Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change for the Listing and Trading of Sprott Physical Gold Trust, 170-175 [E9-31162]
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Federal Register / Vol. 75, No. 1 / Monday, January 4, 2010 / Notices
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,14 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
Section, 100 F Street, NE., Washington,
DC 20549–1090, on official business
days between the hours of 10 a.m. and
3 p.m. Copies of the filing will also 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–NYSE–2009–126 and
should be submitted on or before
January 25, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–31161 Filed 12–31–09; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–61236; File No. SR–
NYSEArca–2009–113]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change for the Listing and
Trading of Sprott Physical Gold Trust
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December 23, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on December
15, 2009, NYSE Arca, Inc. (‘‘NYSE
Arca’’ or the ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
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I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
NYSE Arca, Inc. (‘‘Exchange’’),
through its wholly-owned subsidiary
NYSE Arca Equities, Inc. (‘‘NYSE Arca
Equities’’), proposes to list and trade
units 4 of the Sprott Physical Gold 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
SECURITIES AND EXCHANGE
COMMISSION
14 The text of the proposed rule change is
available on the Commission’s Web site at https://
www.sec.gov.
15 17 CFR 200.30–3(a)(12).
1 15 U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
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. Purpose
The Exchange proposes to list and
trade units (‘‘Units’’) 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.’’ 5 The Commission has
previously approved listing on the
Exchange under NYSE Arca Equities
Rule 5.2(j)(6) and 8.201, respectively,
shares of the streetTRACKS Gold Trust
and iShares COMEX Gold Trust.6 Prior
4 Each unit represents an equal, fractional,
undivided ownership interest in the net assets of
the Trust attributable to the particular class of units.
5 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.
6 See Securities Exchange Act Release No. 56224
(August 8, 2007), 72 FR 45850 (August 15, 2007)
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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.7 In
addition, the Commission has approved
trading of the streetTRACKS Gold Trust
and iShares Silver Trust and [sic] on the
Exchange pursuant to UTP.8 The
Commission also has approved listing of
the iShares Silver Trust on the
Exchange 9 and, previously, listing of
the iShares Silver Trust on the
American Stock Exchange LLC (now
known as ‘‘NYSE Amex LLC’’).10
Further, the Commission has also
approved listing on the Exchange under
NYSE Arca Equities Rule 8.201 shares of
ETFS Silver Trust 11 and ETFS Gold
Trust.12
Sprott Asset Management LP is the
sponsor or manager of the Trust (the
‘‘Sponsor’’ or the ‘‘Manager’’,13 as the
case may be), RBC Dexia Investor
Services Trust is the trustee of the Trust
(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).
7 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).
8 See Securities Exchange Act Release No. 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); Securities Exchange Act Release No. 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).
9 See Securities Exchange Act Release No. 58956
(November 14, 2008), 73 FR 71074 (November 24,
2008) (SR–NYSEArca–2008–124) (approving listing
on the Exchange of the iShares Silver Trust).
10 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).
11 See Securities Exchange Act Release No. 59781
(April 17, 2009), 74 FR 18771 (April 24, 2009) (SR–
NYSEArca–2009–28) (approving listing on the
Exchange of the ETFS Silver Trust).
12 See Securities Exchange Act Release No. 59895
(May 8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40) (approving listing on the
Exchange of the ETFS Gold Trust).
13 The Manager is a limited partnership existing
under the laws of Ontario, Canada, and acts as
manager of the Trust pursuant to the Trust’s trust
agreement and the management agreement. The
Manager provides management and advisory
services to the Trust. Additional details regarding
the Manager are set forth in the Registration
Statement on Form F–1 for the Sprott Physical Gold
Trust, filed with the Commission on December 9,
2009 (No. 333–163601) (the ‘‘Registration
Statement’’).
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(the ‘‘Trustee’’),14 the Royal Canadian
Mint is the custodian for the physical
gold bullion owned by the Trust (the
‘‘Gold Custodian’’),15 and RBC Dexia
serves as the custodian of the Trust’s
assets other than physical gold bullion
(the ‘‘Non-Gold Custodian’’).16
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Listing Rules
Definition. Rule 8.201(c)(1) defines
Commodity-Based Trust Shares as a
security (a) that is issued by a trust that
holds a specified commodity deposited
with the trust; (b) that is issued by such
trust in a specified aggregate minimum
number in return for a deposit of a
quantity of the underlying commodity;
and (c) that, when aggregated in the
same specified minimum number, may
be redeemed at a holder’s request by
such trust which will deliver to the
redeeming holder the quantity of the
underlying commodity.
The Trust will issue Units, each of
which represents an equal, fractional
undivided ownership interest in the net
assets of the Trust attributable to the
particular class of Units. Except with
respect to cash held by the Trust to pay
expenses and anticipated redemptions,
the Trust expects to own only London
Good Delivery physical gold bullion.
The investment objective of the Trust is
for the Units to reflect the performance
of the price of gold bullion, less the
expenses of the Trust’s operations.17
The Trust is not actively managed and
does not engage in any activities
designed to obtain a profit from, or to
ameliorate losses caused by, changes in
the price of gold bullion. The Trust is
neither an investment company
registered under the Investment
Company Act of 1940 nor a commodity
14 The Trustee holds title to the Trust’s assets on
behalf of the Unitholders and has, together with the
Manager, exclusive authority over the assets and
affairs of the Trust. The Trustee has a fiduciary
responsibility to act in the best interest of the
Unitholders. Additional details regarding the
Trustee are set forth in the Registration Statement.
15 The Gold Custodian will be responsible for and
will bear all risk of the loss of, and damage to, the
Trust’s physical gold bullion that is in its custody,
subject to certain limitations based on events
beyond the Gold Custodian’s control. The Manager,
with the consent of the Trustee, may determine to
change the custodial arrangements of the Trust.
Additional details regarding the Gold Custodian are
set forth in the Registration Statement.
16 The Non-Gold Custodian will be responsible
for and will bear all risk of the loss of, and damage
to, the Trust’s assets (other than physical gold
bullion) that are in its custody, subject to certain
limitations based on events beyond the Non-Gold
Custodian’s control. The Manager, with the consent
of the Trustee, may determine to change the
custodial arrangements of the Trust. Additional
details regarding the Non-Gold Custodian are set
forth in the Registration Statement.
17 The descriptions of the Trust, the Units and the
gold market contained herein are based on the
Registration Statement.
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pool for purposes of the Commodity
Exchange Act.18 The Units will be
issued in an initial public offering. The
Trust may issue additional Units (i) in
future offerings if the gross proceeds
received by the Trust per Unit is not less
than 100% of the most recently
calculated NAV or (ii) by way of a
distribution in Units in connection with
an income distribution. The Trust will
not issue Units on an on-going or daily
basis. At the start of trading the Trust
will issue a minimum of 1,000,000
Units to at least 400 holders
(‘‘Unitholders’’), as further described
below.
The Units will be redeemable
monthly at the option of the holder. The
redemption process is further described
below.
The Exchange represents that the
Units satisfy the remaining
requirements of NYSE Arca Equities
Rule 8.201 and thereby qualify for
listing on the Exchange.19
Operation of the Gold Market
A detailed description of the gold
market is set forth in the Registration
Statement.
Secondary Market Trading and
Liquidity
While the Trust’s investment
objective is for the Units to reflect the
performance of physical gold bullion,
less the expenses of the Trust, the Units
may trade in the secondary market on
the NYSE Arca at prices that are lower
or higher relative to their net asset value
per Unit (‘‘NAV’’). The NAV is expected
to fluctuate with changes in the market
value of the Trust’s assets. The trading
price of the Units will fluctuate in
accordance with changes in the NAV as
well as market supply and demand. The
amount of the discount or premium in
the trading price relative to the NAV
may be influenced by non-concurrent
trading hours between the NYSE Arca
and the COMEX and other major world
gold markets. While the Units will trade
on the NYSE Arca until 4 p.m., New
York time, liquidity in the global gold
market will be reduced after the close of
the major world gold markets, including
London and of the COMEX division of
the New York Mercantile Exchange at
1:30 p.m., New York time. As a result,
18 The Trust does not trade in gold futures
contracts. The Trust takes delivery of physical gold
that complies with certain gold delivery rules.
Because the Trust does not trade in gold futures
contracts on any futures exchange, the Trust is not
regulated as a commodity pool, and is not operated
by a commodity pool operator.
19 With respect to application of Rule 10A–3 (17
CFR 240.10A–3) under the Securities Exchange [sic]
of 1934 (‘‘Act’’) (15 U.S.C. 78a), the Trust relies on
the exemption contained in Rule 10A–3(c)(7).
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171
during this time, trading spreads, and
the resulting premium or discount to the
NAV may widen.
Trust Expenses
The fees and expenses of the Trust are
set forth in detail in the Registration
Statement.
Initial Public Offering and Redemption
of Units
The Trust will offer at a minimum,
1,000,000 Units in its initial public
offering to a minimum of 400
Unitholders. Each Unit will represent an
equal, fractional, undivided ownership
interest in the net assets of the Trust
attributable to the particular class of
Units. It is not currently intended that
the Trust will create additional Units.
Unitholders may redeem their Units
on a monthly basis.
Redemption for Physical Gold
Subject to the terms of the trust
agreement and the Manager’s right to
suspend redemptions under certain
circumstances described in the
registration statement, Units may be
redeemed at the option of a Unitholder
for physical gold bullion in any
calendar month. Units redeemed for
physical gold will be entitled to a
redemption price equal to 100% of the
NAV of the redeemed Units on the last
Business Day, as defined herein, of the
calendar month in which the
redemption request is processed, less
redemption and delivery expenses.
Redemption requests for gold must be
for amounts that are at least equivalent
in value to one London Good Delivery
bar or an integral multiple thereof, plus
applicable expenses. A ‘‘London Good
Delivery bar’’ contains between 350 and
430 troy ounces of gold. Any fractional
amount of redemption proceeds in
excess of one London Good Delivery bar
or an integral multiple thereof will be
paid in cash at a rate equal to 100% of
the NAV of such excess amount. The
ability of a Unitholder to redeem Units
for physical gold bullion may be limited
by the sizes of London Good Delivery
bars held by the Trust at the time of the
redemption. A Unitholder redeeming
Units for gold will be responsible for
expenses incurred by the Trust in
connection with such redemption and
applicable delivery expenses, including
the handling of the notice of
redemption, the delivery of the physical
bullion for units that are being
redeemed and the applicable gold
storage in-and-out fees.
A redemption notice to redeem Units
for physical gold bullion must be
received by the Trust’s transfer agent no
later than 4 p.m. Toronto time, on the
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15th day of the calendar month in
which the redemption notice will be
processed or, if such day is not a day on
which banks located in New York, New
York, are open for the transaction of
banking business (a ‘‘Business Day’’),
then on the immediately following day
that is a Business Day. Any redemption
notice received after such time will be
processed in the next month.
Physical gold bullion received by a
Unitholder as a result of a redemption
of Units will be delivered by armored
transportation service carrier pursuant
to delivery instructions provided by the
Unitholder. The armored transportation
service carrier will be engaged by or on
behalf of the redeeming Unitholder.
Such physical gold bullion can be
delivered (i) To an account established
by the Unitholder at an institution
located in North America authorized to
accept and hold London Good Delivery
bars; (ii) in the United States, to any
physical address (subject to approval by
the armored transportation service
carrier); (iii) in Canada, to any business
address (subject to approval by the
armored transportation service carrier);
and (iv) outside of the United States and
Canada, to any address approved by the
armored transportation service carrier.
Physical gold bullion delivered to an
institution located in North America
authorized to accept and hold London
Good Delivery bars will likely retain its
London Good Delivery status while in
the custody of such institution; physical
gold bullion delivered pursuant to a
Unitholder’s delivery instruction to a
destination other than an institution
located in North America authorized to
accept and hold London Good Delivery
bars will no longer be deemed London
Good Delivery once received by the
Unitholder. The armored transportation
service carrier will receive gold bullion
in connection with a redemption of
Units approximately 10 Business Days
after the end of the month in which the
redemption notice is processed. Any
cash to be received by a redeeming
Unitholder in connection with a
redemption of Units for physical gold
bullion will be delivered to the
Unitholder’s brokerage account within
10 Business Days after the calendar
month in which the redemption is
processed.
Redemption for Cash
Subject to the terms of the trust
agreement and the Manager’s right to
suspend redemptions under certain
circumstances described in the
registration statement, Units may be
redeemed at the option of a Unitholder
for cash on a monthly basis. Units
redeemed for cash will be entitled to a
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redemption price equal to 95% of the
lesser of (i) the volume-weighted
average trading price of the Units traded
on the NYSE Arca or, if trading has been
suspended on NYSE Arca, the trading
price of the units traded on the Toronto
Stock Exchange, for the last five
Business Days of the month in which
the redemption request is processed and
(ii) the NAV of the redeemed Units as
of 4 p.m., Toronto time, on the last
Business Day of such month. Cash
redemption proceeds will be transferred
to a redeeming Unitholder
approximately three Business Days after
the end of the month in which the
redemption notice is processed. See
‘‘Redemption of Units’’ for detailed
terms and conditions relating to the
redemption of Units for cash.
A redemption notice to redeem Units
for cash must be received by the Trust’s
transfer agent no later than 4 p.m..
Toronto time, on the 15th day of the
calendar month in which the
redemption notice will be processed or,
if such day is not a Business Day, then
on the immediately following day that
is a Business Day. Any redemption
notice to redeem Units for cash received
after such time will be processed in the
next month.
Termination Events
The Trust will be terminated in the
event there are no Units outstanding,
the Trustee resigns or is removed and no
successor trustee is appointed by the
Manager by the time the resignation or
removal becomes effective, the Manager
resigns and no successor manager is
appointed by the Manager and approved
by Unitholders by the time the
resignation becomes effective, the
Manager is, in the opinion of the
Trustee, in material default of its
obligations under the trust agreement
and does not cure such default within
a certain time period, the Manager
experiences certain insolvency events or
the assets of the Manager have become
subject to seizure or confiscation by any
public or governmental authority. In
addition, the Manager may, in its
discretion, terminate the Trust, without
Unitholder approval, if, in the opinion
of the Manager, after consulting with the
independent review committee, the
value of net assets of the Trust has been
reduced such that it is no longer
economically feasible to continue the
Trust and it would be in the best
interests of the Unitholders to terminate
the Trust, by giving the Trustee and
each holder of Units at the time at least
90 days’ notice. To the extent such
termination in the discretion of the
Manager may involve a matter that
would be a ‘‘conflict of interest matter’’
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as set forth in applicable Canadian
regulations, the matter will be referred
by the Manager to the independent
review committee established by the
Manager for its recommendation. In
connection with the termination of the
Trust, the Trust shall, to the extent
possible, convert its assets to cash and,
after paying or making adequate
provision for all of the Trust’s liabilities,
distribute the net assets of the Trust to
Unitholders, on a pro rata basis, as soon
as practicable after the termination date.
Additional information regarding the
Units and the operation of the Trust,
including termination events, risks, and
redemption procedures, is described in
the Registration Statement.
Valuation of Gold and Definition of Net
Asset Value
The value of the net assets of the
Trust and the NAV will be determined
daily at 4:00 p.m. (Toronto time) on
each day that is a Business Day, by the
Trust’s valuator, which is RBC Dexia
Investor Services Trust. The value of the
net assets of the Trust as of the
valuation time on any such day shall be
equal to the aggregate fair market value
of the assets of the Trust as of such date,
less an amount equal to the total
liabilities of the Trust (excluding all
liabilities represented by outstanding
Units and deferred taxes) as of such
date. The valuator shall calculate the
NAV by dividing the value of the net
assets of the Trust on that day by the
total number of Units then outstanding
on such day.
The Units will be book-entry only and
individual certificates will not be issued
for the Units (except in connection with
a redemption of Units, during the
process of which redeeming Units will
be certificated and presented for
cancellation as part of the redemption
process).
Availability of Information Regarding
Gold Prices
Currently, the Consolidated Tape Plan
does not provide for dissemination of
the spot price of a commodity, such as
gold, over the Consolidated Tape.
However, there will be disseminated
over the Consolidated Tape the last sale
price for the Units, as is the case for all
equity securities traded on the Exchange
(including exchange-traded funds). In
addition, there is a considerable amount
of gold price and gold market
information available on public Web
sites and through professional and
subscription services.
Investors may obtain on a 24-hour
basis gold pricing information based on
the spot price for an ounce of gold from
various financial information service
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providers, such as Reuters and
Bloomberg. Reuters and Bloomberg
provide at no charge on their Web sites
delayed information regarding the spot
price of gold and last sale prices of gold
futures, as well as information about
news and developments in the gold
market. Reuters and Bloomberg also
offer a professional service to
subscribers for a fee that provides
information on gold 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 gold, as well as a feed of live
streaming prices to Reuters and
Moneyline Telerate subscribers.
Complete real-time data for gold futures
and options prices traded on the
COMEX 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 gold, 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 or [sic]
https://www.thebulliondesk.com.
The Trust Web site will provide an
intraday indicative value (‘‘IIV’’) per
share for the Units, as calculated by 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 will be calculated based
on a price of gold derived from updated
bids and offers indicative of the spot
price of gold.20 In addition, the Web site
for the Trust will contain the following
information, on a per Unit basis, for the
Trust: (a) The mid-point of the bid-ask
price 21 at the close of trading in relation
to the NAV as of the time the NAV is
calculated (‘‘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 Trust’s prospectus, as
well as the two most recent reports to
20 The IIV on a per Unit basis disseminated
during the Core Trading Session should not be
viewed as a real-time update of the NAV, which is
calculated once a day.
21 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.
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stockholders. Finally, the Trust Web site
will provide the last sale price of the
Units as traded in the US market. In
addition, the Exchange will make
available over the Consolidated Tape
quotation information, trading volume,
closing prices and NAV for the Units
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 Units.
A minimum of 1,000,000 22 Units will
be required to be outstanding at the start
of trading.23 The minimum number of
Units required to be outstanding
exceeds the 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.
A minimum of 400 24 Unitholders at the
start of trading.25 Additionally, it is
anticipated that the initial price of a
Unit will be approximately $10.00. The
Exchange believes that the anticipated
minimum number of Units outstanding
at the start of trading is sufficient to
provide adequate market liquidity. The
Trust represented to the Exchange that,
prior to listing, the NAV would be
calculated daily and made available to
all market participants at the same time.
The Trust has also represented to the
Exchange that, prior to listing, the IIV
will be calculated at least every fifteen
seconds and made available to all
market participants at the same time.
Trading Rules
The Exchange deems the Units to be
equity securities and subject to the
Exchange’s existing rules governing the
trading of equity securities. Trading in
the Units 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 Units during all
trading sessions.
Further, NYSE Arca Equities Rule
8.201 sets forth certain restrictions on
ETP Holders acting as registered Market
Makers in the Units to facilitate
surveillance. Pursuant to NYSE Arca
22 The minimum number of Units issued is
comparable to the minimum threshold established
for the issuance of equity linked notes under NYSE
Arca Rule 5.2(j)(2).
23 See e-mail, dated December 23, 2009, from Tim
Malinowski, NYSE Arca, to David Liu, Assistant
Director, Division of Trading and Markets,
Commission.
24 The minimum number of holders is comparable
to the minimum threshold established for the
issuance of equity linked notes under NYSE Arca
Rule 5.2(j)(2).
25 See supra note 23.
PO 00000
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173
Equities Rule 8.201(h), an ETP Holder
acting as a registered Market Maker in
the Units is required to provide the
Exchange with information relating to
its trading in the underlying gold,
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 Units 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 gold,
related futures or options on futures or
any other related derivative (including
the Units).
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 Units.
Trading on the Exchange in the Units
may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Units inadvisable. These may
include: (1) The extent to which
conditions in the underlying gold
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 Units will be subject
to trading halts caused by extraordinary
market volatility pursuant to the
Exchange’s ‘‘circuit breaker’’ rule.26
Surveillance
The Exchange intends to utilize its
existing surveillance procedures
applicable to derivative products
(including Commodity-Based Trust
Shares) to monitor trading in the Units.
The Exchange represents that these
procedures are adequate to properly
monitor Exchange trading of the Units
in all trading sessions and to deter and
26 See
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NYSE Arca Equities Rule 7.12.
04JAN1
174
Federal Register / Vol. 75, No. 1 / Monday, January 4, 2010 / Notices
pwalker on DSK8KYBLC1PROD with NOTICES
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 Units and the
underlying gold, gold futures contracts,
options on gold futures, or any other
gold 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.27
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 Units.
Specifically, the Information Bulletin
will discuss the following: (1) The
procedures for purchases and
redemptions of Units; (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
Units; (3) how information regarding the
IIV is disseminated; (4) the requirement
that ETP Holders deliver a prospectus to
investors purchasing newly issued Units
prior to or concurrently with the
confirmation of a transaction; (5) the
possibility that trading spreads and the
resulting premium or discount on the
Units may widen as a result of reduced
liquidity of gold trading during the Core
and Late Trading Sessions after the
close of the major world gold 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. ETP Holders
purchasing Units from the Trust for
resale to investors will deliver a
prospectus to such investors.
27 A list of ISG members is available at https://
www.ISGPortal.org. The Exchange notes that the
New York Mercantile Exchange, of which the
COMEX is a division, is an ISG member, however,
the TOCOM is not an ISG member and the
Exchange does not have in place a comprehensive
surveillance sharing agreement with such market.
VerDate Nov<24>2008
17:11 Dec 31, 2009
Jkt 220001
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 gold, that the Commission has
no jurisdiction over the trading of gold
as a physical commodity, and that the
CFTC has regulatory jurisdiction over
the trading of gold futures contracts and
options on gold futures contracts.
The Information Bulletin will also
discuss any relief, if granted, by the
Commission or the staff from any rules
under the Act.
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:
Electronic Comments
• Use the Commission’s Internet
2. Statutory Basis
comment form (https://www.sec.gov/
The Exchange believes that the
proposed rule change is consistent with rules/sro.shtml); or
• Send an e-mail to ruleSection 6(b) 28 of the Act, in general, and
comments@sec.gov. Please include File
furthers the objectives of Section
Number SR–NYSEArca–2009–113 on
6(b)(5),29 in particular, because it is
the subject line.
designed to promote just and equitable
principles of trade, to foster cooperation Paper Comments
and coordination with persons engaged
• Send paper comments in triplicate
in facilitating transactions in securities,
to Elizabeth M. Murphy, Secretary,
and to remove impediments and perfect Securities and Exchange Commission,
the mechanisms of a free and open
100 F Street, NE., Washington, DC
market and to protect investors and the
20549–1090.
public interest. The Exchange believes
All submissions should refer to File
that the proposed rule change will
Number SR–NYSEArca–2009–113. This
facilitate the listing and trading of an
file number should be included on the
additional type of commodity-based
subject line if e-mail is used. To help the
product that will enhance competition
Commission process and review your
among market participants, to the
comments more efficiently, please use
benefit of investors and the marketplace. only one method. The Commission will
post all comments on the Commission’s
B. Self-Regulatory Organization’s
Internet Web site (https://www.sec.gov/
Statement on Burden on Competition
rules/sro.shtml). Copies of the
The Exchange does not believe that
submission, all subsequent
the proposed rule change will impose
amendments, all written statements
any burden on competition that is not
with respect to the proposed rule
necessary or appropriate in furtherance
change that are filed with the
of the purposes of the Act.
Commission, and all written
C. Self-Regulatory Organization’s
communications relating to the
Statement on Comments on the
proposed rule change between the
Proposed Rule Change Received From
Commission and any person, other than
Members, Participants or Others
those that may be withheld from the
public in accordance with the
No written comments were solicited
or received with respect to the proposed provisions of 5 U.S.C. 552, will be
available for inspection and copying in
rule change.
the Commission’s Public Reference
III. Date of Effectiveness of the
Room, 100 F Street, NE., Washington,
Proposed Rule Change and Timing for
DC 20549, on official business days
Commission Action
between the hours of 10 a.m. and 3 p.m.
Copies of the filing also will be available
Within 35 days of the date of
publication of this notice in the Federal for inspection and copying at NYSE
Register or within such longer period (i) Arca’s principal office and on its
Internet Web site at https://
as the Commission may designate up to
www.nyse.com. All comments received
90 days of such date if it finds such
will be posted without change; the
longer period to be appropriate and
Commission does not edit personal
publishes its reasons for so finding or
identifying information from
(ii) as to which the self-regulatory
submissions. You should submit only
28 15 U.S.C. 78f(b).
information that you wish to make
29 15 U.S.C. 78f(b)(5).
available publicly. All submissions
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04JAN1
Federal Register / Vol. 75, No. 1 / Monday, January 4, 2010 / Notices
should refer to File Number SR–
NYSEArca–2009–113 and should be
submitted on or before January 25, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–31162 Filed 12–31–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61241; File No. SR–CBOE–
2009–100]
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Modify CBSX Rule
51.8 To Add Pegged Cross Orders, To
Add an Interpretation Regarding
Pricing of Cross Orders, and To Add
Greater Flexibility to Intermarket
Sweep Orders
December 24, 2009.
pwalker on DSK8KYBLC1PROD with NOTICES
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 December
23, 2009, the Chicago Board Options
Exchange, Incorporated (‘‘Exchange’’ or
‘‘CBOE’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by the Exchange.
The Exchange filed the proposal as a
‘‘non-controversial’’ proposed rule
change pursuant to Section
19(b)(3)(A)(iii) of the Act 3 and Rule
19b–4(f)(6) thereunder.4 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
The Exchange proposes to modify
CBSX Rule 51.8 to add a new ordertype, to add an interpretation regarding
CBSX pricing of cross orders, and to add
greater flexibility to the CBSX
intermarket sweep order process. The
text of the proposed rule change is
available on the Exchange’s Web site
(https://www.cboe.org/Legal), on the
Commission’s Web site (https://
www.sec.gov), at the Exchange’s
30 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
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
CBOE 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The filing proposes to make three
changes to CBSX Rule 51.8. First, the
proposal would allow users the ability
to have any unexecuted balance of an
intermarket sweep order (ISO) be
booked and displayed. Currently, any
unexecuted balance is cancelled. Thus,
if the NBBO is 20–20.04 (500 × 100) and
CBSX represents the best offer, an ISO
(that is not labeled as immediate or
cancel) to buy 200 shares would get
filled on 100 shares at 20.04 and the
balance would book as a 20.04 bid for
100 shares.
Second, the filing proposes to adopt a
‘‘Pegged Cross Order’’. This order type
would allow users to send both sides of
a cross with an execution price that is
pegged to the national best offer or
national best bid. In fast moving markets
this gives users greater certainty in
executing crosses while ensuring that
such executions honor Protected
Quotations. Pegged Cross orders are
entered with a penny or subpenny
amount higher (lower) than the national
best bid (offer). By way of example, if
the NBBO is 20–20.04 and a 7000 share
Pegged Cross order priced at the bid
plus .01 is received, CBSX will execute
the 7000 share cross at 20.01.
If, however, a Pegged Cross is priced
in a way that would cause a tradethrough of a Protected Quotation, then
the system will re-price the cross to a
permissible trade price (i.e. the nearest
price to the originally requested price
that would not cause a trade-through
and that would not conflict with the
priority provisions of CBSX Rule 52.11.5
1 15
VerDate Nov<24>2008
17:11 Dec 31, 2009
5 CBSX Rule 52.11 provides that a cross can only
establish priority at the disseminated CBSX bid/
offer if it (i) is for at least 5000 shares, (ii) is for
Jkt 220001
PO 00000
Frm 00074
Fmt 4703
Sfmt 4703
175
For example, if the NBBO is 20–20.04
and a 7000 share Pegged Cross order
priced at the bid plus .05 is received
while the CBSX offer is 20.04 for 100
shares, CBSX will execute the 7000
share cross at 20.04. If the cross were
only for 2000 shares, CBSX would effect
the cross at 20.03 because it could not
establish priority at 20.04 pursuant to
Rule 52.11.
In addition, if a Pegged Cross is
received when the national best offer is
crossed with the national best bid, the
system will cancel the order. If a Pegged
Cross is received when the national best
bid is locked with the national best
offer, the system will attempt to execute
the cross at the lock price provided such
execution would not conflict with the
priority provisions of Rule 52.11.
The last change proposed in this filing
is to adopt language substantially
similar to a provision contained in
Chicago Stock Exchange Article XX,
Rule 4.a.(7)(b) which allows for cross
transactions to be priced in subpennies.
The proposed provision, which would
be contained in an interpretation to
CBSX Rule 51.8 would allow crosses to
be priced in increments as small as
0.0001 provided the execution is more
than $0.01 better than the prevailing
BBO unless the cross would already be
allowed priority at the BBO pursuant to
Rule 52.11.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with Section
6(b) of the Act 6 in general and furthers
the objectives of Section 6(b)(5) of the
Act 7 in particular in that, by offering
users an enhanced price improvement
features and greater control over order
routing, it is designed to promote just
and equitable principles of trade, serve
to remove impediments to and perfect
the mechanism of a free and open
market and a national market system.
Further, the filing is consistent with the
Exchange’s priority principles in that it
complies with Exchange Rule 52.11, and
the filing is consistent with existing
exemption 8 to the subpenny restrictions
of SEC rule 612 in that any subpenny
executions effected pursuant to the
proposal will occur at least one penny
better than any resting customer interest
in the CBSX book that has priority order
a cross pursuant to CBSX Rule 52.11.
a principal amount of at least $100,000, and (iii) is
greater in size than any single public customer
order at the proposed cross price.
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
8 See Exchange Act Release No. 34–54714
(November 6, 2006), 71 FR 66352 (November 14,
2006).
E:\FR\FM\04JAN1.SGM
04JAN1
]]>Agencies
[Federal Register Volume 75, Number 1 (Monday, January 4, 2010)]
[Notices]
[Pages 170-175]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-31162]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61236; File No. SR-NYSEArca-2009-113]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change for the Listing and Trading of Sprott Physical
Gold Trust
December 23, 2009.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on December 15, 2009, NYSE Arca, Inc. (``NYSE Arca'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NYSE Arca, Inc. (``Exchange''), through its wholly-owned subsidiary
NYSE Arca Equities, Inc. (``NYSE Arca Equities''), proposes to list and
trade units \4\ of the Sprott Physical Gold 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.
---------------------------------------------------------------------------
\4\ Each unit represents an equal, fractional, undivided
ownership interest in the net assets of the Trust attributable to
the particular class of units.
---------------------------------------------------------------------------
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 units (``Units'') 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.''
\5\ The Commission has previously approved listing on the Exchange
under NYSE Arca Equities Rule 5.2(j)(6) and 8.201, respectively, shares
of the streetTRACKS Gold Trust and iShares COMEX Gold Trust.\6\ 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.\7\ In addition, the Commission has approved trading of the
streetTRACKS Gold Trust and iShares Silver Trust and [sic] on the
Exchange pursuant to UTP.\8\ The Commission also has approved listing
of the iShares Silver Trust on the Exchange \9\ and, previously,
listing of the iShares Silver Trust on the American Stock Exchange LLC
(now known as ``NYSE Amex LLC'').\10\ Further, the Commission has also
approved listing on the Exchange under NYSE Arca Equities Rule 8.201
shares of ETFS Silver Trust \11\ and ETFS Gold Trust.\12\
---------------------------------------------------------------------------
\5\ 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.
\6\ 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).
\7\ 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).
\8\ See Securities Exchange Act Release No. 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); Securities Exchange Act Release No. 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).
\9\ See Securities Exchange Act Release No. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust).
\10\ 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).
\11\ See Securities Exchange Act Release No. 59781 (April 17,
2009), 74 FR 18771 (April 24, 2009) (SR-NYSEArca-2009-28) (approving
listing on the Exchange of the ETFS Silver Trust).
\12\ See Securities Exchange Act Release No. 59895 (May 8,
2009), 74 FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40) (approving
listing on the Exchange of the ETFS Gold Trust).
---------------------------------------------------------------------------
Sprott Asset Management LP is the sponsor or manager of the Trust
(the ``Sponsor'' or the ``Manager'',\13\ as the case may be), RBC Dexia
Investor Services Trust is the trustee of the Trust
[[Page 171]]
(the ``Trustee''),\14\ the Royal Canadian Mint is the custodian for the
physical gold bullion owned by the Trust (the ``Gold Custodian''),\15\
and RBC Dexia serves as the custodian of the Trust's assets other than
physical gold bullion (the ``Non-Gold Custodian'').\16\
---------------------------------------------------------------------------
\13\ The Manager is a limited partnership existing under the
laws of Ontario, Canada, and acts as manager of the Trust pursuant
to the Trust's trust agreement and the management agreement. The
Manager provides management and advisory services to the Trust.
Additional details regarding the Manager are set forth in the
Registration Statement on Form F-1 for the Sprott Physical Gold
Trust, filed with the Commission on December 9, 2009 (No. 333-
163601) (the ``Registration Statement'').
\14\ The Trustee holds title to the Trust's assets on behalf of
the Unitholders and has, together with the Manager, exclusive
authority over the assets and affairs of the Trust. The Trustee has
a fiduciary responsibility to act in the best interest of the
Unitholders. Additional details regarding the Trustee are set forth
in the Registration Statement.
\15\ The Gold Custodian will be responsible for and will bear
all risk of the loss of, and damage to, the Trust's physical gold
bullion that is in its custody, subject to certain limitations based
on events beyond the Gold Custodian's control. The Manager, with the
consent of the Trustee, may determine to change the custodial
arrangements of the Trust. Additional details regarding the Gold
Custodian are set forth in the Registration Statement.
\16\ The Non-Gold Custodian will be responsible for and will
bear all risk of the loss of, and damage to, the Trust's assets
(other than physical gold bullion) that are in its custody, subject
to certain limitations based on events beyond the Non-Gold
Custodian's control. The Manager, with the consent of the Trustee,
may determine to change the custodial arrangements of the Trust.
Additional details regarding the Non-Gold Custodian are set forth in
the Registration Statement.
---------------------------------------------------------------------------
Listing Rules
Definition. Rule 8.201(c)(1) defines Commodity-Based Trust Shares
as a security (a) that is issued by a trust that holds a specified
commodity deposited with the trust; (b) that is issued by such trust in
a specified aggregate minimum number in return for a deposit of a
quantity of the underlying commodity; and (c) that, when aggregated in
the same specified minimum number, may be redeemed at a holder's
request by such trust which will deliver to the redeeming holder the
quantity of the underlying commodity.
The Trust will issue Units, each of which represents an equal,
fractional undivided ownership interest in the net assets of the Trust
attributable to the particular class of Units. Except with respect to
cash held by the Trust to pay expenses and anticipated redemptions, the
Trust expects to own only London Good Delivery physical gold bullion.
The investment objective of the Trust is for the Units to reflect the
performance of the price of gold bullion, less the expenses of the
Trust's operations.\17\ The Trust is not actively managed and does not
engage in any activities designed to obtain a profit from, or to
ameliorate losses caused by, changes in the price of gold bullion. The
Trust is neither an investment company registered under the Investment
Company Act of 1940 nor a commodity pool for purposes of the Commodity
Exchange Act.\18\ The Units will be issued in an initial public
offering. The Trust may issue additional Units (i) in future offerings
if the gross proceeds received by the Trust per Unit is not less than
100% of the most recently calculated NAV or (ii) by way of a
distribution in Units in connection with an income distribution. The
Trust will not issue Units on an on-going or daily basis. At the start
of trading the Trust will issue a minimum of 1,000,000 Units to at
least 400 holders (``Unitholders''), as further described below.
---------------------------------------------------------------------------
\17\ The descriptions of the Trust, the Units and the gold
market contained herein are based on the Registration Statement.
\18\ The Trust does not trade in gold futures contracts. The
Trust takes delivery of physical gold that complies with certain
gold delivery rules. Because the Trust does not trade in gold
futures contracts on any futures exchange, the Trust is not
regulated as a commodity pool, and is not operated by a commodity
pool operator.
---------------------------------------------------------------------------
The Units will be redeemable monthly at the option of the holder.
The redemption process is further described below.
The Exchange represents that the Units satisfy the remaining
requirements of NYSE Arca Equities Rule 8.201 and thereby qualify for
listing on the Exchange.\19\
---------------------------------------------------------------------------
\19\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Securities Exchange [sic] of 1934 (``Act'') (15 U.S.C.
78a), the Trust relies on the exemption contained in Rule 10A-
3(c)(7).
---------------------------------------------------------------------------
Operation of the Gold Market
A detailed description of the gold market is set forth in the
Registration Statement.
Secondary Market Trading and Liquidity
While the Trust's investment objective is for the Units to reflect
the performance of physical gold bullion, less the expenses of the
Trust, the Units may trade in the secondary market on the NYSE Arca at
prices that are lower or higher relative to their net asset value per
Unit (``NAV''). The NAV is expected to fluctuate with changes in the
market value of the Trust's assets. The trading price of the Units will
fluctuate in accordance with changes in the NAV as well as market
supply and demand. The amount of the discount or premium in the trading
price relative to the NAV may be influenced by non-concurrent trading
hours between the NYSE Arca and the COMEX and other major world gold
markets. While the Units will trade on the NYSE Arca until 4 p.m., New
York time, liquidity in the global gold market will be reduced after
the close of the major world gold markets, including London and of the
COMEX division of the New York Mercantile Exchange at 1:30 p.m., New
York time. As a result, during this time, trading spreads, and the
resulting premium or discount to the NAV may widen.
Trust Expenses
The fees and expenses of the Trust are set forth in detail in the
Registration Statement.
Initial Public Offering and Redemption of Units
The Trust will offer at a minimum, 1,000,000 Units in its initial
public offering to a minimum of 400 Unitholders. Each Unit will
represent an equal, fractional, undivided ownership interest in the net
assets of the Trust attributable to the particular class of Units. It
is not currently intended that the Trust will create additional Units.
Unitholders may redeem their Units on a monthly basis.
Redemption for Physical Gold
Subject to the terms of the trust agreement and the Manager's right
to suspend redemptions under certain circumstances described in the
registration statement, Units may be redeemed at the option of a
Unitholder for physical gold bullion in any calendar month. Units
redeemed for physical gold will be entitled to a redemption price equal
to 100% of the NAV of the redeemed Units on the last Business Day, as
defined herein, of the calendar month in which the redemption request
is processed, less redemption and delivery expenses. Redemption
requests for gold must be for amounts that are at least equivalent in
value to one London Good Delivery bar or an integral multiple thereof,
plus applicable expenses. A ``London Good Delivery bar'' contains
between 350 and 430 troy ounces of gold. Any fractional amount of
redemption proceeds in excess of one London Good Delivery bar or an
integral multiple thereof will be paid in cash at a rate equal to 100%
of the NAV of such excess amount. The ability of a Unitholder to redeem
Units for physical gold bullion may be limited by the sizes of London
Good Delivery bars held by the Trust at the time of the redemption. A
Unitholder redeeming Units for gold will be responsible for expenses
incurred by the Trust in connection with such redemption and applicable
delivery expenses, including the handling of the notice of redemption,
the delivery of the physical bullion for units that are being redeemed
and the applicable gold storage in-and-out fees.
A redemption notice to redeem Units for physical gold bullion must
be received by the Trust's transfer agent no later than 4 p.m. Toronto
time, on the
[[Page 172]]
15th day of the calendar month in which the redemption notice will be
processed or, if such day is not a day on which banks located in New
York, New York, are open for the transaction of banking business (a
``Business Day''), then on the immediately following day that is a
Business Day. Any redemption notice received after such time will be
processed in the next month.
Physical gold bullion received by a Unitholder as a result of a
redemption of Units will be delivered by armored transportation service
carrier pursuant to delivery instructions provided by the Unitholder.
The armored transportation service carrier will be engaged by or on
behalf of the redeeming Unitholder. Such physical gold bullion can be
delivered (i) To an account established by the Unitholder at an
institution located in North America authorized to accept and hold
London Good Delivery bars; (ii) in the United States, to any physical
address (subject to approval by the armored transportation service
carrier); (iii) in Canada, to any business address (subject to approval
by the armored transportation service carrier); and (iv) outside of the
United States and Canada, to any address approved by the armored
transportation service carrier. Physical gold bullion delivered to an
institution located in North America authorized to accept and hold
London Good Delivery bars will likely retain its London Good Delivery
status while in the custody of such institution; physical gold bullion
delivered pursuant to a Unitholder's delivery instruction to a
destination other than an institution located in North America
authorized to accept and hold London Good Delivery bars will no longer
be deemed London Good Delivery once received by the Unitholder. The
armored transportation service carrier will receive gold bullion in
connection with a redemption of Units approximately 10 Business Days
after the end of the month in which the redemption notice is processed.
Any cash to be received by a redeeming Unitholder in connection with a
redemption of Units for physical gold bullion will be delivered to the
Unitholder's brokerage account within 10 Business Days after the
calendar month in which the redemption is processed.
Redemption for Cash
Subject to the terms of the trust agreement and the Manager's right
to suspend redemptions under certain circumstances described in the
registration statement, Units may be redeemed at the option of a
Unitholder for cash on a monthly basis. Units redeemed for cash will be
entitled to a redemption price equal to 95% of the lesser of (i) the
volume-weighted average trading price of the Units traded on the NYSE
Arca or, if trading has been suspended on NYSE Arca, the trading price
of the units traded on the Toronto Stock Exchange, for the last five
Business Days of the month in which the redemption request is processed
and (ii) the NAV of the redeemed Units as of 4 p.m., Toronto time, on
the last Business Day of such month. Cash redemption proceeds will be
transferred to a redeeming Unitholder approximately three Business Days
after the end of the month in which the redemption notice is processed.
See ``Redemption of Units'' for detailed terms and conditions relating
to the redemption of Units for cash.
A redemption notice to redeem Units for cash must be received by
the Trust's transfer agent no later than 4 p.m.. Toronto time, on the
15th day of the calendar month in which the redemption notice will be
processed or, if such day is not a Business Day, then on the
immediately following day that is a Business Day. Any redemption notice
to redeem Units for cash received after such time will be processed in
the next month.
Termination Events
The Trust will be terminated in the event there are no Units
outstanding, the Trustee resigns or is removed and no successor trustee
is appointed by the Manager by the time the resignation or removal
becomes effective, the Manager resigns and no successor manager is
appointed by the Manager and approved by Unitholders by the time the
resignation becomes effective, the Manager is, in the opinion of the
Trustee, in material default of its obligations under the trust
agreement and does not cure such default within a certain time period,
the Manager experiences certain insolvency events or the assets of the
Manager have become subject to seizure or confiscation by any public or
governmental authority. In addition, the Manager may, in its
discretion, terminate the Trust, without Unitholder approval, if, in
the opinion of the Manager, after consulting with the independent
review committee, the value of net assets of the Trust has been reduced
such that it is no longer economically feasible to continue the Trust
and it would be in the best interests of the Unitholders to terminate
the Trust, by giving the Trustee and each holder of Units at the time
at least 90 days' notice. To the extent such termination in the
discretion of the Manager may involve a matter that would be a
``conflict of interest matter'' as set forth in applicable Canadian
regulations, the matter will be referred by the Manager to the
independent review committee established by the Manager for its
recommendation. In connection with the termination of the Trust, the
Trust shall, to the extent possible, convert its assets to cash and,
after paying or making adequate provision for all of the Trust's
liabilities, distribute the net assets of the Trust to Unitholders, on
a pro rata basis, as soon as practicable after the termination date.
Additional information regarding the Units and the operation of the
Trust, including termination events, risks, and redemption procedures,
is described in the Registration Statement.
Valuation of Gold and Definition of Net Asset Value
The value of the net assets of the Trust and the NAV will be
determined daily at 4:00 p.m. (Toronto time) on each day that is a
Business Day, by the Trust's valuator, which is RBC Dexia Investor
Services Trust. The value of the net assets of the Trust as of the
valuation time on any such day shall be equal to the aggregate fair
market value of the assets of the Trust as of such date, less an amount
equal to the total liabilities of the Trust (excluding all liabilities
represented by outstanding Units and deferred taxes) as of such date.
The valuator shall calculate the NAV by dividing the value of the net
assets of the Trust on that day by the total number of Units then
outstanding on such day.
The Units will be book-entry only and individual certificates will
not be issued for the Units (except in connection with a redemption of
Units, during the process of which redeeming Units will be certificated
and presented for cancellation as part of the redemption process).
Availability of Information Regarding Gold Prices
Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of a commodity, such as gold, over the
Consolidated Tape. However, there will be disseminated over the
Consolidated Tape the last sale price for the Units, as is the case for
all equity securities traded on the Exchange (including exchange-traded
funds). In addition, there is a considerable amount of gold price and
gold market information available on public Web sites and through
professional and subscription services.
Investors may obtain on a 24-hour basis gold pricing information
based on the spot price for an ounce of gold from various financial
information service
[[Page 173]]
providers, such as Reuters and Bloomberg. Reuters and Bloomberg provide
at no charge on their Web sites delayed information regarding the spot
price of gold and last sale prices of gold futures, as well as
information about news and developments in the gold market. Reuters and
Bloomberg also offer a professional service to subscribers for a fee
that provides information on gold 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 gold, as well as a feed of live streaming prices to
Reuters and Moneyline Telerate subscribers. Complete real-time data for
gold futures and options prices traded on the COMEX 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 gold,
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
or [sic] https://www.thebulliondesk.com.
The Trust Web site will provide an intraday indicative value
(``IIV'') per share for the Units, as calculated by 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 will be calculated based
on a price of gold derived from updated bids and offers indicative of
the spot price of gold.\20\ In addition, the Web site for the Trust
will contain the following information, on a per Unit basis, for the
Trust: (a) The mid-point of the bid-ask price \21\ at the close of
trading in relation to the NAV as of the time the NAV is calculated
(``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 Trust's prospectus, as well as the two most recent reports
to stockholders. Finally, the Trust Web site will provide the last sale
price of the Units as traded in the US market. In addition, the
Exchange will make available over the Consolidated Tape quotation
information, trading volume, closing prices and NAV for the Units from
the previous day.
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\20\ The IIV on a per Unit basis disseminated during the Core
Trading Session should not be viewed as a real-time update of the
NAV, which is calculated once a day.
\21\ 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.
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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 Units.
A minimum of 1,000,000 \22\ Units will be required to be
outstanding at the start of trading.\23\ The minimum number of Units
required to be outstanding exceeds the 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. A minimum of 400 \24\ Unitholders at the start of trading.\25\
Additionally, it is anticipated that the initial price of a Unit will
be approximately $10.00. The Exchange believes that the anticipated
minimum number of Units outstanding at the start of trading is
sufficient to provide adequate market liquidity. The Trust represented
to the Exchange that, prior to listing, the NAV would be calculated
daily and made available to all market participants at the same time.
The Trust has also represented to the Exchange that, prior to listing,
the IIV will be calculated at least every fifteen seconds and made
available to all market participants at the same time.
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\22\ The minimum number of Units issued is comparable to the
minimum threshold established for the issuance of equity linked
notes under NYSE Arca Rule 5.2(j)(2).
\23\ See e-mail, dated December 23, 2009, from Tim Malinowski,
NYSE Arca, to David Liu, Assistant Director, Division of Trading and
Markets, Commission.
\24\ The minimum number of holders is comparable to the minimum
threshold established for the issuance of equity linked notes under
NYSE Arca Rule 5.2(j)(2).
\25\ See supra note 23.
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Trading Rules
The Exchange deems the Units to be equity securities and subject to
the Exchange's existing rules governing the trading of equity
securities. Trading in the Units 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 Units during all
trading sessions.
Further, NYSE Arca Equities Rule 8.201 sets forth certain
restrictions on ETP Holders acting as registered Market Makers in the
Units to facilitate surveillance. Pursuant to NYSE Arca Equities Rule
8.201(h), an ETP Holder acting as a registered Market Maker in the
Units is required to provide the Exchange with information relating to
its trading in the underlying gold, 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 Units 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 gold,
related futures or options on futures or any other related derivative
(including the Units).
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 Units. Trading on the Exchange in the Units may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Units inadvisable. These may include:
(1) The extent to which conditions in the underlying gold 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 Units will be
subject to trading halts caused by extraordinary market volatility
pursuant to the Exchange's ``circuit breaker'' rule.\26\
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\26\ See NYSE Arca Equities Rule 7.12.
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Surveillance
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products (including Commodity-Based
Trust Shares) to monitor trading in the Units. The Exchange represents
that these procedures are adequate to properly monitor Exchange trading
of the Units in all trading sessions and to deter and
[[Page 174]]
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 Units and the underlying gold, gold futures
contracts, options on gold futures, or any other gold 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.\27\
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\27\ A list of ISG members is available at https://www.ISGPortal.org. The Exchange notes that the New York Mercantile
Exchange, of which the COMEX is a division, is an ISG member,
however, the TOCOM is not an ISG member and the Exchange does not
have in place a comprehensive surveillance sharing agreement with
such market.
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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 Units. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Units; (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 Units;
(3) how information regarding the IIV is disseminated; (4) the
requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Units prior to or concurrently with the
confirmation of a transaction; (5) the possibility that trading spreads
and the resulting premium or discount on the Units may widen as a
result of reduced liquidity of gold trading during the Core and Late
Trading Sessions after the close of the major world gold 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. ETP Holders
purchasing Units 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 gold, that the Commission has no jurisdiction over the trading
of gold as a physical commodity, and that the CFTC has regulatory
jurisdiction over the trading of gold futures contracts and options on
gold 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) \28\ of the Act, in general, and furthers the
objectives of Section 6(b)(5),\29\ 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.
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\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(5).
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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.
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:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2009-113 on the subject line.
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-2009-113. 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. Copies of the filing also will be available for
inspection and copying at NYSE Arca's principal office and on its
Internet Web site at https://www.nyse.com. 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
[[Page 175]]
should refer to File Number SR-NYSEArca-2009-113 and should be
submitted on or before January 25, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-31162 Filed 12-31-09; 8:45 am]
BILLING CODE 8011-01-P
