Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Relating to Listing and Trading of Shares of ETFS Platinum Trust, 59319-59328 [E9-27495]
Download as PDF
<![CDATA[
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
with Section 6(b)(5) of the Act,7 which
requires, among other things, that the
rules of a national securities exchange
be designed to prevent fraudulent and
manipulative acts and practices; to
promote just and equitable principles of
trade; to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, and
processing information with respect to,
and facilitating transactions in
securities; to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system; and, in general, to protect
investors and the public interest.
In the past, the Commission has
expressed concern that the affiliation of
an exchange with one of its members
raises potential conflicts of interest and
the potential for unfair competitive
advantage.8 The proposed relationship
raises similar concerns in that the
Exchange will be affiliated with two
broker-dealers that provide Routing
Services for orders that may be routed
to the Exchange in competition with
Exchange members. The Exchange has
requested that the Commission approve
its proposed affiliation with NYFIX
Millennium and NYFIX Securities on a
temporary basis, not to exceed six
months, subject to certain conditions
designed to address such concerns.
Specifically, so long as the Exchange
is affiliated with NYFIX Millennium or
NYFIX Securities and with respect to
the Routing Services provided by each: 9
(1) Neither NYFIX Millennium nor
NYFIX Securities are members of the
Exchange nor will they become
members of the Exchange;
(2) NYFIX does not offer order routing
services other than the Routing Services,
and none of the Routing Services will be
modified unless such modification is
approved by the Commission;
(3) NYFIX will not engage in
proprietary trading;
7 15
U.S.C. 78f(b)(5≤.
e.g., Securities Exchange Act Release Nos.
54170 (July 18, 2006), 71 FR 42149 (July 25, 2006)
(SR–NASDAQ–2006–006) (order approving
Nasdaq’s proposal to adopt Nasdaq Rule 2140,
restricting affiliations between Nasdaq and its
members); 53382 (February 27, 2006), 71 FR 11251
(March 6, 2006) (SR–NYSE–2005–77) (order
approving combination of NYSE and Archipelago
Holdings, Inc.); 58673 (September 29, 2008), 73 FR
57707 (October 3, 2008) (SR–Amex–2008–62) (order
approving acquisition of the American Stock
Exchange by NYSE Euronext); 59135 (December 22,
2008), 73 FR 79954 (December 30, 2008) (SR–ISE–
2009–85) (order approving the purchase by ISE
Holdings of an ownership interest in DirectEdge
Holdings LLC); and 59281 (January 22, 2009), 74 FR
5014 (January 28, 2009) (SR–NYSE–2008–120)
(order approving a joint venture between NYSE and
BIDS Holdings L.P.).
9 For the conditions set forth below, references to
NYFIX also refer to its subsidiaries NYFIX
Millennium and NYFIX Securities. See Amendment
No. 1, supra note 4.
mstockstill on DSKH9S0YB1PROD with NOTICES
8 See,
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
(4) NYFIX will not accept any new
clients for the Routing Services after the
Merger;
(5) There will continue to be
independent functionality of, and full
public access to, NYSE facilities; and
(6) There will be a complete
separation between NYFIX, on the one
hand, and the Exchange and its
affiliates, on the other (e.g., no shared
office space, no shared employees, no
shared systems).
The Exchange may furnish to NYFIX
the same information on the same terms
that the Exchange makes available in the
normal course of business to any other
person. Specifically:
(a) NYFIX must not be provided an
information advantage concerning the
operation of the Exchange or any of its
facilities, particularly regarding changes
and improvements to the trading
systems, that are not available to the
industry generally.
(b) NYFIX will be prevented from
having any advance knowledge of
proposed changes or modifications to
the operations of the Exchange or its
facilities, including but not limited to
advance knowledge of related filings by
the Exchange pursuant to Rule 19b–4 of
the of the Act.10
(c) NYFIX will not share employees or
databases with the Exchange, any
facility of the Exchange, or any other
affiliate of the Exchange or their
facilities, and will be housed in a
separate office.
(d) NYFIX will only be notified of any
changes or improvements to any of the
Exchange’s operations or trading
facilities in the same manner that other
persons are notified of such changes or
improvements;
(e) NYFIX will not disclose any
system or design specifications, or any
other information, to any employees of
the Exchange, any facility of the
Exchange, or any other affiliate of the
Exchange or their facilities that would
give NYFIX an unfair advantage over its
competitors.
(f) None of the Exchange, any facility
of the Exchange, or any other affiliate of
the Exchange or their facilities will
disclose any system or design
specifications, or any other information,
to any employees of NYFIX or any
affiliate of NYFIX that would give the
Exchange, any other facility of the
Exchange, any other affiliate of the
Exchange, or NYFIX an unfair advantage
over its competitors.
The Commission also notes that each
of NYFIX Millenium and NYFIX
Securities has the Financial Industry
Regulatory Authority (‘‘FINRA’’), an
10 15
PO 00000
U.S.C. 78a.
Frm 00207
Fmt 4703
Sfmt 4703
59319
unaffiliated self-regulatory organization
(‘‘SRO’’), as its designated examining
authority and neither broker-dealer is a
member of the Exchange.11
The Commission finds that the
temporary proposed affiliation between
the Exchange and NYFIX Millennium
and NYFIX Securities, pursuant to the
proposed terms and conditions, is
consistent with the Act, particularly
Section 6(b)(5) thereunder.12 The
Commission continues to be concerned
about potential unfair competition and
conflicts of interest when an exchange,
or one of its affiliates, is the parent
company of a broker-dealer that
provides Routing Services that may be
in competition with services provided
by members of that exchange. The
Commission believes, however, that the
temporary nature of the affiliation,
together with the proposed terms and
conditions, are reasonably designed to
mitigate concern about potential unfair
competition and conflicts of interest
between the commercial interests of the
Exchange or its affiliates, and the
Exchange’s regulatory responsibilities.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,13 that the
proposed rule change (SR–
NYSEAmex—2009–63), as amended, is
hereby approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.14
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–27500 Filed 11–16–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60970; File No. SR–
NYSEArca–2009–95]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change Relating to Listing and
Trading of Shares of ETFS Platinum
Trust
November 9, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that, on October
20, 2009, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or ‘‘Exchange’’) filed with the
11 See
Notice.
U.S.C. 78(f)(b)(5).
13 15 U.S.C. 78s(b)(2).
14 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
12 15
E:\FR\FM\17NON1.SGM
17NON1
59320
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NYSE Arca, through its wholly-owned
subsidiary NYSE Arca Equities, Inc.
(‘‘NYSE Arca Equities’’), proposes to list
and trade shares of the ETFS Platinum
Trust (the ‘‘Trust’’) pursuant to NYSE
Arca Equities Rule 8.201. The text of the
proposed rule change is available on the
Exchange’s Web site at https://
www.nyse.com, at the Exchange’s
principal office and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
mstockstill on DSKH9S0YB1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to list and
trade ETFS Platinum Shares (‘‘Shares’’)
of the Trust under NYSE Arca Equities
Rule 8.201. Under NYSE Arca Equities
Rule 8.201, the Exchange may propose
to list and/or trade pursuant to unlisted
trading privileges (‘‘UTP’’)
‘‘Commodity-Based Trust Shares.’’ 3 The
Commission has previously approved
listing on the Exchange under NYSE
Arca Equities Rule 8.201 of other issues
of Commodity-Based Trust Shares. The
Commission has approved listing on the
Exchange of the streetTRACKS Gold
Trust and iShares COMEX Gold Trust.4
3 Commodity-Based Trust Shares are securities
issued by a trust that represent investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
4 See Securities Exchange Act Release No. 56224
(August 8, 2007), 72 FR 45850 (August 15, 2007)
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
Prior to their listing on the Exchange,
the Commission approved listing of the
streetTRACKS Gold Trust on the New
York Stock Exchange (‘‘NYSE’’) and
listing of iShares COMEX Gold Trust on
the American Stock Exchange LLC (now
known as ‘‘NYSE Amex LLC’’).5 In
addition, the Commission has approved
trading of the streetTRACKS Gold Trust
and iShares Silver Trust on the
Exchange pursuant to UTP.6 The
Commission also has approved listing of
the iShares Silver Trust on the
Exchange 7 and, previously, listing of
the iShares Silver Trust on the
American Stock Exchange LLC.8
The Trust will issue Shares which
represent units of fractional undivided
beneficial interest in and ownership of
the Trust. The investment objective of
the Trust is for the Shares to reflect the
performance of the price of platinum,
less the expenses of the Trust’s
operations.9
ETFS Services USA LLC is the
sponsor of the Trust (‘‘Sponsor’’), The
Bank of New York Mellon is the trustee
of the Trust (‘‘Trustee’’) ,10 and HSBC
(SR–NYSEArca–2007–76) (approving listing on the
Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11,
2007), 72 FR 39114 (July 17, 2007) (SR–NYSEArca–
2007–43) (order approving listing on the Exchange
of iShares COMEX Gold Trust).
5 See Securities Exchange Act Release No. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004)
(SR–NYSE–2004–22) (order approving listing of
streetTRACKS Gold Trust on NYSE); Securities
Exchange Act Release No. 51058 (January 19, 2005),
70 FR 3749 (January 26, 2005) (SR–Amex–2004–38)
(order approving listing of iShares COMEX Gold
Trust on the American Stock Exchange LLC).
6 See Securities Exchange Act Release Nos. 53520
(March 20, 2006), 71 FR 14977 (March 24, 2006)
(SR–PCX–2005–117) (approving trading on the
Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731
(March 4, 2005) (SR–PCX–2004–117) (approving
trading on the Exchange of the streetTRACKS Gold
Trust pursuant to UTP).
7 See Securities Exchange Act Release Nos. 58956
(November 14, 2008), 73 FR 71074 (November 24,
2008) (SR–NYSEArca–2008–124) (approving listing
on the Exchange of the iShares Silver Trust).
8 See Securities Exchange Act Release No. 53521
(March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR–Amex–2005–72) (approving listing on the
American Stock Exchange LLC of the iShares Silver
Trust).
9 See Amendment No. 2 to the Registration
Statement for the ETFS Platinum Trust on Form S–
1, filed with the Commission on October 20, 2009
(File No. 333–158381) (‘‘Registration Statement’’).
The descriptions of the Trust, the Shares and the
platinum market contained herein are based on the
Registration Statement.
10 The Trustee is generally responsible for the
day-to-day administration of the Trust, including
keeping the Trust’s operational records. The
Trustee’s principal responsibilities include (1)
transferring the Trust’s platinum as needed to pay
the Sponsor’s Fee in platinum (platinum transfers
are expected to occur approximately monthly in the
ordinary course), (2) valuing the Trust’s platinum
and calculating the NAV of the Trust and the NAV
per Share, (3) receiving and processing orders from
Authorized Participants to create and redeem
PO 00000
Frm 00208
Fmt 4703
Sfmt 4703
Bank USA, N.A. is the custodian of the
Trust (‘‘Custodian’’).11
The Exchange represents that the
Shares satisfy the requirements of NYSE
Arca Equities Rule 8.201 and thereby
qualify for listing on the Exchange.12
Operation of the Platinum Market
According to the Registration
Statement, the global trade in platinum
consists of Over-the-Counter (OTC)
transactions in spot, forwards, and
options and other derivatives, together
with exchange-traded futures and
options. The OTC market trades on a 24hour per day continuous basis and
accounts for most global platinum
trading.
Market makers, as well as others in
the OTC market, trade with each other
and with their clients on a principal-toprincipal basis. All risks and issues of
credit are between the parties directly
involved in the transaction. Market
makers include the market-making
members of the LPPM, the trade
association that acts as the coordinator
for activities conducted on behalf of its
members and other participants in the
LPPM. The four market-making
members of the LPPM are: J.Aron &
Company (a division of Goldman Sachs
International), Engelhard Metals
Limited, HSBC Bank USA, N.A.
(through its London branch), and
Standard Bank. The OTC market
provides a relatively flexible market in
terms of quotes, price, size, destinations
for delivery and other factors. Bullion
dealers customize transactions to meet
clients’ requirements. The OTC market
has no formal structure and no openoutcry meeting place.
Baskets and coordinating the processing of such
orders with the Custodian and DTC, (4) selling the
Trust’s platinum as needed to pay any
extraordinary Trust expenses that are not assumed
by the Sponsor, (5) when appropriate, making
distributions of cash or other property to
Shareholders, and (6) receiving and reviewing
reports from or on the Custodian’s custody of and
transactions in the Trust’s platinum.
11 The Custodian is responsible for safekeeping
for the Trust platinum deposited with it by
Authorized Participants in connection with the
creation of Baskets. The Custodian is also
responsible for selecting the Zurich Sub-Custodians
and its other direct sub-custodians, if any. The
Custodian facilitates the transfer of platinum in and
out of the Trust through the unallocated platinum
accounts it will maintain for each Authorized
Participant and the unallocated and allocated
platinum accounts it will maintain for the Trust.
The Custodian is responsible for allocating specific
plates or ingots of physical platinum to the Trust’s
allocated platinum account. The Custodian will
provide the Trustee with regular reports detailing
the platinum transfers in and out of the Trust’s
unallocated and allocated platinum accounts and
identifying the platinum plates or ingots held in the
Trust’s allocated platinum account.
12 With respect to application of Rule 10A–3 (17
CFR 240.10A–3) under the Securities Exchange of
1934 (‘‘Act’’) (15 U.S.C. 78a), the Trust relies on the
exemption contained in Rule 10A–3(c)(7).
E:\FR\FM\17NON1.SGM
17NON1
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
mstockstill on DSKH9S0YB1PROD with NOTICES
According to the Registration
Statement, the main centers of the OTC
market are London, New York, Hong
Kong and Zurich. Mining companies,
manufacturers of jewelry and industrial
products, together with investors and
speculators, tend to transact their
business through one of these market
centers. Centers such as Dubai and
several cities in the Far East also
transact substantial OTC market
business, typically involving jewelry
and small plates or ingots (1 kilogram or
less) and will hedge their exposure by
selling into one of these main OTC
centers. Precious metals dealers have
offices around the world and most of the
world’s major bullion dealers are either
members or associate members of the
London Bullion Market Association
and/or the LPPM. In the OTC market,
the standard size of platinum trades
between market makers is 1,000 ounces.
Liquidity in the OTC market can vary
from time to time during the course of
the 24-hour trading day. Fluctuations in
liquidity are reflected in adjustments to
dealing spreads—the differential
between a dealer’s ‘‘buy’’ and ‘‘sell’’
prices. The period of greatest liquidity
in the platinum market generally occurs
at the time of day when trading in the
European time zones overlaps with
trading in the United States, which is
when OTC market trading in London,
New York and other centers coincides
with futures and options trading on the
COMEX. This period lasts for
approximately four hours each New
York business day morning.13
The London Platinum Market
According to the Registration
Statement, although the market for
physical platinum is distributed
globally, most OTC market trades are
cleared through London. In addition to
coordinating market activities, the
London Platinum Palladium Market
(‘‘LPPM’’) acts as the principal point of
contact between the market and its
regulators. A primary function of the
13 The Registration Statement includes a table
with data regarding World Platinum Supply and
demand 1998–2008. According to the Registration
Statement, the table illustrates that the platinum
supply over the past ten years has averaged 6.8
million ounces with the majority of production
from South Africa. Production from South Africa,
on average, accounts for approximately 68% of total
production. There is a 20% increase in platinum
supply when comparing the average five-year
periods ended 2003 and 2008, at 6.2 million ounces
and 7.4 million ounces, respectively. The biggest
source of demand for platinum output from 1998–
2008 has come from the autocatalyst sector, which
has accounted for an approximate average of 44%
of all demand. Conversely, the jewelry sector has
seen a continuous decline in demand continually
2002 to 2008. From 2002 levels, 2008 jewelry
demand has decreased by 60%. The annual demand
for platinum over the past 10 years has averaged
approximately 7.0 million ounces.
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
LPPM is its involvement in the
promotion of refining standards by
maintenance of the ‘‘London/Zurich
Good Delivery Lists,’’ which are the lists
of LPPM accredited melters and
assayers of platinum. The LPPM also
coordinates market clearing and
vaulting, promotes good trading
practices and develops standard
documentation.
Platinum is traded generally on a loco
Zurich basis, meaning the precious
metal is physically held in vaults in
Zurich or is transferred into accounts
established in Zurich. The basis for
settlement and delivery of a loco Zurich
spot trade is payment (generally in U.S.
dollars) two business days after the
trade date against delivery. Delivery of
the platinum can either be by physical
delivery or through the clearing systems
to an unallocated account.
The unit of trade in London is the troy
ounce, whose conversion between
grams is: 1,000 grams is equivalent to
32.1507465 troy ounces, and one troy
ounce is equivalent to 31.1034768
grams. A London/Zurich good delivery
plate or ingot is acceptable for delivery
in settlement of a transaction on the
OTC market. Typically referred to as
Good Delivery, a plate or ingot must
contain between 32 and 192 troy ounces
of platinum with a minimum fineness
(or purity) of 999.5 parts per 1,000
(99.95%), be of good appearance, and be
easy to handle and stack. The platinum
content of a platinum plate or ingot is
calculated by multiplying the gross
weight (expressed in units of 0.025 troy
ounces) by the fineness of the plate or
ingot. A Good Delivery plate or ingot
must also bear the stamp of one of the
melters and assayers who are on the
LPPM approved list. Unless otherwise
specified, the platinum spot price
always refers to that of Good Delivery
Standards. Business is generally
conducted over the phone and through
electronic dealing systems.14
Twice daily during London trading
hours there is a fix which provides
reference platinum prices for that day’s
trading. Many long-term contracts will
be priced on the basis of either the
morning (AM) or afternoon (PM)
London fix, and market participants will
usually refer to one or the other of these
prices when looking for a basis for
valuations. The London fix is the most
widely used benchmark for daily
platinum prices and is quoted by
various financial information sources.
Formal participation in the London
fix is traditionally limited to four
14 Terms relating to the Trust and the Shares
referred to, but not defined, herein are defined in
the Registration Statement.
PO 00000
Frm 00209
Fmt 4703
Sfmt 4703
59321
members, each of which is a bullion
dealer and a member of the LPPM. The
chairmanship now rotates annually
among the four member firms. The
morning session of the fix starts at 9:45
a.m. London time and the afternoon
session starts at 2 p.m. London time.
The members of the LPPM fixing are
currently: J.Aron & Company (a division
of Goldman Sachs International),
Engelhard Metals Limited, HSBC Bank
USA N.A. (London branch), and
Standard Bank London Limited. Any
other market participant wishing to
participate in the trading on the fix is
required to do so through one of the four
platinum fixing members.
Orders are placed either with one of
the four fixing members or with another
precious metals dealer who will then be
in contact with a fixing member during
the fixing. The fixing members net-off
all orders when communicating their
net interest at the fixing. The fix begins
with the fixing chairman suggesting a
‘‘trying price,’’ reflecting the market
price prevailing at the opening of the
fix. This is relayed by the fixing
members to their dealing rooms which
have direct communication with all
interested parties. Any market
participant may enter the fixing process
at any time, or adjust or withdraw his
order. The platinum price is adjusted up
or down until all the buy and sell orders
are matched, at which time the price is
declared fixed. All fixing orders are
transacted on the basis of this fixed
price, which is instantly relayed to the
market through various media. The
London fix is widely viewed as a full
and fair representation of all market
interest at the time of the fix.
Futures Exchanges
The most significant platinum futures
exchanges are the NYMEX and the
Tokyo Commodity Exchange (TOCOM).
The NYMEX is the largest exchange in
the world for trading precious metals
futures and options and has been
trading platinum since 1974. The
TOCOM has been trading platinum
since 1982. Trading on these exchanges
is based on fixed delivery dates and
transaction sizes for the futures and
options contracts traded. The NYMEX
operates through a central clearance
system. On June 6, 2003, TOCOM
adopted a similar clearance system. In
each case, the exchange acts as a
counterparty for each member for
clearing purposes.
Market Regulation
The global platinum markets are
overseen and regulated by both
governmental and self-regulatory
organizations. In addition, certain trade
associations have established rules and
protocols for market practices and
E:\FR\FM\17NON1.SGM
17NON1
mstockstill on DSKH9S0YB1PROD with NOTICES
59322
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
participants. In the United Kingdom,
responsibility for the regulation of the
financial market participants, including
the major participating members of the
LPPM, falls under the authority of the
Financial Services Authority (‘‘FSA’’) as
provided by the Financial Services and
Markets Act 2000 (‘‘FSM Act’’). Under
this act, all UK-based banks, together
with other investment firms, are subject
to a range of requirements, including
fitness and properness, capital
adequacy, liquidity, and systems and
controls.
The FSA is responsible for regulating
investment products, including
derivatives, and those who deal in
investment products. Regulation of spot,
commercial forwards, and deposits of
platinum not covered by the FSM Act is
provided for by The London Code of
Conduct for Non-Investment Products,
which was established by market
participants in conjunction with the
Bank of England.
The TOCOM has authority to perform
financial and operational surveillance
on its members’ trading activities,
scrutinize positions held by members
and large-scale customers, and monitor
the price movements of futures markets
by comparing them with cash and other
derivative markets’ prices. To act as a
Futures Commission Merchant Broker, a
broker must obtain a license from
Japan’s Ministry of Economy, Trade and
Industry (‘‘METI’’), the regulatory
authority that oversees the operations of
the TOCOM.
The Trust will not trade in platinum
futures contracts on the NYMEX or on
any other futures exchange. The Trust
will only take delivery of physical
platinum that complies with the
NYMEX platinum delivery rules or the
LPPM platinum delivery rules. Because
the Trust will not trade in platinum
futures contracts on any futures
exchange, the Trust will not be
regulated by the Commodity Futures
Trading Commission (‘‘CFTC’’) under
the Commodity Exchange Act 15
(‘‘CEA’’) as a ‘‘commodity pool,’’ and
will not be operated by a CFTCregulated commodity pool operator.
Investors in the Trust will not receive
the regulatory protections afforded to
investors in regulated commodity pools,
nor may the NYMEX or any futures
exchange enforce its rules with respect
to the Trust’s activities. In addition,
investors in the Trust will not benefit
from the protections afforded to
investors in platinum futures contracts
on regulated futures exchanges.
Custody of the Trust’s Platinum
15 7
U.S.C. 1 et seq.
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
Custody of the physical platinum
deposited with and held by the Trust
will be provided by the Custodian at its
London, England vaults, by Zurich SubCustodians selected by the Custodian in
their Zurich vaults and by other subcustodians on a temporary basis only.
The Custodian is a market maker,
clearer and approved weigher under the
rules of the LPPM.
The Custodian is the custodian of the
physical platinum credited to the Trust
Allocated Account in accordance with
the Custody Agreements. The Custodian
will segregate the physical platinum
credited to the Trust Allocated Account
from any other precious metal it holds
or holds for others by entering
appropriate entries in its books and
records, and will require any Zurich
Sub-Custodian it appoints to also
segregate the physical platinum from
the other platinum held by them for
other customers of the Custodian and
the Zurich Sub-Custodian’s other
customers. The Custodian will require
any Zurich Sub-Custodian it appoints to
identify in such Zurich Sub-Custodian’s
books and records the Trust as having
the rights to the physical platinum
credited to its Trust Allocated Account.
The Custodian, as instructed by the
Trustee, is authorized to accept, on
behalf of the Trust, deposits of platinum
in unallocated form. Acting on standing
instructions specified in the Custody
Agreements, the Custodian will or will
require a Zurich Sub-Custodian to
allocate platinum deposited in
unallocated form with the Trust by
selecting plates or ingots of physical
platinum for deposit to the Trust
Allocated Account. All physical
platinum allocated to the Trust must
conform to the rules, regulations,
practices and customs of the LPPM.
The process of withdrawing platinum
from the Trust for a redemption of a
Basket will follow the same general
procedure as for depositing platinum
with the Trust for a creation of a Basket,
only in reverse. Each transfer of
platinum between the Trust Allocated
Account and the Trust Unallocated
Account connected with a creation or
redemption of a Basket may result in a
small amount of platinum being held in
the Trust Unallocated Account after the
completion of the transfer. In making
deposits and withdrawals between the
Trust Allocated Account and the Trust
Unallocated Account, the Custodian
will use commercially reasonable efforts
to minimize the amount of platinum
held in the Trust Unallocated Account
as of the close of each business day and
in any case not to exceed 192 troy
ounces of platinum.
PO 00000
Frm 00210
Fmt 4703
Sfmt 4703
According to the Registration
Statement, the Trust is not registered as
an investment company under the
Investment Company Act of 1940 16 and
is not required to register under such
act. The Trust will not hold or trade in
commodity futures contracts regulated
by the CEA, as administered by the
CFTC. The Trust is not a commodity
pool for purposes of the CEA, and
neither the Sponsor nor the Trustee is
subject to regulation by the CFTC as a
commodity pool operator or a
commodity trading advisor in
connection with the Shares.
Sponsor’s Estimate of Expected Size
of the Trust
The Sponsor has made
representations to the Commission
regarding the expected size of the Trust
and the expected impact of the offering
of the Shares on the global platinum
market.17 In the May 15, 2009 Letter, the
Sponsor has stated its expectation that
the Trust’s assets under management
(‘‘AUM’’) would be between $240
million and $480 million after three
years of the Trust’s operation, and using
the platinum spot market price of
$1149.00 per ounce as of May 8, 2009,
the Trust would be expected to be
acquiring between approximately
70,000 to 140,000 ounces of platinum
on an annual basis.18 The Sponsor has
represented that it does not believe that
the currently expected size of the Trust
will have a meaningful effect on the
global supply or demand for platinum,
and that the Trust’s highest forecast
platinum acquisitions would represent
2.1% and 2.0%, respectively, of the 10year average annual supply and demand
for platinum through the end of 2008.19
The Sponsor, therefore, has stated its
belief that, in view of the amount of
Shares sought to be registered, the Trust
believes there will be a market neutral
impact given that the Shares can be a
current source of supply at then current
prices through redemptions.20
16 15
U.S.C. 80a.
Supplemental Comment Response
regarding the Trust, dated May 15, 2009, from Peter
J. Shea, Katten Muchin Rosenman LLP, to the
Commission (submitted via EDGAR) (‘‘May 15,
2009 Letter’’).
18 The Exchange notes that ETF Securities Ltd.,
the Sponsor’s parent entity, has sponsored ETFS
Platinum ETP, traded on the London Stock
Exchange (ticker symbol: PHPT), which had AUM
of approximately $347.8 million as of May 8, 2009.
19 See note 13, supra.
20 The Sponsor states that it intends to recast its
analysis each time it seeks to register additional
Shares of the Trust in the future to ensure that
additional Trust offerings will not be disruptive to
platinum supply and demand. May 15, 2009 Letter
at p. 4. As stated in the May 15, 2009 Letter, the
Registration Statement seeks to register 4,780,000
Shares, and that, at an estimated platinum
acquisition rate of 140,000 ounces per year, the
17 See
E:\FR\FM\17NON1.SGM
17NON1
mstockstill on DSKH9S0YB1PROD with NOTICES
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
In the May 15, 2009 Letter, the
Sponsor also states that it expects that
the offering of the Shares will not have
a meaningful impact on the global
platinum market, founded on the
Sponsor’s belief that the present Share
offering is limited to an appropriate size
and that arbitrage opportunities between
platinum market prices and the Trust’s
net asset value together with the low
cost creation and redemption process
utilizing physical metal will neutralize
any impact of the Trust on the broader
platinum market.21
According to the Registration
Statement, since there is no limit on the
amount of platinum that the Trust may
acquire, the Trust, as it grows, may have
an impact on the supply and demand of
platinum that ultimately may affect the
price of the Shares in a manner
unrelated to other factors affecting the
global market for platinum.
Secondary Market Trading
While the Trust’s investment
objective is for the Shares to reflect the
performance of platinum, less the
expenses of the Trust, the Shares may
trade in the secondary market on the
NYSE Arca at prices that are lower or
higher relative to their net asset value
(‘‘NAV’’) per Share. The amount of the
discount or premium in the trading
price relative to the NAV per Share may
be influenced by non-concurrent trading
hours between the NYSE Arca and the
NYMEX and London. While the Shares
will trade on the NYSE Arca until 8 PM
New York time, liquidity in the global
platinum market will be reduced after
the close of the NYMEX at 1:05 PM New
York time. As a result, during this time,
trading spreads, and the resulting
premium or discount, on the Shares
may widen.
Trust Expenses
The Trust’s only ordinary recurring
expense is expected to be equal to the
Sponsor’s Fee. In exchange for the
Sponsor’s Fee, the Sponsor has agreed
to assume the following administrative
and marketing expenses incurred by the
Trust: the Trustee’s monthly fee and
out-of-pocket expenses, the Custodian’s
fee, Exchange listing fees, SEC
registration fees, printing and mailing
costs, audit fees and up to $100,000 per
annum in legal expenses. The Sponsor
will also pay the costs of the Trust’s
organization and the initial sale of the
Shares, including the applicable SEC
registration fees.
The Sponsor’s Fee will accrue daily at
an annualized rate equal to a specified
percentage of the adjusted net asset
Trust would complete its Share offering in
approximately 3.4 years.
21 May 15, 2009 Letter at p. 5.
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
value of the Trust and will be payable
monthly in arrears. The Sponsor, from
time to time, may temporarily waive all
or a portion of the Sponsor’s Fee at its
discretion for a stated period of time.
The Trust will deliver platinum to the
Sponsor to pay the Sponsor’s Fee and
sell platinum to raise the funds needed
for the payment of all Trust expenses
not assumed by the Sponsor. The
purchase price received as
consideration for such sales will be the
Trust’s sole source of funds to cover its
liabilities. The Trust will not engage in
any activity designed to derive a profit
from changes in the price of platinum.
Platinum not needed to redeem Baskets,
or to cover the Sponsor’s Fee and Trust
expenses not assumed by the Trustee,
will be held in physical form by the
Custodian (except for residual amounts
not exceeding 192 ounces of platinum,
the maximum weight to make one Good
Delivery plate or ingot, which will be
held in unallocated form by the
Custodian on behalf of the Trust). As a
result of the recurring deliveries of
platinum necessary to pay the Sponsor’s
Fee in-kind and potential sales of
platinum to pay in cash the Trust
expenses not assumed by the Sponsor,
the net asset value of the Trust and,
correspondingly, the fractional amount
of physical platinum represented by
each Share will decrease over the life of
the Trust.22
Creation and Redemption of Shares
The Trust will create and redeem
Shares in one or more Baskets (a Basket
equals a block of 50,000 Shares). The
creation and redemption of Baskets will
only be made ‘‘in-kind’’ in exchange for
the delivery to the Trust or the
distribution by the Trust of the amount
of platinum and any cash represented
by the Baskets being created or
redeemed, the amount of which will be
based on the combined NAV of the
number of Shares included in the
Baskets being created or redeemed
determined on the day the order to
create or redeem Baskets is properly
received. The creation and redemption
of Baskets may occur daily.
Authorized Participants are the only
persons that may place orders to create
and redeem Baskets.23 Authorized
22 See e-mail from Michael Cavalier, Chief
Counsel, NYSE Euronext, to David Liu, Assistant
Director, Christopher W. Chow, Special Counsel,
and Andrew Madar, Special Counsel, Commission,
dated November 9, 2009.
23 Authorized Participants must be (1) registered
broker-dealers or other securities market
participants, such as banks and other financial
institutions that are exempt from registration as
broker-dealers to engage in securities transactions,
and (2) participants in DTC. To become an
Authorized Participant, a person must enter into an
Authorized Participant Agreement with the Sponsor
PO 00000
Frm 00211
Fmt 4703
Sfmt 4703
59323
Participants will pay a transaction fee of
$500 to the Trustee for each order they
place to create or redeem one or more
Baskets. Authorized Participants who
make deposits with the Trust in
exchange for Baskets will receive no
fees, commissions or other form of
compensation or inducement of any
kind from either the Sponsor or the
Trust, and no such person has any
obligation or responsibility to the
Sponsor or the Trust to effect any sale
or resale of Shares.
According to the Registration
Statement, certain Authorized
Participants are expected to have the
facility to participate directly in the
physical platinum market and the
platinum futures market. In some cases,
an Authorized Participant may from
time to time acquire platinum from or
sell platinum to its affiliated platinum
trading desk, which may profit in these
instances. Each Authorized Participant
will have its own set of rules and
procedures, internal controls and
information barriers as it determines is
appropriate in light of its own
regulatory regime.
Shareholders who are not Authorized
Participants will only be able to redeem
their Shares through an Authorized
Participant.
All platinum will be delivered to the
Trust and distributed by the Trust in
unallocated form through credits and
debits between Authorized Participant
Unallocated Accounts and the Trust
Unallocated Account. Platinum
transferred from an Authorized
Participant Unallocated Account to the
Trust in unallocated form will first be
credited to the Trust Unallocated
Account. Thereafter, the Custodian will
allocate specific plates or ingots of
platinum representing the amount of
platinum credited to the Trust
Unallocated Account (to the extent such
amount is representable by whole
platinum plates or ingots) to the Trust
Allocated Account. The movement of
platinum is reversed for the distribution
of platinum to an Authorized
Participant in connection with the
redemption of Baskets.
All physical platinum represented by
a credit to any Authorized Participant
Unallocated Account and to the Trust
Unallocated Account and all physical
platinum held in the Trust Allocated
Account with the Custodian must be of
at least a minimum fineness (or purity)
of 999.5 parts per 1,000 (99.95%) and
otherwise conform to the rules,
and the Trustee. The Authorized Participant
Agreement provides the procedures for the creation
and redemption of Baskets and for the delivery of
the platinum and any cash required for such
creations and redemptions.
E:\FR\FM\17NON1.SGM
17NON1
mstockstill on DSKH9S0YB1PROD with NOTICES
59324
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
regulations practices and customs of the
LPPM, including the specifications for a
Good Delivery plate or ingot.
Creation Procedures
On any business day, an Authorized
Participant may place an order with the
Trustee to create one or more Baskets.
Creation and redemption orders will be
accepted on ‘‘business days’’ when the
NYSE Arca is open for regular trading.
Settlements of such orders requiring
receipt or delivery, or confirmation of
receipt or delivery, of platinum in the
United Kingdom, Zurich or another
jurisdiction will occur on ‘‘business
days’’ when (1) banks in the United
Kingdom, Zurich or such other
jurisdiction and (2) the London/Zurich
or such other platinum markets are
regularly open for business. If such
banks or the London/Zurich platinum
markets are not open for regular
business for a full day, such a day will
only be a ‘‘business day’’ for settlement
purposes if the settlement procedures
can be completed by the end of such
day. Settlement of platinum deliveries,
which occur loco Zurich, may be
delayed for longer than three business
days. Settlement of orders requiring
receipt or delivery, or confirmation of
receipt or delivery, of Shares will occur,
after confirmation of the applicable
platinum delivery, on ‘‘business days’’
when the NYSE Arca is open for regular
trading. Purchase orders must be placed
by 4 p.m. New York time or the close
of regular trading on the NYSE Arca,
whichever is earlier. The day on which
the Trustee receives a valid purchase
order is the purchase order date.
By placing a purchase order, an
Authorized Participant agrees to deposit
platinum with the Trust, or a
combination of platinum and cash, as
described below. Prior to the delivery of
Baskets for a purchase order, the
Authorized Participant must also have
wired to the Trustee the non-refundable
transaction fee due for the purchase
order.
Determination of Required Deposits
The total deposit required to create
each Basket (‘‘Creation Basket Deposit’’)
will be an amount of platinum and cash,
if any, that is in the same proportion to
the total assets of the Trust (net of
estimated accrued but unpaid fees,
expenses and other liabilities) on the
date the order to purchase is properly
received as the number of Shares to be
created under the purchase order is in
proportion to the total number of Shares
outstanding on the date the order is
received. The Sponsor anticipates that
in the ordinary course of the Trust’s
operations a cash deposit will not be
required for the creation of Baskets.
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
The amount of the required platinum
deposit is determined by dividing the
number of ounces of platinum held by
the Trust by the number of Baskets
outstanding, as adjusted for estimated
accrued but unpaid fees and expenses as
described in the next paragraph.
The amount of any required cash
deposit is determined as follows. The
estimated unpaid fees, expenses and
liabilities of the Trust accrued through
the purchase order date are subtracted
from any cash held or receivable by the
Trust as of the purchase order date. The
remaining amount is divided by the
number of Shares outstanding
immediately before the purchase order
date and then multiplied by the number
of Shares being created pursuant to the
purchase order. If the resulting amount
is positive, this amount is the required
cash deposit. If the resulting amount is
negative, the amount of the required
platinum deposit will be reduced by the
number of fine ounces of platinum
equal in value to that resulting amount,
determined at the price of platinum
used in calculating the NAV of the Trust
on the purchase order date. Fractions of
a fine ounce of platinum smaller than
0.001 of a fine ounce which are
included in the platinum deposit
amount are disregarded. All questions
as to the composition of a Creation
Basket Deposit will be finally
determined by the Trustee. The
Trustee’s determination of the Creation
Basket Deposit shall be final and
binding on all persons interested in the
Trust.
Delivery of Required Deposits
An Authorized Participant who places
a purchase order is responsible for
crediting its Authorized Participant
Unallocated Account with the required
platinum deposit amount by the third
business day in Zurich following the
purchase order date. Upon receipt of the
platinum deposit amount, the
Custodian, after receiving appropriate
instructions from the Authorized
Participant and the Trustee, will transfer
on the third business day following the
purchase order date the platinum
deposit amount from the Authorized
Participant Unallocated Account to the
Trust Unallocated Account and the
Trustee will direct DTC to credit the
number of Baskets ordered to the
Authorized Participant’s DTC account.
The expense and risk of delivery,
ownership and safekeeping of platinum
until such platinum has been received
by the Trust shall be borne solely by the
Authorized Participant. The Trustee
may accept delivery of platinum by
such other means as the Sponsor, from
time to time, may determine to be
acceptable for the Trust, provided that
PO 00000
Frm 00212
Fmt 4703
Sfmt 4703
the same is disclosed in a Trust
prospectus. If platinum is to be
delivered other than as described above,
the Sponsor is authorized to establish
such procedures and to appoint such
custodians and establish such custody
accounts in addition to those described
in this prospectus, as the Sponsor
determines to be desirable.
Acting on standing instructions given
by the Trustee, the Custodian will
transfer the platinum deposit amount
from the Trust Unallocated Account to
the Trust Allocated Account by
transferring platinum plates and ingots
from its inventory to the Trust Allocated
Account. The Custodian will use
commercially reasonable efforts to
complete the transfer of platinum to the
Trust Allocated Account prior to the
time by which the Trustee is to credit
the Basket to the Authorized
Participant’s DTC account; if, however,
such transfers have not been completed
by such time, the number of Baskets
ordered will be delivered against receipt
of the platinum deposit amount in the
Trust Unallocated Account, and all
Shareholders will be exposed to the
risks of unallocated platinum to the
extent of that platinum deposit amount
until the Custodian completes the
allocation process.
The Trustee may reject a purchase
order or a Creation Basket Deposit if
such order or Creation Basket Deposit if
[sic] not presented in proper form as
described in the Authorized Participant
Agreement or if the fulfillment of the
order, in the opinion of counsel, might
be unlawful.
Redemption Procedures
According to the Registration
Statement, the procedures by which an
Authorized Participant can redeem one
or more Baskets will mirror the
procedures for the creation of Baskets.
On any business day, an Authorized
Participant may place an order with the
Trustee to redeem one or more Baskets.
Redemption orders must be placed by 4
PM New York time or the close of
regular trading on the NYSE Arca,
whichever is earlier. A redemption
order so received is effective on the date
it is received in satisfactory form by the
Trustee. The redemption procedures
allow Authorized Participants to redeem
Baskets and do not entitle an individual
Shareholder to redeem any Shares in an
amount less than a Basket, or to redeem
Baskets other than through an
Authorized Participant.
By placing a redemption order, an
Authorized Participant agrees to deliver
the Baskets to be redeemed through
DTC’s book-entry system to the Trust
not later than the third business day
following the effective date of the
E:\FR\FM\17NON1.SGM
17NON1
mstockstill on DSKH9S0YB1PROD with NOTICES
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
redemption order. Prior to the delivery
of the redemption distribution for a
redemption order, the Authorized
Participant must also have wired to the
Trustee the non-refundable transaction
fee due for the redemption order.
Determination of Redemption
Distribution
The redemption distribution from the
Trust will consist of (1) a credit to the
redeeming Authorized Participant’s
Authorized Participant Unallocated
Account representing the amount of the
platinum held by the Trust evidenced
by the Shares being redeemed plus or
minus (2) the cash redemption amount.
The cash redemption amount is equal to
the value of all assets of the Trust other
than platinum less all estimated accrued
but unpaid expenses and other
liabilities, divided by the number of
Baskets outstanding and multiplied by
the number of Baskets included in the
Authorized Participant’s redemption
order. The Trustee will distribute any
positive cash redemption amount
through DTC to the account of the
Authorized Participant as recorded on
DTC’s book entry system. If the cash
redemption amount is negative, the
credit to the Authorized Participant
Unallocated Account will be reduced by
the number of ounces of platinum equal
in value to the negative cash redemption
amount, determined at the price of
platinum used in calculating the NAV of
the Trust on the redemption order date.
The Sponsor anticipates that in the
ordinary course of the Trust’s operations
there will be no cash distributions made
to Authorized Participants upon
redemptions. Fractions of a fine ounce
of platinum included in the redemption
distribution smaller than 0.001 of a fine
ounce are disregarded. Redemption
distributions will be subject to the
deduction of any applicable tax or other
governmental charges which may be
due.
Delivery of Redemption Distribution
The redemption distribution due from
the Trust will be delivered to the
Authorized Participant on the third
business day following the redemption
order date if, by 9 a.m. New York time
on such third business day, the
Trustee’s DTC account has been
credited with the Baskets to be
redeemed. Terms relating to the Trust
and the Shares referred to, but not
defined, herein are defined in the
Registration Statement.
The Custodian will transfer the
redemption platinum amount from the
Trust Allocated Account to the Trust
Unallocated Account and, thereafter, to
the redeeming Authorized Participant’s
Authorized Participant Unallocated
Account.
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
The Trustee may, in its discretion,
and will when directed by the Sponsor,
suspend the right of redemption, or
postpone the redemption settlement
date, (1) for any period during which
the NYSE Arca is closed other than
customary weekend or holiday closings,
or trading on the NYSE Arca is
suspended or restricted or (2) for any
period during which an emergency
exists as a result of which delivery,
disposal or evaluation of platinum is not
reasonably practicable.
The Trustee will reject a redemption
order if the order is not in proper form
as described in the Authorized
Participant Agreement or if the
fulfillment of the order, in the opinion
of its counsel, might be unlawful.
Creation and Redemption Transaction
Fee
To defray the costs incurred by the
Trustee in providing services for
processing the creation and redemption
of Baskets, an Authorized Participant
will be required to pay a transaction fee
to the Trustee of $500 per order to create
or redeem Baskets. An order may
include multiple Baskets. The
transaction fee may be reduced,
increased or otherwise changed by the
Trustee with the consent of the Sponsor.
The Trustee shall notify DTC of any
agreement to change the transaction fee
and will not implement any increase in
the fee for the redemption of Baskets
until 30 days after the date of the notice.
Termination Events
The Trustee will terminate and
liquidate the Trust if the aggregate
market capitalization of the Trust, based
on the closing price for the Shares, was
less than $350 million (as adjusted for
inflation) at any time after the first
anniversary after the Trust’s formation
and the Trustee receives, within six
months after the last of those trading
days, notice from the Sponsor of its
decision to terminate the Trust. The
Trustee will terminate the Trust if the
CFTC determines that the Trust is a
commodities pool under the CEA. The
Trustee may also terminate the Trust
upon the agreement of the owners of
beneficial interests in the Shares
(‘‘Shareholders’’) owning at least 75% of
the outstanding Shares.
Additional information regarding the
Shares and the operation of the Trust,
including termination events, risks, and
creation and redemption procedures, are
described in the Registration Statement.
Valuation of Platinum, Definition of
Net Asset Value and Adjusted Net Asset
Value (‘‘ANAV’’)
As of the London PM Fix on each day
that the NYSE Arca is open for regular
trading or, if there is no London PM Fix
on such day or the London PM Fix has
PO 00000
Frm 00213
Fmt 4703
Sfmt 4703
59325
not been announced by 12 noon New
York time on such day, as of 12 noon
New York time on such day (Evaluation
Time), the Trustee will evaluate the
platinum held by the Trust and
determine both the ANAV and the NAV
of the Trust.
At the Evaluation Time, the Trustee
will value the Trust’s platinum on the
basis of that day’s London PM Fix or, if
no London PM Fix is made on such day
or has not been announced by the
Evaluation Time, the next most recent
London platinum price fix (AM or PM)
determined prior to the Evaluation Time
will be used, unless the Sponsor
determines that such price is
inappropriate as a basis for evaluation.
In the event the Sponsor determines that
the London PM Fix or such other
publicly available price as the Sponsor
may deem fairly represents the
commercial value of the Trust’s
platinum is not an appropriate basis for
evaluation of the Trust’s platinum, it
shall identify an alternative basis for
such evaluation to be employed by the
Trustee. Neither the Trustee nor the
Sponsor shall be liable to any person for
the determination that the London PM
Fix or last prior London platinum price
fix is not appropriate as a basis for
evaluation of the Trust’s platinum or for
any determination as to the alternative
basis for such evaluation provided that
such determination is made in good
faith.24
Once the value of the platinum has
been determined, the Trustee will
subtract all estimated accrued but
unpaid fees, expenses and other
liabilities of the Trust from the total
value of the platinum and all other
assets of the Trust (other than any
amounts credited to the Trust’s reserve
account, if established). The resulting
figure is the ANAV of the Trust. The
ANAV of the Trust is used to compute
the Sponsor’s Fee.
To determine the Trust’s NAV, the
Trustee will subtract the amount of
estimated accrued but unpaid fees
computed by reference to the ANAV of
the Trust and to the value of the
platinum held by the Trust from the
ANAV of the Trust. The resulting figure
is the NAV of the Trust. The Trustee
will also determine the NAV per Share
by dividing the NAV of the Trust by the
number of the Shares outstanding as of
the close of trading on the NYSE Arca
(which includes the net number of any
Shares created or redeemed on such
evaluation day).
24 The Exchange, pursuant to NYSE Arca Equities
Rule 7.12, has the discretion to halt trading in the
Shares if the London Fix is not determined or
available for an extended period based on
extraordinary circumstances or market conditions.
E:\FR\FM\17NON1.SGM
17NON1
mstockstill on DSKH9S0YB1PROD with NOTICES
59326
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
The NAV of the Trust is the aggregate
value of the Trust’s assets less its
liabilities (which include estimated
accrued but unpaid fees and expenses).
In determining the NAV of the Trust,
the Trustee will value the platinum held
by the Trust on the basis of the price of
an ounce of platinum as set by the
afternoon session of the twice daily fix
of the price of an ounce of platinum
which starts at 2 p.m. London, England
time (London PM Fix) and is performed
by the four members of the London
Platinum and Palladium Market
(LPPM). The Trustee will determine the
NAV of the Trust on each day the NYSE
Arca is open for regular trading, at the
earlier of the London PM Fix for the day
or 12 noon New York time. If no London
PM Fix is made on a particular
evaluation day or has not been
announced by 12 noon New York time
on a particular evaluation day, the next
most recent London platinum price fix
(AM or PM) will be used in the
determination of the NAV of the Trust,
unless the Sponsor determines that such
price is inappropriate to use as basis for
such determination.
The Shares will be book-entry only
and individual certificates will not be
issued for the Shares.
Liquidity
The Shares may trade at, above or
below the NAV per Share. The NAV per
Share will fluctuate with changes in the
market value of the Trust’s assets. The
trading price of the Shares will fluctuate
in accordance with changes in the NAV
per Share as well as market supply and
demand. The amount of the discount or
premium in the trading price relative to
the NAV per Share may be influenced
by non-concurrent trading hours
between the NYSE Arca and the major
platinum markets. While the Shares will
trade on the NYSE Arca until 8 p.m.
New York time, liquidity in the market
for platinum will be reduced after the
close of the major world platinum
markets, including London and the
NYMEX. As a result, during this time,
trading spreads, and the resulting
premium or discount, on the Shares
may widen.
Availability of Information Regarding
Platinum Prices
Currently, the Consolidated Tape Plan
does not provide for dissemination of
the spot price of a commodity, such as
platinum, over the Consolidated Tape.
However, there will be disseminated
over the Consolidated Tape the last sale
price for the Shares, as is the case for
all equity securities traded on the
Exchange (including exchange-traded
funds). In addition, there is a
considerable amount of platinum price
and platinum market information
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
available on public Web sites and
through professional and subscription
services.
Investors may obtain on a 24-hour
basis platinum pricing information
based on the spot price for an ounce of
platinum from various financial
information service providers, such as
Reuters and Bloomberg. Reuters and
Bloomberg provide at no charge on their
Web sites delayed information regarding
the spot price of platinum and last sale
prices of platinum futures, as well as
information about news and
developments in the platinum market.
Reuters and Bloomberg also offer a
professional service to subscribers for a
fee that provides information on
platinum prices directly from market
participants. An organization named
EBS provides an electronic trading
platform to institutions such as bullion
banks and dealers for the trading of spot
platinum, as well as a feed of live
streaming prices to Reuters and
Moneyline Telerate subscribers.
Complete real-time data for platinum
futures and options prices traded on the
NYMEX are available by subscription
from Reuters and Bloomberg. The
NYMEX also provides delayed futures
and options information on current and
past trading sessions and market news
free of charge on its Web site. There are
a variety of other public Web sites
providing information on platinum,
ranging from those specializing in
precious metals to sites maintained by
major newspapers, such as The Wall
Street Journal. In addition, the London
AM Fix and London PM Fix are
publicly available at no charge at
https://www.lbma.org.uk/
statistics_current.htm or https://
www.thebulliondesk.com.
The Trust Web site will provide an
intraday indicative value (‘‘IIV’’) per
share for the Shares, updated at least
every 15 seconds, as calculated by the
Exchange or a third party financial data
provider, during the Exchange’s Core
Trading Session (9:30 a.m. to 4 p.m.,
New York time). The IIV is calculated
by multiplying the indicative spot price
of platinum by the quantity of platinum
backing each Share. The Trust Web site
will also provide the NAV of the Trust
as calculated each business day by the
Sponsor. In addition, the Web site for
the Trust will contain the following
information, on a per Share basis, for
the Trust: (a) the NAV as of the close of
the prior business day and the midpoint of the bid-ask price 25 at the close
25 The
bid-ask price of the Trust is determined
using the highest bid and lowest offer on the
Consolidated Tape as of the time of calculation of
the closing day NAV.
PO 00000
Frm 00214
Fmt 4703
Sfmt 4703
of trading in relation to such NAV
(‘‘Bid/Ask Price’’), and a calculation of
the premium or discount of such price
against such NAV; and (b) data in chart
format displaying the frequency
distribution of discounts and premiums
of the Bid/Ask Price against the NAV,
within appropriate ranges, for each of
the four previous calendar quarters. The
Web site for the Trust will also provide
the following information: the Creation
Basket Deposit, the Trust’s prospectus,
and the two most recent reports to
stockholders. Finally, the Trust Web site
will also provide the last sale price of
the Shares as traded in the US market.
The Exchange will provide on its Web
site (https://www.nyx.com) a link to the
Trust’s Web site. In addition, the
Exchange will make available over the
Consolidated Tape quotation
information, trading volume, closing
prices and NAV for the Shares from the
previous day.
Criteria for Initial and Continued
Listing
The Trust will be subject to the
criteria in NYSE Arca Equities Rule
8.201(e) for initial and continued listing
of the Shares.
A minimum of 100,000 Shares will be
required to be outstanding at the start of
trading.26 The minimum number of
shares required to be outstanding is
comparable to requirements that have
been applied to previously listed shares
of the streetTRACKS Gold Trust, the
iShares COMEX Gold Trust, the iShares
Silver Trust and exchange-traded funds.
It is anticipated that the initial price of
a Share will be approximately $110.00.
The Exchange believes that the
anticipated minimum number of Shares
outstanding at the start of trading is
sufficient to provide adequate market
liquidity.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Fund subject to the Exchange’s
existing rules governing the trading of
equity securities. Trading in the Shares
on the Exchange will occur in
accordance with NYSE Arca Equities
Rule 7.34(a). The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions. The minimum trading
increment for Shares on the Exchange
will be $0.01.
Further, NYSE Arca Equities Rule
8.201 sets forth certain restrictions on
ETP Holders acting as registered Market
Makers in the Shares to facilitate
26 See e-mail from Michael Cavalier, Chief
Counsel, NYSE Euronext, to David Liu, Assistant
Director, Christopher W. Chow, Special Counsel,
and Andrew Madar, Special Counsel, Commission,
dated November 9, 2009.
E:\FR\FM\17NON1.SGM
17NON1
mstockstill on DSKH9S0YB1PROD with NOTICES
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
surveillance. Pursuant to NYSE Arca
Equities Rule 8.201(h), an ETP Holder
acting as a registered Market Maker in
the Shares is required to provide the
Exchange with information relating to
its trading in the underlying platinum,
related futures or options on futures, or
any other related derivatives. NYSE
Arca Equities Rule 8.201(i) prohibits an
ETP Holder acting as a registered Market
Maker in the Shares from using any
material nonpublic information received
from any person associated with an ETP
Holder or employee of such person
regarding trading by such person or
employee in the underlying platinum,
related futures or options on futures or
any other related derivative (including
the Shares).
As a general matter, the Exchange has
regulatory jurisdiction over its ETP
Holders and their associated persons,
which include any person or entity
controlling an ETP Holder, as well as a
subsidiary or affiliate of an ETP Holder
that is in the securities business. A
subsidiary or affiliate of an ETP Holder
that does business only in commodities
or futures contracts would not be
subject to Exchange jurisdiction, but the
Exchange could obtain information
regarding the activities of such
subsidiary or affiliate through
surveillance sharing agreements with
regulatory organizations of which such
subsidiary or affiliate is a member.
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares.
Trading on the Exchange in the Shares
may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. These may
include: (1) the extent to which
conditions in the underlying platinum
market have caused disruptions and/or
lack of trading, or (2) whether other
unusual conditions or circumstances
detrimental to the maintenance of a fair
and orderly market are present. In
addition, trading in Shares will be
subject to trading halts caused by
extraordinary market volatility pursuant
to the Exchange’s ‘‘circuit breaker’’
rule.27
Surveillance
The Exchange intends to utilize its
existing surveillance procedures
applicable to derivative products
(including Commodity-Based Trust
Shares) to monitor trading in the Shares.
The Exchange represents that these
procedures are adequate to properly
monitor Exchange trading of the Shares
in all trading sessions and to deter and
27 See
NYSE Arca Equities Rule 7.12.
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
detect violations of Exchange rules and
applicable federal securities laws.
The Exchange’s current trading
surveillance focuses on detecting
securities trading outside their normal
patterns. When such situations are
detected, surveillance analysis follows
and investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations. Also, pursuant to
NYSE Arca Equities Rule 8.201(h), the
Exchange is able to obtain information
regarding trading in the Shares and the
underlying platinum, platinum futures
contracts, options on platinum futures,
or any other platinum derivative,
through ETP Holders acting as
registered Market Makers, in connection
with such ETP Holders’ proprietary or
customer trades which they effect on
any relevant market. In addition, the
Exchange may obtain trading
information via the Intermarket
Surveillance Group (‘‘ISG’’) from other
exchanges who are members of the
ISG.28 NYMEX is an ISG member.
Information Bulletin
Prior to the commencement of
trading, the Exchange will inform its
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (1) The
procedures for purchases and
redemptions of Shares in Baskets
(including noting that Shares are not
individually redeemable); (2) NYSE
Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its
ETP Holders to learn the essential facts
relating to every customer prior to
trading the Shares; (3) how information
regarding the IIV is disseminated; (4) the
requirement that ETP Holders deliver a
prospectus to investors purchasing
newly issued Shares prior to or
concurrently with the confirmation of a
transaction; (5) the possibility that
trading spreads and the resulting
premium or discount on the Shares may
widen as a result of reduced liquidity of
platinum trading during the Core and
Late Trading Sessions after the close of
the major world platinum markets; and
(6) trading information. For example,
the Information Bulletin will advise ETP
Holders, prior to the commencement of
trading, of the prospectus delivery
28 A list of ISG members is available at https://
www.isgportal.org. The Exchange notes that
TOCOM is not an ISG member and the Exchange
does not have in place a comprehensive
surveillance sharing agreement with such market.
In addition, the Exchange does not have access to
information regarding platinum-related OTC
transactions in spot, forwards, options or other
derivatives.
PO 00000
Frm 00215
Fmt 4703
Sfmt 4703
59327
requirements applicable to the Trust.
The Exchange notes that investors
purchasing Shares directly from the
Trust (by delivery of the Creation Basket
Deposit) will receive a prospectus. ETP
Holders purchasing Shares from the
Trust for resale to investors will deliver
a prospectus to such investors.
In addition, the Information Bulletin
will reference that the Trust is subject
to various fees and expenses described
in the Registration Statement. The
Information Bulletin will also reference
the fact that there is no regulated source
of last sale information regarding
physical platinum, that the Commission
has no jurisdiction over the trading of
platinum as a physical commodity, and
that the CFTC has regulatory
jurisdiction over the trading of platinum
futures contracts and options on
platinum futures contracts.
The Information Bulletin will also
discuss any relief, if granted, by the
Commission or the staff from any rules
under the Act.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) 29 of the Act, in general, and
furthers the objectives of Section
6(b)(5),30 in particular, because it is
designed to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
and to remove impediments and perfect
the mechanisms of a free and open
market and to protect investors and the
public interest. The Exchange believes
that the proposed rule change will
facilitate the listing and trading of an
additional type of commodity-based
product that will enhance competition
among market participants, to the
benefit of investors and the marketplace.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
No written comments were solicited
or received with respect to the proposed
rule change.
29 15
30 15
E:\FR\FM\17NON1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
17NON1
59328
Federal Register / Vol. 74, No. 220 / Tuesday, November 17, 2009 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve the proposed
rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Copies of the filing also will be available
for inspection and copying at the
principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NYSEArca–2009–95 and
should be submitted on or before
December 8, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.31
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–27495 Filed 11–16–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60962; File No. SR–ISE–
2009–86]
mstockstill on DSKH9S0YB1PROD with NOTICES
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2009–95 on the
subject line.
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Add 75 Options Classes to
the Penny Pilot Program as Modified
by Amendment No. 1
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2009–95. This
file number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on October
27, 2009, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission the proposed
rule change as described in Items I, II,
and III below, which items have been
prepared by the self-regulatory
organization. On November 6, 2009, the
Exchange filed Amendment No. 1 to the
proposed rule change.3 The Commission
is publishing this notice, as amended, to
solicit comments on the proposed rule
change from interested persons.
VerDate Nov<24>2008
20:50 Nov 16, 2009
Jkt 220001
November 6, 2009.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE proposes to designate 75
options classes to be added to the pilot
program to quote and to trade certain
options in pennies (the ‘‘Penny Pilot’’)
on November 2, 2009.
31 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 In Amendment No. 1, ISE proposed to correct
a technical error in Section III. The change does not
effect the substance of the proposed rule change.
1 15
PO 00000
Frm 00216
Fmt 4703
Sfmt 4703
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Purpose—ISE proposes to identify the
next 75 options classes to be added to
the Penny Pilot effective November 2,
2009. The Exchange recently filed to
extend and expand the Penny Pilot
through December 31, 2010.4 In that
filing, the Exchange had proposed
expanding the Penny Pilot on a
quarterly basis to add the next 75 most
actively traded multiply listed options
classes based on national average daily
volume for the six months prior to
selection, closing under $200 per share
on the Expiration Friday prior to
expansion, except that the month
immediately preceding their addition to
the Penny Pilot will not be used for the
purpose of the six-month analysis.5
ISE proposes adding the following 75
options classes to the Penny Pilot on
November 2, 2009, based on national
average daily volume from April 1, 2009
through September 30, 2009:
Symbol
ABX ......
AUY ......
AXP ......
BA ........
BBT ......
BBY ......
BP ........
CHK .....
CIT .......
COF .....
CVX ......
DE ........
DOW ....
DRYS ...
EFA ......
ETFC ....
Company name
Barrick Gold Corp
Yamana Gold Inc
American Express Co
Boeing Co/The
BB&T Corp
Best Buy Co Inc
BP PLC
Chesapeake Energy Corp
CIT Group Inc
Capital One Financial Corp
Chevron Corp
Deere & Co
Dow Chemical Co/The
DryShips Inc
iShares MSCI EAFE Index Fund
E*Trade Financial Corp
4 See Securities Exchange Act Release No. 60865
(October 22, 2009) (Notice of Filing and Immediate
Effectiveness of Proposed Rule Change to Expand
the Penny Pilot Program).
5 Index products would be included in the
expansion if the underlying index level was under
200.
E:\FR\FM\17NON1.SGM
17NON1
]]>Agencies
[Federal Register Volume 74, Number 220 (Tuesday, November 17, 2009)]
[Notices]
[Pages 59319-59328]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-27495]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60970; File No. SR-NYSEArca-2009-95]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change Relating to Listing and Trading of Shares of
ETFS Platinum Trust
November 9, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that, on October 20, 2009, NYSE Arca, Inc. (``NYSE Arca'' or
``Exchange'') filed with the
[[Page 59320]]
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I, II, and III below, which Items have
been prepared by the self-regulatory organization. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NYSE Arca, through its wholly-owned subsidiary NYSE Arca Equities,
Inc. (``NYSE Arca Equities''), proposes to list and trade shares of the
ETFS Platinum Trust (the ``Trust'') pursuant to NYSE Arca Equities Rule
8.201. The text of the proposed rule change is available on the
Exchange's Web site at https://www.nyse.com, at the Exchange's principal
office and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade ETFS Platinum Shares
(``Shares'') of the Trust under NYSE Arca Equities Rule 8.201. Under
NYSE Arca Equities Rule 8.201, the Exchange may propose to list and/or
trade pursuant to unlisted trading privileges (``UTP'') ``Commodity-
Based Trust Shares.'' \3\ The Commission has previously approved
listing on the Exchange under NYSE Arca Equities Rule 8.201 of other
issues of Commodity-Based Trust Shares. The Commission has approved
listing on the Exchange of the streetTRACKS Gold Trust and iShares
COMEX Gold Trust.\4\ Prior to their listing on the Exchange, the
Commission approved listing of the streetTRACKS Gold Trust on the New
York Stock Exchange (``NYSE'') and listing of iShares COMEX Gold Trust
on the American Stock Exchange LLC (now known as ``NYSE Amex LLC'').\5\
In addition, the Commission has approved trading of the streetTRACKS
Gold Trust and iShares Silver Trust on the Exchange pursuant to UTP.\6\
The Commission also has approved listing of the iShares Silver Trust on
the Exchange \7\ and, previously, listing of the iShares Silver Trust
on the American Stock Exchange LLC.\8\
---------------------------------------------------------------------------
\3\ Commodity-Based Trust Shares are securities issued by a
trust that represent investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust.
\4\ See Securities Exchange Act Release No. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the streetTRACKS Gold Trust);
Securities Exchange Act Release No. 56041 (July 11, 2007), 72 FR
39114 (July 17, 2007) (SR-NYSEArca-2007-43) (order approving listing
on the Exchange of iShares COMEX Gold Trust).
\5\ See Securities Exchange Act Release No. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of streetTRACKS Gold Trust on NYSE); Securities
Exchange Act Release No. 51058 (January 19, 2005), 70 FR 3749
(January 26, 2005) (SR-Amex-2004-38) (order approving listing of
iShares COMEX Gold Trust on the American Stock Exchange LLC).
\6\ See Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
\7\ See Securities Exchange Act Release Nos. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust).
\8\ See Securities Exchange Act Release No. 53521 (March 20,
2006), 71 FR 14967 (March 24, 2006) (SR-Amex-2005-72) (approving
listing on the American Stock Exchange LLC of the iShares Silver
Trust).
---------------------------------------------------------------------------
The Trust will issue Shares which represent units of fractional
undivided beneficial interest in and ownership of the Trust. The
investment objective of the Trust is for the Shares to reflect the
performance of the price of platinum, less the expenses of the Trust's
operations.\9\
---------------------------------------------------------------------------
\9\ See Amendment No. 2 to the Registration Statement for the
ETFS Platinum Trust on Form S-1, filed with the Commission on
October 20, 2009 (File No. 333-158381) (``Registration Statement'').
The descriptions of the Trust, the Shares and the platinum market
contained herein are based on the Registration Statement.
---------------------------------------------------------------------------
ETFS Services USA LLC is the sponsor of the Trust (``Sponsor''),
The Bank of New York Mellon is the trustee of the Trust (``Trustee'')
,\10\ and HSBC Bank USA, N.A. is the custodian of the Trust
(``Custodian'').\11\
---------------------------------------------------------------------------
\10\ The Trustee is generally responsible for the day-to-day
administration of the Trust, including keeping the Trust's
operational records. The Trustee's principal responsibilities
include (1) transferring the Trust's platinum as needed to pay the
Sponsor's Fee in platinum (platinum transfers are expected to occur
approximately monthly in the ordinary course), (2) valuing the
Trust's platinum and calculating the NAV of the Trust and the NAV
per Share, (3) receiving and processing orders from Authorized
Participants to create and redeem Baskets and coordinating the
processing of such orders with the Custodian and DTC, (4) selling
the Trust's platinum as needed to pay any extraordinary Trust
expenses that are not assumed by the Sponsor, (5) when appropriate,
making distributions of cash or other property to Shareholders, and
(6) receiving and reviewing reports from or on the Custodian's
custody of and transactions in the Trust's platinum.
\11\ The Custodian is responsible for safekeeping for the Trust
platinum deposited with it by Authorized Participants in connection
with the creation of Baskets. The Custodian is also responsible for
selecting the Zurich Sub-Custodians and its other direct sub-
custodians, if any. The Custodian facilitates the transfer of
platinum in and out of the Trust through the unallocated platinum
accounts it will maintain for each Authorized Participant and the
unallocated and allocated platinum accounts it will maintain for the
Trust. The Custodian is responsible for allocating specific plates
or ingots of physical platinum to the Trust's allocated platinum
account. The Custodian will provide the Trustee with regular reports
detailing the platinum transfers in and out of the Trust's
unallocated and allocated platinum accounts and identifying the
platinum plates or ingots held in the Trust's allocated platinum
account.
---------------------------------------------------------------------------
The Exchange represents that the Shares satisfy the requirements of
NYSE Arca Equities Rule 8.201 and thereby qualify for listing on the
Exchange.\12\
---------------------------------------------------------------------------
\12\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Securities Exchange of 1934 (``Act'') (15 U.S.C. 78a),
the Trust relies on the exemption contained in Rule 10A-3(c)(7).
---------------------------------------------------------------------------
Operation of the Platinum Market
According to the Registration Statement, the global trade in
platinum consists of Over-the-Counter (OTC) transactions in spot,
forwards, and options and other derivatives, together with exchange-
traded futures and options. The OTC market trades on a 24-hour per day
continuous basis and accounts for most global platinum trading.
Market makers, as well as others in the OTC market, trade with each
other and with their clients on a principal-to-principal basis. All
risks and issues of credit are between the parties directly involved in
the transaction. Market makers include the market-making members of the
LPPM, the trade association that acts as the coordinator for activities
conducted on behalf of its members and other participants in the LPPM.
The four market-making members of the LPPM are: J.Aron & Company (a
division of Goldman Sachs International), Engelhard Metals Limited,
HSBC Bank USA, N.A. (through its London branch), and Standard Bank. The
OTC market provides a relatively flexible market in terms of quotes,
price, size, destinations for delivery and other factors. Bullion
dealers customize transactions to meet clients' requirements. The OTC
market has no formal structure and no open-outcry meeting place.
[[Page 59321]]
According to the Registration Statement, the main centers of the
OTC market are London, New York, Hong Kong and Zurich. Mining
companies, manufacturers of jewelry and industrial products, together
with investors and speculators, tend to transact their business through
one of these market centers. Centers such as Dubai and several cities
in the Far East also transact substantial OTC market business,
typically involving jewelry and small plates or ingots (1 kilogram or
less) and will hedge their exposure by selling into one of these main
OTC centers. Precious metals dealers have offices around the world and
most of the world's major bullion dealers are either members or
associate members of the London Bullion Market Association and/or the
LPPM. In the OTC market, the standard size of platinum trades between
market makers is 1,000 ounces.
Liquidity in the OTC market can vary from time to time during the
course of the 24-hour trading day. Fluctuations in liquidity are
reflected in adjustments to dealing spreads--the differential between a
dealer's ``buy'' and ``sell'' prices. The period of greatest liquidity
in the platinum market generally occurs at the time of day when trading
in the European time zones overlaps with trading in the United States,
which is when OTC market trading in London, New York and other centers
coincides with futures and options trading on the COMEX. This period
lasts for approximately four hours each New York business day
morning.\13\
---------------------------------------------------------------------------
\13\ The Registration Statement includes a table with data
regarding World Platinum Supply and demand 1998-2008. According to
the Registration Statement, the table illustrates that the platinum
supply over the past ten years has averaged 6.8 million ounces with
the majority of production from South Africa. Production from South
Africa, on average, accounts for approximately 68% of total
production. There is a 20% increase in platinum supply when
comparing the average five-year periods ended 2003 and 2008, at 6.2
million ounces and 7.4 million ounces, respectively. The biggest
source of demand for platinum output from 1998-2008 has come from
the autocatalyst sector, which has accounted for an approximate
average of 44% of all demand. Conversely, the jewelry sector has
seen a continuous decline in demand continually 2002 to 2008. From
2002 levels, 2008 jewelry demand has decreased by 60%. The annual
demand for platinum over the past 10 years has averaged
approximately 7.0 million ounces.
---------------------------------------------------------------------------
The London Platinum Market
According to the Registration Statement, although the market for
physical platinum is distributed globally, most OTC market trades are
cleared through London. In addition to coordinating market activities,
the London Platinum Palladium Market (``LPPM'') acts as the principal
point of contact between the market and its regulators. A primary
function of the LPPM is its involvement in the promotion of refining
standards by maintenance of the ``London/Zurich Good Delivery Lists,''
which are the lists of LPPM accredited melters and assayers of
platinum. The LPPM also coordinates market clearing and vaulting,
promotes good trading practices and develops standard documentation.
Platinum is traded generally on a loco Zurich basis, meaning the
precious metal is physically held in vaults in Zurich or is transferred
into accounts established in Zurich. The basis for settlement and
delivery of a loco Zurich spot trade is payment (generally in U.S.
dollars) two business days after the trade date against delivery.
Delivery of the platinum can either be by physical delivery or through
the clearing systems to an unallocated account.
The unit of trade in London is the troy ounce, whose conversion
between grams is: 1,000 grams is equivalent to 32.1507465 troy ounces,
and one troy ounce is equivalent to 31.1034768 grams. A London/Zurich
good delivery plate or ingot is acceptable for delivery in settlement
of a transaction on the OTC market. Typically referred to as Good
Delivery, a plate or ingot must contain between 32 and 192 troy ounces
of platinum with a minimum fineness (or purity) of 999.5 parts per
1,000 (99.95%), be of good appearance, and be easy to handle and stack.
The platinum content of a platinum plate or ingot is calculated by
multiplying the gross weight (expressed in units of 0.025 troy ounces)
by the fineness of the plate or ingot. A Good Delivery plate or ingot
must also bear the stamp of one of the melters and assayers who are on
the LPPM approved list. Unless otherwise specified, the platinum spot
price always refers to that of Good Delivery Standards. Business is
generally conducted over the phone and through electronic dealing
systems.\14\
---------------------------------------------------------------------------
\14\ Terms relating to the Trust and the Shares referred to, but
not defined, herein are defined in the Registration Statement.
---------------------------------------------------------------------------
Twice daily during London trading hours there is a fix which
provides reference platinum prices for that day's trading. Many long-
term contracts will be priced on the basis of either the morning (AM)
or afternoon (PM) London fix, and market participants will usually
refer to one or the other of these prices when looking for a basis for
valuations. The London fix is the most widely used benchmark for daily
platinum prices and is quoted by various financial information sources.
Formal participation in the London fix is traditionally limited to
four members, each of which is a bullion dealer and a member of the
LPPM. The chairmanship now rotates annually among the four member
firms. The morning session of the fix starts at 9:45 a.m. London time
and the afternoon session starts at 2 p.m. London time. The members of
the LPPM fixing are currently: J.Aron & Company (a division of Goldman
Sachs International), Engelhard Metals Limited, HSBC Bank USA N.A.
(London branch), and Standard Bank London Limited. Any other market
participant wishing to participate in the trading on the fix is
required to do so through one of the four platinum fixing members.
Orders are placed either with one of the four fixing members or
with another precious metals dealer who will then be in contact with a
fixing member during the fixing. The fixing members net-off all orders
when communicating their net interest at the fixing. The fix begins
with the fixing chairman suggesting a ``trying price,'' reflecting the
market price prevailing at the opening of the fix. This is relayed by
the fixing members to their dealing rooms which have direct
communication with all interested parties. Any market participant may
enter the fixing process at any time, or adjust or withdraw his order.
The platinum price is adjusted up or down until all the buy and sell
orders are matched, at which time the price is declared fixed. All
fixing orders are transacted on the basis of this fixed price, which is
instantly relayed to the market through various media. The London fix
is widely viewed as a full and fair representation of all market
interest at the time of the fix.
Futures Exchanges
The most significant platinum futures exchanges are the NYMEX and
the Tokyo Commodity Exchange (TOCOM). The NYMEX is the largest exchange
in the world for trading precious metals futures and options and has
been trading platinum since 1974. The TOCOM has been trading platinum
since 1982. Trading on these exchanges is based on fixed delivery dates
and transaction sizes for the futures and options contracts traded. The
NYMEX operates through a central clearance system. On June 6, 2003,
TOCOM adopted a similar clearance system. In each case, the exchange
acts as a counterparty for each member for clearing purposes.
Market Regulation
The global platinum markets are overseen and regulated by both
governmental and self-regulatory organizations. In addition, certain
trade associations have established rules and protocols for market
practices and
[[Page 59322]]
participants. In the United Kingdom, responsibility for the regulation
of the financial market participants, including the major participating
members of the LPPM, falls under the authority of the Financial
Services Authority (``FSA'') as provided by the Financial Services and
Markets Act 2000 (``FSM Act''). Under this act, all UK-based banks,
together with other investment firms, are subject to a range of
requirements, including fitness and properness, capital adequacy,
liquidity, and systems and controls.
The FSA is responsible for regulating investment products,
including derivatives, and those who deal in investment products.
Regulation of spot, commercial forwards, and deposits of platinum not
covered by the FSM Act is provided for by The London Code of Conduct
for Non-Investment Products, which was established by market
participants in conjunction with the Bank of England.
The TOCOM has authority to perform financial and operational
surveillance on its members' trading activities, scrutinize positions
held by members and large-scale customers, and monitor the price
movements of futures markets by comparing them with cash and other
derivative markets' prices. To act as a Futures Commission Merchant
Broker, a broker must obtain a license from Japan's Ministry of
Economy, Trade and Industry (``METI''), the regulatory authority that
oversees the operations of the TOCOM.
The Trust will not trade in platinum futures contracts on the NYMEX
or on any other futures exchange. The Trust will only take delivery of
physical platinum that complies with the NYMEX platinum delivery rules
or the LPPM platinum delivery rules. Because the Trust will not trade
in platinum futures contracts on any futures exchange, the Trust will
not be regulated by the Commodity Futures Trading Commission (``CFTC'')
under the Commodity Exchange Act \15\ (``CEA'') as a ``commodity
pool,'' and will not be operated by a CFTC-regulated commodity pool
operator. Investors in the Trust will not receive the regulatory
protections afforded to investors in regulated commodity pools, nor may
the NYMEX or any futures exchange enforce its rules with respect to the
Trust's activities. In addition, investors in the Trust will not
benefit from the protections afforded to investors in platinum futures
contracts on regulated futures exchanges.
---------------------------------------------------------------------------
\15\ 7 U.S.C. 1 et seq.
---------------------------------------------------------------------------
Custody of the Trust's Platinum
Custody of the physical platinum deposited with and held by the
Trust will be provided by the Custodian at its London, England vaults,
by Zurich Sub-Custodians selected by the Custodian in their Zurich
vaults and by other sub-custodians on a temporary basis only. The
Custodian is a market maker, clearer and approved weigher under the
rules of the LPPM.
The Custodian is the custodian of the physical platinum credited to
the Trust Allocated Account in accordance with the Custody Agreements.
The Custodian will segregate the physical platinum credited to the
Trust Allocated Account from any other precious metal it holds or holds
for others by entering appropriate entries in its books and records,
and will require any Zurich Sub-Custodian it appoints to also segregate
the physical platinum from the other platinum held by them for other
customers of the Custodian and the Zurich Sub-Custodian's other
customers. The Custodian will require any Zurich Sub-Custodian it
appoints to identify in such Zurich Sub-Custodian's books and records
the Trust as having the rights to the physical platinum credited to its
Trust Allocated Account.
The Custodian, as instructed by the Trustee, is authorized to
accept, on behalf of the Trust, deposits of platinum in unallocated
form. Acting on standing instructions specified in the Custody
Agreements, the Custodian will or will require a Zurich Sub-Custodian
to allocate platinum deposited in unallocated form with the Trust by
selecting plates or ingots of physical platinum for deposit to the
Trust Allocated Account. All physical platinum allocated to the Trust
must conform to the rules, regulations, practices and customs of the
LPPM.
The process of withdrawing platinum from the Trust for a redemption
of a Basket will follow the same general procedure as for depositing
platinum with the Trust for a creation of a Basket, only in reverse.
Each transfer of platinum between the Trust Allocated Account and the
Trust Unallocated Account connected with a creation or redemption of a
Basket may result in a small amount of platinum being held in the Trust
Unallocated Account after the completion of the transfer. In making
deposits and withdrawals between the Trust Allocated Account and the
Trust Unallocated Account, the Custodian will use commercially
reasonable efforts to minimize the amount of platinum held in the Trust
Unallocated Account as of the close of each business day and in any
case not to exceed 192 troy ounces of platinum.
According to the Registration Statement, the Trust is not
registered as an investment company under the Investment Company Act of
1940 \16\ and is not required to register under such act. The Trust
will not hold or trade in commodity futures contracts regulated by the
CEA, as administered by the CFTC. The Trust is not a commodity pool for
purposes of the CEA, and neither the Sponsor nor the Trustee is subject
to regulation by the CFTC as a commodity pool operator or a commodity
trading advisor in connection with the Shares.
---------------------------------------------------------------------------
\16\ 15 U.S.C. 80a.
---------------------------------------------------------------------------
Sponsor's Estimate of Expected Size of the Trust
The Sponsor has made representations to the Commission regarding
the expected size of the Trust and the expected impact of the offering
of the Shares on the global platinum market.\17\ In the May 15, 2009
Letter, the Sponsor has stated its expectation that the Trust's assets
under management (``AUM'') would be between $240 million and $480
million after three years of the Trust's operation, and using the
platinum spot market price of $1149.00 per ounce as of May 8, 2009, the
Trust would be expected to be acquiring between approximately 70,000 to
140,000 ounces of platinum on an annual basis.\18\ The Sponsor has
represented that it does not believe that the currently expected size
of the Trust will have a meaningful effect on the global supply or
demand for platinum, and that the Trust's highest forecast platinum
acquisitions would represent 2.1% and 2.0%, respectively, of the 10-
year average annual supply and demand for platinum through the end of
2008.\19\ The Sponsor, therefore, has stated its belief that, in view
of the amount of Shares sought to be registered, the Trust believes
there will be a market neutral impact given that the Shares can be a
current source of supply at then current prices through
redemptions.\20\
---------------------------------------------------------------------------
\17\ See Supplemental Comment Response regarding the Trust,
dated May 15, 2009, from Peter J. Shea, Katten Muchin Rosenman LLP,
to the Commission (submitted via EDGAR) (``May 15, 2009 Letter'').
\18\ The Exchange notes that ETF Securities Ltd., the Sponsor's
parent entity, has sponsored ETFS Platinum ETP, traded on the London
Stock Exchange (ticker symbol: PHPT), which had AUM of approximately
$347.8 million as of May 8, 2009.
\19\ See note 13, supra.
\20\ The Sponsor states that it intends to recast its analysis
each time it seeks to register additional Shares of the Trust in the
future to ensure that additional Trust offerings will not be
disruptive to platinum supply and demand. May 15, 2009 Letter at p.
4. As stated in the May 15, 2009 Letter, the Registration Statement
seeks to register 4,780,000 Shares, and that, at an estimated
platinum acquisition rate of 140,000 ounces per year, the Trust
would complete its Share offering in approximately 3.4 years.
---------------------------------------------------------------------------
[[Page 59323]]
In the May 15, 2009 Letter, the Sponsor also states that it expects
that the offering of the Shares will not have a meaningful impact on
the global platinum market, founded on the Sponsor's belief that the
present Share offering is limited to an appropriate size and that
arbitrage opportunities between platinum market prices and the Trust's
net asset value together with the low cost creation and redemption
process utilizing physical metal will neutralize any impact of the
Trust on the broader platinum market.\21\
---------------------------------------------------------------------------
\21\ May 15, 2009 Letter at p. 5.
---------------------------------------------------------------------------
According to the Registration Statement, since there is no limit on
the amount of platinum that the Trust may acquire, the Trust, as it
grows, may have an impact on the supply and demand of platinum that
ultimately may affect the price of the Shares in a manner unrelated to
other factors affecting the global market for platinum.
Secondary Market Trading
While the Trust's investment objective is for the Shares to reflect
the performance of platinum, less the expenses of the Trust, the Shares
may trade in the secondary market on the NYSE Arca at prices that are
lower or higher relative to their net asset value (``NAV'') per Share.
The amount of the discount or premium in the trading price relative to
the NAV per Share may be influenced by non-concurrent trading hours
between the NYSE Arca and the NYMEX and London. While the Shares will
trade on the NYSE Arca until 8 PM New York time, liquidity in the
global platinum market will be reduced after the close of the NYMEX at
1:05 PM New York time. As a result, during this time, trading spreads,
and the resulting premium or discount, on the Shares may widen.
Trust Expenses
The Trust's only ordinary recurring expense is expected to be equal
to the Sponsor's Fee. In exchange for the Sponsor's Fee, the Sponsor
has agreed to assume the following administrative and marketing
expenses incurred by the Trust: the Trustee's monthly fee and out-of-
pocket expenses, the Custodian's fee, Exchange listing fees, SEC
registration fees, printing and mailing costs, audit fees and up to
$100,000 per annum in legal expenses. The Sponsor will also pay the
costs of the Trust's organization and the initial sale of the Shares,
including the applicable SEC registration fees.
The Sponsor's Fee will accrue daily at an annualized rate equal to
a specified percentage of the adjusted net asset value of the Trust and
will be payable monthly in arrears. The Sponsor, from time to time, may
temporarily waive all or a portion of the Sponsor's Fee at its
discretion for a stated period of time.
The Trust will deliver platinum to the Sponsor to pay the Sponsor's
Fee and sell platinum to raise the funds needed for the payment of all
Trust expenses not assumed by the Sponsor. The purchase price received
as consideration for such sales will be the Trust's sole source of
funds to cover its liabilities. The Trust will not engage in any
activity designed to derive a profit from changes in the price of
platinum. Platinum not needed to redeem Baskets, or to cover the
Sponsor's Fee and Trust expenses not assumed by the Trustee, will be
held in physical form by the Custodian (except for residual amounts not
exceeding 192 ounces of platinum, the maximum weight to make one Good
Delivery plate or ingot, which will be held in unallocated form by the
Custodian on behalf of the Trust). As a result of the recurring
deliveries of platinum necessary to pay the Sponsor's Fee in-kind and
potential sales of platinum to pay in cash the Trust expenses not
assumed by the Sponsor, the net asset value of the Trust and,
correspondingly, the fractional amount of physical platinum represented
by each Share will decrease over the life of the Trust.\22\
---------------------------------------------------------------------------
\22\ See e-mail from Michael Cavalier, Chief Counsel, NYSE
Euronext, to David Liu, Assistant Director, Christopher W. Chow,
Special Counsel, and Andrew Madar, Special Counsel, Commission,
dated November 9, 2009.
---------------------------------------------------------------------------
Creation and Redemption of Shares
The Trust will create and redeem Shares in one or more Baskets (a
Basket equals a block of 50,000 Shares). The creation and redemption of
Baskets will only be made ``in-kind'' in exchange for the delivery to
the Trust or the distribution by the Trust of the amount of platinum
and any cash represented by the Baskets being created or redeemed, the
amount of which will be based on the combined NAV of the number of
Shares included in the Baskets being created or redeemed determined on
the day the order to create or redeem Baskets is properly received. The
creation and redemption of Baskets may occur daily.
Authorized Participants are the only persons that may place orders
to create and redeem Baskets.\23\ Authorized Participants will pay a
transaction fee of $500 to the Trustee for each order they place to
create or redeem one or more Baskets. Authorized Participants who make
deposits with the Trust in exchange for Baskets will receive no fees,
commissions or other form of compensation or inducement of any kind
from either the Sponsor or the Trust, and no such person has any
obligation or responsibility to the Sponsor or the Trust to effect any
sale or resale of Shares.
---------------------------------------------------------------------------
\23\ Authorized Participants must be (1) registered broker-
dealers or other securities market participants, such as banks and
other financial institutions that are exempt from registration as
broker-dealers to engage in securities transactions, and (2)
participants in DTC. To become an Authorized Participant, a person
must enter into an Authorized Participant Agreement with the Sponsor
and the Trustee. The Authorized Participant Agreement provides the
procedures for the creation and redemption of Baskets and for the
delivery of the platinum and any cash required for such creations
and redemptions.
---------------------------------------------------------------------------
According to the Registration Statement, certain Authorized
Participants are expected to have the facility to participate directly
in the physical platinum market and the platinum futures market. In
some cases, an Authorized Participant may from time to time acquire
platinum from or sell platinum to its affiliated platinum trading desk,
which may profit in these instances. Each Authorized Participant will
have its own set of rules and procedures, internal controls and
information barriers as it determines is appropriate in light of its
own regulatory regime.
Shareholders who are not Authorized Participants will only be able
to redeem their Shares through an Authorized Participant.
All platinum will be delivered to the Trust and distributed by the
Trust in unallocated form through credits and debits between Authorized
Participant Unallocated Accounts and the Trust Unallocated Account.
Platinum transferred from an Authorized Participant Unallocated Account
to the Trust in unallocated form will first be credited to the Trust
Unallocated Account. Thereafter, the Custodian will allocate specific
plates or ingots of platinum representing the amount of platinum
credited to the Trust Unallocated Account (to the extent such amount is
representable by whole platinum plates or ingots) to the Trust
Allocated Account. The movement of platinum is reversed for the
distribution of platinum to an Authorized Participant in connection
with the redemption of Baskets.
All physical platinum represented by a credit to any Authorized
Participant Unallocated Account and to the Trust Unallocated Account
and all physical platinum held in the Trust Allocated Account with the
Custodian must be of at least a minimum fineness (or purity) of 999.5
parts per 1,000 (99.95%) and otherwise conform to the rules,
[[Page 59324]]
regulations practices and customs of the LPPM, including the
specifications for a Good Delivery plate or ingot.
Creation Procedures
On any business day, an Authorized Participant may place an order
with the Trustee to create one or more Baskets. Creation and redemption
orders will be accepted on ``business days'' when the NYSE Arca is open
for regular trading. Settlements of such orders requiring receipt or
delivery, or confirmation of receipt or delivery, of platinum in the
United Kingdom, Zurich or another jurisdiction will occur on ``business
days'' when (1) banks in the United Kingdom, Zurich or such other
jurisdiction and (2) the London/Zurich or such other platinum markets
are regularly open for business. If such banks or the London/Zurich
platinum markets are not open for regular business for a full day, such
a day will only be a ``business day'' for settlement purposes if the
settlement procedures can be completed by the end of such day.
Settlement of platinum deliveries, which occur loco Zurich, may be
delayed for longer than three business days. Settlement of orders
requiring receipt or delivery, or confirmation of receipt or delivery,
of Shares will occur, after confirmation of the applicable platinum
delivery, on ``business days'' when the NYSE Arca is open for regular
trading. Purchase orders must be placed by 4 p.m. New York time or the
close of regular trading on the NYSE Arca, whichever is earlier. The
day on which the Trustee receives a valid purchase order is the
purchase order date.
By placing a purchase order, an Authorized Participant agrees to
deposit platinum with the Trust, or a combination of platinum and cash,
as described below. Prior to the delivery of Baskets for a purchase
order, the Authorized Participant must also have wired to the Trustee
the non-refundable transaction fee due for the purchase order.
Determination of Required Deposits
The total deposit required to create each Basket (``Creation Basket
Deposit'') will be an amount of platinum and cash, if any, that is in
the same proportion to the total assets of the Trust (net of estimated
accrued but unpaid fees, expenses and other liabilities) on the date
the order to purchase is properly received as the number of Shares to
be created under the purchase order is in proportion to the total
number of Shares outstanding on the date the order is received. The
Sponsor anticipates that in the ordinary course of the Trust's
operations a cash deposit will not be required for the creation of
Baskets.
The amount of the required platinum deposit is determined by
dividing the number of ounces of platinum held by the Trust by the
number of Baskets outstanding, as adjusted for estimated accrued but
unpaid fees and expenses as described in the next paragraph.
The amount of any required cash deposit is determined as follows.
The estimated unpaid fees, expenses and liabilities of the Trust
accrued through the purchase order date are subtracted from any cash
held or receivable by the Trust as of the purchase order date. The
remaining amount is divided by the number of Shares outstanding
immediately before the purchase order date and then multiplied by the
number of Shares being created pursuant to the purchase order. If the
resulting amount is positive, this amount is the required cash deposit.
If the resulting amount is negative, the amount of the required
platinum deposit will be reduced by the number of fine ounces of
platinum equal in value to that resulting amount, determined at the
price of platinum used in calculating the NAV of the Trust on the
purchase order date. Fractions of a fine ounce of platinum smaller than
0.001 of a fine ounce which are included in the platinum deposit amount
are disregarded. All questions as to the composition of a Creation
Basket Deposit will be finally determined by the Trustee. The Trustee's
determination of the Creation Basket Deposit shall be final and binding
on all persons interested in the Trust.
Delivery of Required Deposits
An Authorized Participant who places a purchase order is
responsible for crediting its Authorized Participant Unallocated
Account with the required platinum deposit amount by the third business
day in Zurich following the purchase order date. Upon receipt of the
platinum deposit amount, the Custodian, after receiving appropriate
instructions from the Authorized Participant and the Trustee, will
transfer on the third business day following the purchase order date
the platinum deposit amount from the Authorized Participant Unallocated
Account to the Trust Unallocated Account and the Trustee will direct
DTC to credit the number of Baskets ordered to the Authorized
Participant's DTC account. The expense and risk of delivery, ownership
and safekeeping of platinum until such platinum has been received by
the Trust shall be borne solely by the Authorized Participant. The
Trustee may accept delivery of platinum by such other means as the
Sponsor, from time to time, may determine to be acceptable for the
Trust, provided that the same is disclosed in a Trust prospectus. If
platinum is to be delivered other than as described above, the Sponsor
is authorized to establish such procedures and to appoint such
custodians and establish such custody accounts in addition to those
described in this prospectus, as the Sponsor determines to be
desirable.
Acting on standing instructions given by the Trustee, the Custodian
will transfer the platinum deposit amount from the Trust Unallocated
Account to the Trust Allocated Account by transferring platinum plates
and ingots from its inventory to the Trust Allocated Account. The
Custodian will use commercially reasonable efforts to complete the
transfer of platinum to the Trust Allocated Account prior to the time
by which the Trustee is to credit the Basket to the Authorized
Participant's DTC account; if, however, such transfers have not been
completed by such time, the number of Baskets ordered will be delivered
against receipt of the platinum deposit amount in the Trust Unallocated
Account, and all Shareholders will be exposed to the risks of
unallocated platinum to the extent of that platinum deposit amount
until the Custodian completes the allocation process.
The Trustee may reject a purchase order or a Creation Basket
Deposit if such order or Creation Basket Deposit if [sic] not presented
in proper form as described in the Authorized Participant Agreement or
if the fulfillment of the order, in the opinion of counsel, might be
unlawful.
Redemption Procedures
According to the Registration Statement, the procedures by which an
Authorized Participant can redeem one or more Baskets will mirror the
procedures for the creation of Baskets. On any business day, an
Authorized Participant may place an order with the Trustee to redeem
one or more Baskets. Redemption orders must be placed by 4 PM New York
time or the close of regular trading on the NYSE Arca, whichever is
earlier. A redemption order so received is effective on the date it is
received in satisfactory form by the Trustee. The redemption procedures
allow Authorized Participants to redeem Baskets and do not entitle an
individual Shareholder to redeem any Shares in an amount less than a
Basket, or to redeem Baskets other than through an Authorized
Participant.
By placing a redemption order, an Authorized Participant agrees to
deliver the Baskets to be redeemed through DTC's book-entry system to
the Trust not later than the third business day following the effective
date of the
[[Page 59325]]
redemption order. Prior to the delivery of the redemption distribution
for a redemption order, the Authorized Participant must also have wired
to the Trustee the non-refundable transaction fee due for the
redemption order.
Determination of Redemption Distribution
The redemption distribution from the Trust will consist of (1) a
credit to the redeeming Authorized Participant's Authorized Participant
Unallocated Account representing the amount of the platinum held by the
Trust evidenced by the Shares being redeemed plus or minus (2) the cash
redemption amount. The cash redemption amount is equal to the value of
all assets of the Trust other than platinum less all estimated accrued
but unpaid expenses and other liabilities, divided by the number of
Baskets outstanding and multiplied by the number of Baskets included in
the Authorized Participant's redemption order. The Trustee will
distribute any positive cash redemption amount through DTC to the
account of the Authorized Participant as recorded on DTC's book entry
system. If the cash redemption amount is negative, the credit to the
Authorized Participant Unallocated Account will be reduced by the
number of ounces of platinum equal in value to the negative cash
redemption amount, determined at the price of platinum used in
calculating the NAV of the Trust on the redemption order date. The
Sponsor anticipates that in the ordinary course of the Trust's
operations there will be no cash distributions made to Authorized
Participants upon redemptions. Fractions of a fine ounce of platinum
included in the redemption distribution smaller than 0.001 of a fine
ounce are disregarded. Redemption distributions will be subject to the
deduction of any applicable tax or other governmental charges which may
be due.
Delivery of Redemption Distribution
The redemption distribution due from the Trust will be delivered to
the Authorized Participant on the third business day following the
redemption order date if, by 9 a.m. New York time on such third
business day, the Trustee's DTC account has been credited with the
Baskets to be redeemed. Terms relating to the Trust and the Shares
referred to, but not defined, herein are defined in the Registration
Statement.
The Custodian will transfer the redemption platinum amount from the
Trust Allocated Account to the Trust Unallocated Account and,
thereafter, to the redeeming Authorized Participant's Authorized
Participant Unallocated Account.
The Trustee may, in its discretion, and will when directed by the
Sponsor, suspend the right of redemption, or postpone the redemption
settlement date, (1) for any period during which the NYSE Arca is
closed other than customary weekend or holiday closings, or trading on
the NYSE Arca is suspended or restricted or (2) for any period during
which an emergency exists as a result of which delivery, disposal or
evaluation of platinum is not reasonably practicable.
The Trustee will reject a redemption order if the order is not in
proper form as described in the Authorized Participant Agreement or if
the fulfillment of the order, in the opinion of its counsel, might be
unlawful.
Creation and Redemption Transaction Fee
To defray the costs incurred by the Trustee in providing services
for processing the creation and redemption of Baskets, an Authorized
Participant will be required to pay a transaction fee to the Trustee of
$500 per order to create or redeem Baskets. An order may include
multiple Baskets. The transaction fee may be reduced, increased or
otherwise changed by the Trustee with the consent of the Sponsor. The
Trustee shall notify DTC of any agreement to change the transaction fee
and will not implement any increase in the fee for the redemption of
Baskets until 30 days after the date of the notice.
Termination Events
The Trustee will terminate and liquidate the Trust if the aggregate
market capitalization of the Trust, based on the closing price for the
Shares, was less than $350 million (as adjusted for inflation) at any
time after the first anniversary after the Trust's formation and the
Trustee receives, within six months after the last of those trading
days, notice from the Sponsor of its decision to terminate the Trust.
The Trustee will terminate the Trust if the CFTC determines that the
Trust is a commodities pool under the CEA. The Trustee may also
terminate the Trust upon the agreement of the owners of beneficial
interests in the Shares (``Shareholders'') owning at least 75% of the
outstanding Shares.
Additional information regarding the Shares and the operation of
the Trust, including termination events, risks, and creation and
redemption procedures, are described in the Registration Statement.
Valuation of Platinum, Definition of Net Asset Value and Adjusted
Net Asset Value (``ANAV'')
As of the London PM Fix on each day that the NYSE Arca is open for
regular trading or, if there is no London PM Fix on such day or the
London PM Fix has not been announced by 12 noon New York time on such
day, as of 12 noon New York time on such day (Evaluation Time), the
Trustee will evaluate the platinum held by the Trust and determine both
the ANAV and the NAV of the Trust.
At the Evaluation Time, the Trustee will value the Trust's platinum
on the basis of that day's London PM Fix or, if no London PM Fix is
made on such day or has not been announced by the Evaluation Time, the
next most recent London platinum price fix (AM or PM) determined prior
to the Evaluation Time will be used, unless the Sponsor determines that
such price is inappropriate as a basis for evaluation. In the event the
Sponsor determines that the London PM Fix or such other publicly
available price as the Sponsor may deem fairly represents the
commercial value of the Trust's platinum is not an appropriate basis
for evaluation of the Trust's platinum, it shall identify an
alternative basis for such evaluation to be employed by the Trustee.
Neither the Trustee nor the Sponsor shall be liable to any person for
the determination that the London PM Fix or last prior London platinum
price fix is not appropriate as a basis for evaluation of the Trust's
platinum or for any determination as to the alternative basis for such
evaluation provided that such determination is made in good faith.\24\
---------------------------------------------------------------------------
\24\ The Exchange, pursuant to NYSE Arca Equities Rule 7.12, has
the discretion to halt trading in the Shares if the London Fix is
not determined or available for an extended period based on
extraordinary circumstances or market conditions.
---------------------------------------------------------------------------
Once the value of the platinum has been determined, the Trustee
will subtract all estimated accrued but unpaid fees, expenses and other
liabilities of the Trust from the total value of the platinum and all
other assets of the Trust (other than any amounts credited to the
Trust's reserve account, if established). The resulting figure is the
ANAV of the Trust. The ANAV of the Trust is used to compute the
Sponsor's Fee.
To determine the Trust's NAV, the Trustee will subtract the amount
of estimated accrued but unpaid fees computed by reference to the ANAV
of the Trust and to the value of the platinum held by the Trust from
the ANAV of the Trust. The resulting figure is the NAV of the Trust.
The Trustee will also determine the NAV per Share by dividing the NAV
of the Trust by the number of the Shares outstanding as of the close of
trading on the NYSE Arca (which includes the net number of any Shares
created or redeemed on such evaluation day).
[[Page 59326]]
The NAV of the Trust is the aggregate value of the Trust's assets
less its liabilities (which include estimated accrued but unpaid fees
and expenses). In determining the NAV of the Trust, the Trustee will
value the platinum held by the Trust on the basis of the price of an
ounce of platinum as set by the afternoon session of the twice daily
fix of the price of an ounce of platinum which starts at 2 p.m. London,
England time (London PM Fix) and is performed by the four members of
the London Platinum and Palladium Market (LPPM). The Trustee will
determine the NAV of the Trust on each day the NYSE Arca is open for
regular trading, at the earlier of the London PM Fix for the day or 12
noon New York time. If no London PM Fix is made on a particular
evaluation day or has not been announced by 12 noon New York time on a
particular evaluation day, the next most recent London platinum price
fix (AM or PM) will be used in the determination of the NAV of the
Trust, unless the Sponsor determines that such price is inappropriate
to use as basis for such determination.
The Shares will be book-entry only and individual certificates will
not be issued for the Shares.
Liquidity
The Shares may trade at, above or below the NAV per Share. The NAV
per Share will fluctuate with changes in the market value of the
Trust's assets. The trading price of the Shares will fluctuate in
accordance with changes in the NAV per Share as well as market supply
and demand. The amount of the discount or premium in the trading price
relative to the NAV per Share may be influenced by non-concurrent
trading hours between the NYSE Arca and the major platinum markets.
While the Shares will trade on the NYSE Arca until 8 p.m. New York
time, liquidity in the market for platinum will be reduced after the
close of the major world platinum markets, including London and the
NYMEX. As a result, during this time, trading spreads, and the
resulting premium or discount, on the Shares may widen.
Availability of Information Regarding Platinum Prices
Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity, such as platinum, over
the Consolidated Tape. However, there will be disseminated over the
Consolidated Tape the last sale price for the Shares, as is the case
for all equity securities traded on the Exchange (including exchange-
traded funds). In addition, there is a considerable amount of platinum
price and platinum market information available on public Web sites and
through professional and subscription services.
Investors may obtain on a 24-hour basis platinum pricing
information based on the spot price for an ounce of platinum from
various financial information service providers, such as Reuters and
Bloomberg. Reuters and Bloomberg provide at no charge on their Web
sites delayed information regarding the spot price of platinum and last
sale prices of platinum futures, as well as information about news and
developments in the platinum market. Reuters and Bloomberg also offer a
professional service to subscribers for a fee that provides information
on platinum prices directly from market participants. An organization
named EBS provides an electronic trading platform to institutions such
as bullion banks and dealers for the trading of spot platinum, as well
as a feed of live streaming prices to Reuters and Moneyline Telerate
subscribers. Complete real-time data for platinum futures and options
prices traded on the NYMEX are available by subscription from Reuters
and Bloomberg. The NYMEX also provides delayed futures and options
information on current and past trading sessions and market news free
of charge on its Web site. There are a variety of other public Web
sites providing information on platinum, ranging from those
specializing in precious metals to sites maintained by major
newspapers, such as The Wall Street Journal. In addition, the London AM
Fix and London PM Fix are publicly available at no charge at https://www.lbma.org.uk/statistics_current.htm or https://www.thebulliondesk.com.
The Trust Web site will provide an intraday indicative value
(``IIV'') per share for the Shares, updated at least every 15 seconds,
as calculated by the Exchange or a third party financial data provider,
during the Exchange's Core Trading Session (9:30 a.m. to 4 p.m., New
York time). The IIV is calculated by multiplying the indicative spot
price of platinum by the quantity of platinum backing each Share. The
Trust Web site will also provide the NAV of the Trust as calculated
each business day by the Sponsor. In addition, the Web site for the
Trust will contain the following information, on a per Share basis, for
the Trust: (a) the NAV as of the close of the prior business day and
the mid-point of the bid-ask price \25\ at the close of trading in
relation to such NAV (``Bid/Ask Price''), and a calculation of the
premium or discount of such price against such NAV; and (b) data in
chart format displaying the frequency distribution of discounts and
premiums of the Bid/Ask Price against the NAV, within appropriate
ranges, for each of the four previous calendar quarters. The Web site
for the Trust will also provide the following information: the Creation
Basket Deposit, the Trust's prospectus, and the two most recent reports
to stockholders. Finally, the Trust Web site will also provide the last
sale price of the Shares as traded in the US market. The Exchange will
provide on its Web site (https://www.nyx.com) a link to the Trust's Web
site. In addition, the Exchange will make available over the
Consolidated Tape quotation information, trading volume, closing prices
and NAV for the Shares from the previous day.
---------------------------------------------------------------------------
\25\ The bid-ask price of the Trust is determined using the
highest bid and lowest offer on the Consolidated Tape as of the time
of calculation of the closing day NAV.
---------------------------------------------------------------------------
Criteria for Initial and Continued Listing
The Trust will be subject to the criteria in NYSE Arca Equities
Rule 8.201(e) for initial and continued listing of the Shares.
A minimum of 100,000 Shares will be required to be outstanding at
the start of trading.\26\ The minimum number of shares required to be
outstanding is comparable to requirements that have been applied to
previously listed shares of the streetTRACKS Gold Trust, the iShares
COMEX Gold Trust, the iShares Silver Trust and exchange-traded funds.
It is anticipated that the initial price of a Share will be
approximately $110.00. The Exchange believes that the anticipated
minimum number of Shares outstanding at the start of trading is
sufficient to provide adequate market liquidity.
---------------------------------------------------------------------------
\26\ See e-mail from Michael Cavalier, Chief Counsel, NYSE
Euronext, to David Liu, Assistant Director, Christopher W. Chow,
Special Counsel, and Andrew Madar, Special Counsel, Commission,
dated November 9, 2009.
---------------------------------------------------------------------------
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Fund subject to the Exchange's existing rules
governing the trading of equity securities. Trading in the Shares on
the Exchange will occur in accordance with NYSE Arca Equities Rule
7.34(a). The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions. The minimum trading
increment for Shares on the Exchange will be $0.01.
Further, NYSE Arca Equities Rule 8.201 sets forth certain
restrictions on ETP Holders acting as registered Market Makers in the
Shares to facilitate
[[Page 59327]]
surveillance. Pursuant to NYSE Arca Equities Rule 8.201(h), an ETP
Holder acting as a registered Market Maker in the Shares is required to
provide the Exchange with information relating to its trading in the
underlying platinum, related futures or options on futures, or any
other related derivatives. NYSE Arca Equities Rule 8.201(i) prohibits
an ETP Holder acting as a registered Market Maker in the Shares from
using any material nonpublic information received from any person
associated with an ETP Holder or employee of such person regarding
trading by such person or employee in the underlying platinum, related
futures or options on futures or any other related derivative
(including the Shares).
As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder, as well as a subsidiary or
affiliate of an ETP Holder that is in the securities business. A
subsidiary or affiliate of an ETP Holder that does business only in
commodities or futures contracts would not be subject to Exchange
jurisdiction, but the Exchange could obtain information regarding the
activities of such subsidiary or affiliate through surveillance sharing
agreements with regulatory organizations of which such subsidiary or
affiliate is a member.
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) the extent to which conditions in the underlying platinum
market have caused disruptions and/or lack of trading, or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present. In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\27\
---------------------------------------------------------------------------
\27\ See NYSE Arca Equities Rule 7.12.
---------------------------------------------------------------------------
Surveillance
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products (including Commodity-Based
Trust Shares) to monitor trading in the Shares. The Exchange represents
that these procedures are adequate to properly monitor Exchange trading
of the Shares in all trading sessions and to deter and detect
violations of Exchange rules and applicable federal securities laws.
The Exchange's current trading surveillance focuses on detecting
securities trading outside their normal patterns. When such situations
are detected, surveillance analysis follows and investigations are
opened, where appropriate, to review the behavior of all relevant
parties for all relevant trading violations. Also, pursuant to NYSE
Arca Equities Rule 8.201(h), the Exchange is able to obtain information
regarding trading in the Shares and the underlying platinum, platinum
futures contracts, options on platinum futures, or any other platinum
derivative, through ETP Holders acting as registered Market Makers, in
connection with such ETP Holders' proprietary or customer trades which
they effect on any relevant market. In addition, the Exchange may
obtain trading information via the Intermarket Surveillance Group
(``ISG'') from other exchanges who are members of the ISG.\28\ NYMEX is
an ISG member.
---------------------------------------------------------------------------
\28\ A list of ISG members is available at https://www.isgportal.org. The Exchange notes that TOCOM is not an ISG
member and the Exchange does not have in place a comprehensive
surveillance sharing agreement with such market. In addition, the
Exchange does not have access to information regarding platinum-
related OTC transactions in spot, forwards, options or other
derivatives.
---------------------------------------------------------------------------
Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Shares in Baskets (including noting that
Shares are not individually redeemable); (2) NYSE Arca Equities Rule
9.2(a), which imposes a duty of due diligence on its ETP Holders to
learn the essential facts relating to every customer prior to trading
the Shares; (3) how information regarding the IIV is disseminated; (4)
the requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; (5) the possibility that trading spreads
and the resulting premium or discount on the Shares may widen as a
result of reduced liquidity of platinum trading during the Core and
Late Trading Sessions after the close of the major world platinum
markets; and (6) trading information. For example, the Information
Bulletin will advise ETP Holders, prior to the commencement of trading,
of the prospectus delivery requirements applicable to the Trust. The
Exchange notes that investors purchasing Shares directly from the Trust
(by delivery of the Creation Basket Deposit) will receive a prospectus.
ETP Holders purchasing Shares from the Trust for resale to investors
will deliver a prospectus to such investors.
In addition, the Information Bulletin will reference that the Trust
is subject to various fees and expenses described in the Registration
Statement. The Information Bulletin will also reference the fact that
there is no regulated source of last sale information regarding
physical platinum, that the Commission has no jurisdiction over the
trading of platinum as a physical commodity, and that the CFTC has
regulatory jurisdiction over the trading of platinum futures contracts
and options on platinum futures contracts.
The Information Bulletin will also discuss any relief, if granted,
b
