged by DTC or the Custodian by imposing a transaction fee
on investors purchasing or redeeming Creation Units (“Transaction
Fee”).
(c) Timing
and Transmission of Purchase Orders
All
orders to purchase Creation Units must be received by the Distributor no later
than the Closing Time (as defined above) on the Transmittal Date in order for
the purchaser to receive the NAV determined on the Transmittal
Date.
The
Distributor will transmit all purchase orders to the relevant
Fund. The Fund and/or the Distributor may reject any order that is
not in proper form. After a Fund has accepted a purchase order and
received delivery of the Deposit Securities and any accompanying cash payment,
or the All-Cash Payment, as applicable, DTC will instruct the Fund to initiate
“delivery” of the appropriate number of the Shares to the book-entry account
specified by the purchaser. The Distributor will furnish a Prospectus
and a confirmation to those placing purchase orders. The Prospectus
or SAI of each Fund will disclose other grounds for rejection of purchase
orders. The Distributor will be responsible for maintaining records
of both the orders placed with it and the confirmations of acceptance furnished
by it. In addition, the Distributor will maintain a record of the
instructions given to the applicable Fund to implement the delivery of the
Shares.
A
Creation Unit of a Fund will not be issued until the transfer of good title to
the Trust (or a relevant future registered open-end investment company
contemplated by this Application) of the Deposit Securities and the payment of
any cash portion of the purchase price, or the transfer of the All-Cash Payment
have been completed. Notwithstanding the foregoing, to the extent
contemplated by a Participant Agreement, Creation Units will be issued to an
Authorized Participant notwithstanding the fact that the corresponding Deposit
Securities and cash payment have not been received in part or in whole, in
reliance on the undertaking of such Authorized Participant to deliver the
missing Deposit Securities or cash payment as soon as possible, which
undertaking shall be secured by such Authorized Participant’s delivery and
maintenance of appropriate collateral. The Participant Agreement will
permit the Fund to buy the missing Deposit Securities at any time and will
subject the Authorized Participant to liability for any shortfall between the
cost to the Trust (or a relevant future registered open-end investment company
contemplated by this Application) of purchasing such securities and the value of
the collateral. The SAI may contain further detail relating to such
collateral procedures.
(2) Payment for Creation
Units
(a) General
As
applicable, persons purchasing Creation Units from the Funds must make an
in-kind deposit of Deposit Securities together with an amount of cash specified
by the Adviser (“Cash Amount”), plus any applicable Transaction Fee, or an
All-Cash Payment. With respect to the Cash Amount for in-kind
transactions and All-Cash Payments, the purchaser will make a cash payment on
the contract settlement date. The Deposit Securities and the Cash
Amount collectively are referred to as the “Creation Deposit.” The
Cash Amount is a cash payment designed to ensure that the total aggregate value
of a Creation Deposit is identical to the NAV of the Creation Unit it is used to
purchase.9
(b) Domestic
Funds
For
purchases of Funds utilizing the in-kind process, Creation Deposits placed using
the DTC Process must be delivered through an Authorized
Participant. Authorized Participants wishing to place an order
creating Creation Units, to be effected using the DTC Process, must state that
the creation of Creation Units will be effected through a transfer of securities
and cash. The Creation Deposit transfer must be ordered on the Transmittal Date
in a timely fashion so as to ensure the delivery of the requisite number of
Deposit Securities through DTC to the account of the Fund on the contract
settlement date. Cash equal to the Cash Amount must be transferred
directly to the Fund through the Federal Reserve Bank wire transfer system in a
timely manner so as to be received by the Fund on the contract settlement
date. An order to create Creation Units using the DTC Process is
deemed received by the Distributor on the Transmittal Date if (i) such
order is received by the Distributor not later than the Closing Time on such
Transmittal Date; and (ii) all other procedures set forth in the Participant
Agreement are properly followed. However, if the Fund does not receive both the
requisite Deposit Securities and the Cash Amount in a timely fashion on the
contract settlement date, such order will be canceled. Upon written
notice to the Distributor, such canceled order may be resubmitted the following
Business Day using the Creation Deposit for that Business Day. The
delivery of Creation Units purchased through the DTC Process will occur within
the normal settlement cycle, currently no later than the third Business Day
following the day on which the creation order is deemed received by the
Distributor.
(c) Foreign
Funds
An
in-kind purchase of a Creation Unit of a Future Fund that is a Foreign Fund will
operate as follows.11 Once a purchase order has been
placed with the Distributor, the Distributor will inform the
Custodian. The Custodian will then inform the appropriate
sub-custodians. The Authorized Participant will deliver to the
appropriate sub-custodians, on behalf of itself or the Beneficial Owner on whose
behalf it is acting, the relevant Deposit Securities (or the cash value of all
or a part of such Deposit Securities, in the case of a permitted or required
cash purchase or “cash in lieu” amount), with any appropriate adjustments as
determined by the Fund. Deposit Securities must be delivered to the
accounts maintained at the applicable sub-custodians.
For both
the Domestic Funds and the Foreign Funds, the securities and the number of the
Deposit Securities for an in-kind purchase required for the Creation Deposit for
each Fund will change as rebalancing adjustments and corporate action events,
among other reasons for change, are reflected, from time to time, by the Adviser
in light of the investment objective of such Fund. The composition of the
Deposit Securities may also change in response to adjustments to the weighting
or composition of the Component Securities in the relevant Index. The
adjustments described above will reflect changes (i) known to the Adviser by the
time of determination of the Deposit Securities, (ii) known in the composition
of the Index being tracked by the relevant Fund, or (iii) resulting from
corporate actions, among other reasons for change.
Applicants
reserve the right to permit or require a purchasing investor to substitute an
amount of cash or a different security to replace any prescribed Deposit
Security. Substitution might be permitted or required, for example,
because one or more Deposit Securities: (i) may be unavailable; (ii) may
not be available in the quantity needed to make a Creation Deposit; or
(iii) may not be eligible for trading by an Authorized Participant or the
investor on whose behalf the Authorized Participant is
acting. Brokerage commissions incurred by a Fund to acquire any
Deposit Security that is not part of the Creation Deposit are expected to be
immaterial. In any event, the Adviser may adjust the relevant
Transaction Fee paid by such purchasing investor to ensure that the Fund
collects any additional fee or expense and the amount of any brokerage
commissions paid relating to the substitution of a different
security.
(3) Redemption
Just as
the Shares can be purchased from a Fund only in Creation Units, the Shares
similarly may be redeemed only if tendered in Creation Units (except in the
event the Fund is liquidated). To redeem the Shares, an investor must
accumulate enough Shares to constitute a Creation Unit. Redemption
requests must be placed by or through an Authorized Participant. As
required by law, redemption requests in good order will receive the NAV next
determined after the request is received. Pursuant to its
organizational documents, the Trust has the right to make redemption payments in
respect of a Fund in cash, in-kind or a combination of both, provided the value
of its redemption payments on a Creation Unit basis equals the NAV times the
appropriate number of Shares of such Fund. Applicants currently
contemplate that Creation Units of a New Fund or Future Fund will be redeemed
principally in-kind (together with a balancing cash payment) except in certain
circumstances in which Creation Units may be redeemed all or in part for
cash. Investors purchasing or redeeming Creation Units entirely in
cash will be required to use the DTC Process.
(a) In-Kind
Redemptions
When
using the DTC Process, an in-kind redemption involves delivery of the Shares in
Creation Units from the entity placing the request to the Fund corresponding
with a delivery of the requisite amount of each of the underlying Portfolio
Securities from the Fund to the entity placing the redemption
request. As previously described in this Application, the DTC Process
involves a non-automatic line-by-line position movement of the underlying
Portfolio Securities and Shares. Therefore, both the Fund and the
entity placing the in-kind redemption request will be required to reconcile
delivery and receipt of the correct share amounts for the transfer of the Shares
and the corresponding transfer of each underlying Portfolio
Security. Transmission of an amount calculated in the same manner as
the Cash Amount (“Cash Redemption Payment”) 12 and the Transaction Fee (which includes the
processing, settlement and clearing costs associated with securities transfers)
must be accomplished in a manner acceptable to the Fund, normally through a DTC
cash transfer system. For Foreign Funds, a redemption request will not be made
through DTC. Creation Units of each Fund will be redeemed principally
in-kind, except in certain circumstances. However, the Fund has the
right to make redemption payments in kind, in cash, or a combination of each,
provided that the value of its redemption payments equals the NAV of the Shares
tendered for redemption. The Adviser may adjust the Transaction Fee
imposed on a redemption that is wholly or partly paid in cash in order to take
into account any additional brokerage commission or other transaction costs,
fees or expenses incurred by the Fund.
A Fund
may make redemptions partly in cash in lieu of transferring one or more
Redemption Securities to a redeeming investor if the Fund determines, in its
discretion, that such alternative is warranted.14 This could happen if the redeeming
investor is unable, by law or policy, to own a particular Redemption
Security. For example, a redeeming investor may be an
investment-banking firm or broker-dealer restricted from holding shares of a
company whose securities it recently underwrote.15
The right
to redeem Shares will not be suspended nor payment upon redemption delayed,
consistent with Section 22(e) of the 1940 Act and Rule 22e-2 under the 1940 Act,
except as provided in the Prior Order with respect to certain Equity Funds that
invest in foreign securities.
(b) Redemptions
for All-Cash Payment
Redemptions
of Creation Units for an All-Cash Payment will occur through procedures that are
analogous (in reverse) to those for purchases. All requests for
redemption are subject to acceptance by the Trust and must be preceded or
accompanied by the requisite number of Shares of the relevant Fund, which
delivery must be made to the Trust through the DTC Process, according to the
procedures set forth in the Participant Agreement. If a request for
redemption is rejected by the Trust, which rejection would occur if the request
does not comply with the procedures set forth in the Participant Agreement, the
Trust will so notify the entity requesting such redemption, which then would
have to re-submit the redemption request in good order. Transmission
of cash amounts, including the Transaction Fee, must be accomplished in a manner
acceptable to the Trust and as specified in the Participant
Agreement. An entity redeeming Shares in Creation Units through an
All-Cash Payment may be required to pay a higher Transaction Fee than would have
been charged had the redemption been effected on an in-kind basis through the
DTC Process, calculated in the manner as disclosed in the Prospectus and/or
SAI.
The price
of the Shares will be based on a current bid/offer in the secondary
market. The price of the Shares of any Fund, like the price of all
traded securities, is subject to factors such as supply and demand, although
Applicants believe that the market value of the Shares primarily will rise or
fall based on changes in the current value of the Portfolio Securities held by
the Fund. The Shares, which are available for purchase or sale on an intra-day
basis, do not have a fixed relationship to the previous day’s NAV or the current
day’s NAV. Therefore, prices of the Shares on an Exchange may be
below, at or above the most recently calculated NAV of such
Shares. No secondary sales of the Shares will be made to brokers at a
concession by the Distributor or by a Fund. Transactions involving
the purchases or sales of Shares on an Exchange will be subject to customary
brokerage fees and charges.
Applicants
believe that the existence of a continuous secondary market for the Shares,
together with the publication by the Listing Exchange of the current market
value of the sum of the Deposit Securities and the estimated Cash Amount, will
be key features of the Funds that are particularly attractive to certain types
of investors. The pricing of the Shares by means of bids and offers
on an Exchange would be similar to the pricing of shares of many other
ETFs.
(1) General
In
addition to the list of names and amounts of each security constituting the
current Deposit Securities of the Creation Deposit, it is intended that, on each
Business Day, the Cash Amount effective as of the previous Business Day, for an
outstanding Share of each Fund, will be made available, if
applicable. Neither the Trust nor any Fund will be involved in, or
responsible for, the calculation or dissemination of any such information and
will make no warranty as to accuracy of such information. In
addition, the following information will be disseminated: (i) continuously
throughout the regular trading hours on the relevant Listing Exchange
(anticipated to be 9:30 a.m. to 4:00 p.m. ET) the market value of Shares by the
Listing Exchange over the Consolidated Tape, and (ii) every 15 seconds
throughout such regular trading hours, an amount per individual Share
representing the sum of the estimated Cash Amount and the current value of the
Deposit Securities. Comparing these two figures allows an investor to
determine whether, and to what extent, the Shares are selling at a premium or a
discount to NAV.16 The composition and return of the
Index will be calculated and the total return will be disseminated once each
Business Day at the end of the day. The end of day values of any
Foreign Fund will be adjusted to reflect currency exchange rates at the end of
each Business Day.
16 Applicants
understand that Nasdaq disseminates market-traded fund valuation information via
its Nasdaq Index Dissemination Service data feed. This information is
currently disseminated to the public through many of the major market data
vendors, including Thomson Financial, Reuters, Bloomberg and Standard &
Poor’s Comstock.
Each Fund
will make available, on a daily basis, through the Distributor the names and
required number of each of the Deposit Securities in a Creation Unit, as well as
information regarding the Cash Amount, or the All-Cash Payment, as
applicable. The NAV for each Fund will be calculated and disseminated
daily. The Fund’s Website, accessible to all investors at no charge,
will publish the current version of the Prospectus and SAI, the identity of the
Index for each Fund, as well as additional quantitative information that is
updated on a daily basis, including daily trading volume, closing price and
closing NAV for each Fund. In addition, Applicants expect that the
Listing Exchange will disseminate a variety of data with respect to each Fund on
a daily basis, including information with respect to recent NAV for each Fund,
net accumulated dividend, final dividend amount to be paid, Shares outstanding,
Deposit Securities and total cash amount per Creation Unit, or estimated
All-Cash Payment as applicable, will be made available prior to the opening of
the Listing Exchange.
As
discussed above, the closing prices of the Funds’ Deposit Securities are readily
available from, as applicable, the relevant markets, automated quotation
systems, published or other public sources or on-line information services such
as Bloomberg or Reuters.
(a) Calculation
of Intra-day NAV
An
estimated intra-day NAV for each Fund will be calculated by an independent third
party every 15 seconds during the Listing Exchange’s regular trading hours and
disseminated every 15 seconds on the Consolidated Tape associated with the
Exchange. The estimated NAV for each Fund will be updated throughout
the day to reflect changing prices using multiple prices from one or more
independent third party pricing sources. Applicants represent that
(i) the estimated NAV for each Fund will be calculated by an independent third
party; (ii) the estimated NAV will be calculated using prices obtained from one
or more independent third-party pricing sources throughout the day; and (iii)
the estimated NAV will be calculated in accordance with pre-determined criteria
and set parameters so that an individual “price” based on an analysis of one or
more pricing sources is obtained for each security in a Creation
Deposit.
Because
all bonds typically trade by means of “over-the-counter” or “OTC” transactions,
information about the intra-day prices of such bonds comes from a variety of
sources. The estimated NAV will be calculated by using a combination
of: (i) executed bond transactions (e.g., such as those reported
on FINRA’s Trace Reporting and Compliance System (“TRACE” or the “TRACE
System”); (ii) intra-day prices obtained directly from broker-dealers; and/or
(iii) intra-day prices obtained from subscription services, such as
Bloomberg.
For these
purposes, “intra-day prices” may include executed transaction prices, executable
prices or indicative prices, all of which are available to Authorized
Participants and other investors from major broker-dealers. “Executed
transaction prices,” as the term suggests, are the prices at which completed
bond transactions actually occurred, such as those executed transactions
reported on TRACE or other transaction reporting systems. “Executable
quotations” are price quotations provided by broker-dealers that indicate the
price at which such broker-dealer would buy or sell a specified amount of
securities. “Indicative quotations” are price quotations provided by
broker-dealers that, while not necessarily executable, provide an indication of
the price at which such broker-dealer would buy or sell a specified amount of
securities.
(b) Availability
of Intra-day Pricing and Other Information
As
previously noted, one source of intra-day U.S. bond prices is the TRACE
system. The TRACE system reports executed prices on corporate
bonds. The development of the TRACE system provides evidence that
transparency in the U.S. bond market is increasing. TRACE reported
prices are available without charge on the FINRA’s website on a “real time”
basis (subject to a 15 minute delay) and also are available by subscription from
various information providers (e.g.,
Bloomberg). In addition, Authorized Participants and other market
participants, particularly those that regularly deal or trade in bonds have
access to intra-day bond prices from a variety of sources other than TRACE,
including, for example, their own trading desks. Applicants
understand that (i) many Authorized Participants already make markets in the
bonds included in the Indexes and (ii) when acting as such, they have access to
intra-day bond prices through their own trading desks and will be able to assess
the intra-day value of each Fund’s Deposit Securities and the reasonableness of
a Fund’s estimated NAV using this information. Market participants, particularly
large institutional investors, regularly receive executable and indicative
quotations on bonds from broker-dealers. In addition, Authorized
Participants and other market participants can obtain bond prices by
subscription from third parties through on-line client-based services.17
End of
day prices of each Fund’s Deposit Securities are readily available from
published or other public sources, such as TRACE, or on-line client-based
information services provided by major broker-dealers, IDC, Bridge, Bloomberg,
and other pricing services commonly used by bond mutual funds and other
institutional investors.
17 “[M]ost
professional market participants, dealers, investors and issuers have access to
reliable bond price data through commercial vendors.” Statement of William H.
James of the Bond Market Association before the House Committee on Commerce
Subcommittee on Finance and Hazardous Materials, September 29, 1998, reported in
The Bond Market Association--Legislative Issues (discussing the increasing
availability of pricing information in all sectors of the bond
market).
A great
deal of information will be available to prospective investors about the Shares
and each New Fund or Future Fund. Investors interested in a
particular Fund can obtain the Fund’s Form N-SAR, N-CSR, N-Q, and N-PX, as well
as the annual and semi-annual reports sent to shareholders. In
addition, because the Shares will be listed and traded on a Listing Exchange,
prospective investors will have access to information about the product over and
above what is normally available about shares of a regular mutual
fund. Information regarding the market price and trading volumes of
the Shares will be continually available on a real time basis throughout the day
via the Consolidated Quote System and Consolidated Tape Association, the Listing
Exchange’s website and other electronic services, such as Bloomberg and
Reuters. The previous Business Day’s market price and trading volume
information with respect to the Shares may be published daily in the financial
section of newspapers. In addition, Applicants expect that any New
Fund or Future Fund may be followed closely by both bond market and mutual fund
professionals, who will offer their analysis as to why investors should
purchase, avoid, hold or sell the Shares. In short, Exchange listing
of the Shares should ensure not only that there is a large amount of raw data
available, but also that such data is packaged, analyzed and widely disseminated
to the investing public.
Because,
as discussed above, information about the intra-day prices of each Fund’s
Deposit Securities may be readily available, Applicants expect that Authorized
Participants and other market participants will have sufficient information to
make their own assessments of the intra-day value of each Fund’s Deposit
Securities and each Fund’s estimated NAV and to use this information to take
advantage of arbitrage opportunities.
Subject
to Section II.I, the Applicants expect that, with respect to the Prospectus,
SAI, shareholder reports, and marketing or advertising materials for each New
Fund or Future Fund, the approach regarding disclosure will be identical to that
of the Equity Funds, which are the subject of the Prior Order.
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I.
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Deletion
of Relief in the Prior Order from Section 24(d) Under the 1940 Act and
Changes to Disclosure Requirements
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As stated
above, the Applicants seek to amend the Prior Order to delete the relief granted
to Applicants from Section 24(d) of the 1940 Act. The Applicants
believe that the deletion of the exemption from Section 24(d), which was
granted in the Prior Order, is warranted because the adoption of the summary
prospectus under Investment Company Act Release No. 28584 (January 13, 2009)
(“Summary Prospectus Rule”) should supplant any need by a Fund to use a Product
Description.
All
representations and conditions contained in this Application and in the
Application for the Prior Order that require a Fund to disclose particular
information in the Fund’s Prospectus and/or annual report shall remain effective
with respect to the Fund until the time the Fund complies with the disclosure
requirements adopted by the Commission in the Summary Prospectus
Rule.
Applicants
request an order to amend the Prior Order which permits: (a) open-end management
investment companies to issue the Shares of Equity Funds in large aggregations
only; (b) secondary market transactions in the Shares to occur at negotiated
prices; (c) dealers to sell the Shares to purchasers in the secondary market
unaccompanied by a prospectus, when prospectus delivery is not required by the
Securities Act; (d) certain affiliated persons of the Equity Funds to deposit
securities into, and receive securities from, the Equity Funds in connection
with the purchase and redemption of Creation Units; (e) certain Equity Funds to
pay redemption proceeds more than seven days after the tender of Shares for
redemption under certain circumstances, (f) certain open-end management
investment companies and unit investment trusts outside of the same group of
investment companies as the Equity Funds to acquire Shares beyond the limits of
Section 12(d)(1)(A) of the 1940 Act, and (g) each Equity Fund and/or a
broker-dealer registered under the Exchange Act to sell the Shares to open-end
management investment companies and unit investment trust outside of the same
group of investment companies as the Equity Funds to acquire the Shares beyond
the limits of section 12(d)(1)(B).
Section
6(c) of the 1940 Act provides that the Commission may exempt any person,
security, or transaction, or any class of persons, securities, or transactions,
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 1940 Act, subject to the
same terms, provisions and conditions of the Prior Order, except as amended by
this Application.
Each New
Fund or Future Fund, except as otherwise noted herein, will operate in a manner
identical to the operation of Equity Funds for which the Commission has already
granted exemptive relief. The requested relief would amend the Prior
Order to apply to each New Fund or Future Fund.
Applicants
believe that the Shares of the New Funds or Future Funds afford significant
benefits in the public interest. Among other benefits, availability of the
Shares would: provide increased investment opportunities that should (i)
encourage diversified investment; (ii) provide in the case of individual
tradable Shares, a low-cost market-based fixed-income product that can be traded
throughout the day at prices that reflect minute by minute conditions rather
than end of day prices; (iii) provide investors with an opportunity to diversify
their portfolios by purchasing fixed-income securities at a low cost and with
significantly lower transaction costs then if they purchased individual mutual
funds with similar objectives; (iv) provide a security that should be freely
available in response to market demand; and (v) provide a more tax efficient
investment vehicle than most traditional mutual funds or closed-end
funds.
With
respect to the exemptive relief specified below regarding Section 17(a)(1)
and 17(a)(2), relief is requested pursuant to Section 17(b), which provides
that the Commission may approve the sale of securities to an investment company
and the purchase of securities from an investment company, in both cases by an
affiliated person of such company, if the Commission finds that:
“the
terms of the proposed transaction...are reasonable and fair and do not involve
any overreaching on the part of any person concerned, the proposed transaction
is consistent with the policy of each registered investment company concerned
....and the proposed transaction is consistent with the general purposes of [the
1940 Act ].”
The sale
and redemption of Creation Unit of each New Fund or Future Fund is on the same
terms for all investors, whether or not such investor is an
affiliate. In each case, Creation Units are sold and redeemed by the
relevant Fund at their NAV. The Portfolio Deposit for each New Fund
or Future Fund is based on a standard applicable to all and valued in the same
manner in all cases. Such transactions do not involve “overreaching”
by an affiliated person. Accordingly, Applicants believe the proposed
transactions described herein meet the Section l7(b) standards for relief
because the terms of such proposed transactions, including the consideration to
be paid or received for the Creation Unit, are reasonable and fair and do not
involve overreaching on the part of any person concerned.
Applicants
believe that the exemptions requested are necessary and appropriate in the
public interest and consistent with the protection of investors and the purposes
fairly intended by the 1940 Act. The exemptions and order requested
are substantially similar to those granted in the Prior Order and to other
ETFs.
Applicants
agree that any amended order granting the requested relief will be subject to
the same conditions as those imposed by the Prior Order, except for condition 5
to the Prior Order, which will be deleted, and condition 3 to the Prior Order,
whose last sentence will be deleted.
Pursuant
to Rule 0-2(f) under the 1940 Act, the Applicants hereby state that the address
of the Applicants is as follows:
Global X
Funds
Global X
Management Company
410 Park
Avenue, 4th
Floor
New York,
NY 10001
(212)
644-6440
The
Applicants further state that all questions concerning this Application should
be directed to:
Daphne
Tippens Chisolm
Law
Offices of DT Chisolm, PC
11508
H-236 Providence Road
Charlotte,
NC
(704)
806-2387
Pursuant
to Rule 0-2(c)(l) under the 1940 Act , each Applicant hereby represents that the
undersigned is authorized to file this Application and any further amendments
thereto in the name of and on behalf of the respective Applicant. The
items required by Rule 0-2(c)(l) under the 1940 Act are attached hereto as
Exhibit A. The verifications required by Rule 0-2(d) under the 1940
Act are attached hereto as Exhibit B.
The
Applicants request that the Commission issue an order without a hearing pursuant
to Rule 0-5 under the 1940 Act.
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Respectfully
submitted,
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Global
X Funds
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By:
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/s/ Bruno
del Ama
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Bruno
del Ama
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President
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Global
X Funds
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Date:
October 1, 2010
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Global
X Management Company
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By:
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/s/ Bruno
del Ama
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Bruno
del Ama
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Chief
Executive Officer
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Global
X Management Company LLC
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Date:
October 1, 2010
VII. Exhibit
Index
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A.
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Authorizations
required pursuant to Rule 0-2(c)(l).
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1.
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Global
X Funds
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2.
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Global
X Management Company LLC
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B.
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Verifications
required pursuant to Rule 0-2(d).
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1.
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Global
X Funds
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2.
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Global
X Management Company LLC
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EXHIBIT
A-1
AUTHORIZATION
RULE
0-2(c)(l)
Global
X Funds
In
accordance with Rule 0-2(c) under the 1940 Act, Bruno del Ama, in his capacity
as President of Global X Funds, states that all actions necessary to authorize
the execution and filing of this Application for an order to amend a Prior Order
(as described in the Application) have been taken, and the person signing and
filing this document is authorized to do so on behalf of Global X Funds pursuant
to his general authority as President of Global X Funds and pursuant to the
following resolution adopted by the Board of Trustees of the Global X Funds on
March 26, 2010:
RESOLVED, that any appropriate
officer of the Trust be, and is hereby, authorized to prepare and execute on
behalf of the Trust and to file with the SEC, pursuant to the 1940 Act, an
application for exemptive relief from the provisions under the Act to the extent
necessary to allow the Trust to offer new series that invest in fixed income
securities and financial instruments selected to correspond, before fees and
expenses, generally to the price and yield performance of specified fixed income
or fixed income related index.
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/s/ Bruno
del Ama
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Bruno
del Ama
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President
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Global
X Funds
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EXHIBIT
A-2
AUTHORIZATION
RULE
0-2(c)(l)
Global
X Management Company LLC
In
accordance with Rule 0-2(c) under the 1940 Act, the Applicant states that all
actions necessary to authorize the execution and filing of this Application for
an order to amend a Prior Order (as described in the Application) have been
taken, and the person signing and filing this document is authorized to do so on
behalf of Global X Management Company LLC. Bruno del Ama is authorized to sign
and file this document on behalf of Global X Management Company LLC, pursuant to
the general authority vested in him as Chief Executive Officer of Global X
Management Company.
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/s/ Bruno
del Ama
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Bruno
del Ama
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Chief
Executive Officer
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Global
X Management Company
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EXHIBIT
B-1
VERIFICATION
RULE
0-2(d)
Global
X Funds
VERIFICATION
The
undersigned states that that (i) he has duly executed the attached Application
for an order to amend a Prior Order (as described in the Application) dated
October 1, 2010 for and on behalf of Global X Funds (“Trust”), (ii) he is the
President of the Trust; and (iii) all actions necessary to authorize the
undersigned to execute and file such instrument have been taken. The
undersigned further states that he is familiar with such instrument, and the
contents thereof, and that the facts therein set forth are true to the best of
his knowledge, information and belief.
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/s/ Bruno
del Ama
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Bruno
del Ama
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President
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Global
X Funds
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EXHIBIT
B-2
VERIFICATION
RULE
0-2(d)
Global
X Management Company LLC
The
undersigned states that (i) he has duly executed the attached Application for an
order to amend a Prior Order (as described in the Application) dated October 1,
2010 for and on behalf of Global X Management Company LLC.; (ii) he is Chief
Executive Officer of such company; and (iii) all actions by stockholders,
directors, and other bodies necessary to authorize the undersigned to execute
and file such instrument have been taken. The undersigned further
states that he is familiar with such instrument, and the contents thereof, and
that the facts therein set forth are true to the best of his knowledge,
information and belief.
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/s/ Bruno
del Ama
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Bruno
del Ama
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Chief
Executive Officer
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Global
X Management Company LLC
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