Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of Proposed Rule Change Amending Its Trust Unit Rules and Proposing the Listing of the Nuveen Diversified Commodity Fund, 9265-9272 [2010-4136]
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Federal Register / Vol. 75, No. 39 / Monday, March 1, 2010 / Notices
comprehensive transaction information
regarding the market for Asset-Backed
Securities.
The Commission notes that FINRA
has not proposed to publicly
disseminate any transaction information
relating to Asset-Backed Securities at
this time. FINRA believes that
information on Asset-Backed Securities
transactions should be collected and
analyzed before making any decision
regarding the utility of such information
for transparency purposes or the
consequences of dissemination on this
market. FINRA has stated that, after a
period of study, it would file a proposed
rule change if it determined that its
study of the trading data provides a
reasonable basis to seek dissemination
of transaction information on AssetBacked Securities. The Commission has
historically been supportive of efforts to
improve post-trade transparency in the
fixed income markets and encourages
FINRA to carry out that study.
The Commission further finds that the
proposed fees set forth in Rule 7730 for
the reporting of transactions in AssetBacked Securities are consistent with
Section 15A(b)(5) of the Act,43 which
requires, among other things, that
FINRA rules provide for the equitable
allocation of reasonable dues, fees, and
other charges among members and
issuers and other persons using any
facility or system that FINRA operates
or controls.44
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V. Accelerated Approval
The Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,45 for approving the proposed rule
change, as modified by Amendment No.
1 thereto, prior to the 30th day after the
date of publication of the amended
proposal in the Federal Register. The
changes proposed in Amendment No. 1
are minor and technical in nature or are
designed to respond to specific concerns
raised by commenters. Accordingly, the
Commission finds that good cause exists
to approve the proposal, as modified by
Amendment No. 1, on an accelerated
basis.
VI. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether Amendment No. 1 to
the proposed rule change is consistent
with the Act. Comments may be
43 15
U.S.C. 78o–3(b)(5).
Commission notes that, because
transaction information regarding Asset-Backed
Securities will not be disseminated, FINRA has not
proposed any market data fees for this information
at this time.
45 15 U.S.C. 78s(b)(2).
44 The
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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 rulecomments@sec.gov. Please include File
Number SR–FINRA–2009–065 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–FINRA–2009–065. 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 Web site viewing and
printing 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 will
also be available for inspection and
copying at the principal office of
FINRA. 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 No.
SR–FINRA–2009–065 and should be
submitted on or before March 22, 2010.
VII. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,46 that the
proposed rule change (SR–FINRA–
2009–065), as modified by Amendment
No.1, be, and hereby is, approved on an
accelerated basis.
46 15
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U.S.C. 78s(b)(2).
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.47
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–4067 Filed 2–26–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61571; File No. SR–
NYSEAmex–2010–09]
Self-Regulatory Organizations; NYSE
Amex LLC; Notice of Filing of
Proposed Rule Change Amending Its
Trust Unit Rules and Proposing the
Listing of the Nuveen Diversified
Commodity Fund
February 23, 2010.
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 January
29, 2010, NYSE Amex LLC (the
‘‘Exchange’’ or ‘‘NYSE Amex’’) 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 selfregulatory 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 Amex proposes to amend NYSE
Amex Rule 1600 et seq., to provide that
the issuers of Trust Units listed
thereunder may invest directly in
commodities and commodity
derivatives rather than solely in the
assets of a trust, partnership, limited
liability company, corporation or other
similar entity constituted as a
commodity pool that holds such
investments. Other minor changes are
also made to conform to changes made
to other NYSE Amex rules. Pursuant to
these rules, the Exchange proposes to
list and trade shares of the Nuveen
Diversified Commodity Fund. The text
of the proposed rule change is available
at the Exchange, the Commission’s
Public Reference Room, and https://
www.nyse.com.
47 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
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Federal Register / Vol. 75, No. 39 / Monday, March 1, 2010 / Notices
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.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
NYSE Amex previously adopted Rule
1600 et seq. to permit the listing of Trust
Units, which are defined as securities
that are issued by a trust or other similar
entity that invests in the assets of a
trust, partnership, limited liability
company, corporation or other similar
entity constituted as a commodity pool
that holds investments comprising or
otherwise based on any combination of
futures contracts, options on futures
contracts, forward contracts, swap
contracts and/or commodities.4 Rule
1600 was adopted in contemplation of
the listing of shares of the Nuveen
Commodities Income and Growth Fund
(the ‘‘Fund’’), a fund sponsored by
Nuveen Investments, Inc. (‘‘Nuveen’’)
and the investment plan of the Fund
was described in detail in the
Exchange’s Form 19b–4 and the
Commission’s Notice.5 Nuveen now
proposes to go forward with a listing of
shares (the ‘‘Shares’’) of the Fund under
a new name, the Nuveen Diversified
Commodity Fund, and with a somewhat
modified investment plan, which is
described below under ‘‘Nuveen
Diversified Commodity Fund.’’ The
Shares will conform to the initial and
continued listing criteria under Rule
1602. The initial public offering and
sale of the Shares will be registered
under the Securities Act of 1933.
In order to use income tax reporting
procedures more familiar to investors in
investment trusts, it was originally
contemplated that the Fund would have
a ‘‘master/feeder’’ structure in which the
Fund would hold no assets directly
4 See Securities Exchange Act Release No. 56880
(December 3, 2007), 72 FR 69259 (December 3 [sic],
2007).
5 See Securities Exchange Act Release No. 56465
(September 19, 2007), 72 FR 54489 (September 25,
2007).
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except the equity of a separate
investment vehicle, which would serve
as the conduit through which the Fund
would make its investments. However,
due to a change in the interpretation of
applicable tax law by the Internal
Revenue Service, the originally
expected trust reporting procedures
would no longer be available under a
master/feeder structure. In light of this
interpretative change, Nuveen proposes
to modify its approach and have the
listed Fund make its own direct
investments. Rule 1600 as currently in
effect permits only the listing of Trust
Units whose issuers utilize the master/
feeder structure originally intended to
be used for the Fund. The rule was
drafted in this way simply because it
accommodated the security proposed to
be listed at that time and was not
designed to provide any protections to
investors, but merely facilitated the
now-unavailable trust-based tax
reporting procedures. Consequently, the
Exchange proposes to amend the
definition of Trust Units in Rule 1600 to
remove the master/feeder structure
requirement and permit the listing of
Trust Units where the issuer is
constituted as a commodity pool which
invests directly in commodities and
commodity derivatives. The Exchange
believes that this amendment does not
in any way increase the risk to investors
of investing in the Trust Units or give
rise to any new regulatory concerns.
Nuveen has represented to the Exchange
that there are no material revisions to
the Fund’s structure or investment
approach other than those described in
this filing and the Exchange believes
that these revisions do not give rise to
any new regulatory issues or raise
significant new investor protection
concerns.
Nuveen Diversified Commodity Fund
The Fund was formed as a Delaware
statutory trust on December 7, 2005
pursuant to a Declaration of Trust
signed by Wilmington Trust Company,
as the Delaware Trustee.6 The Fund’s
primary investment objective is to seek
total return through broad exposure to
the commodities markets. The Fund’s
secondary objective is to provide
investors with monthly income and
capital distributions not commonly
associated with commodity
investments. The Fund will invest in
commodity futures and forward
contracts, options on commodity futures
and forward contracts and over-thecounter (‘‘OTC’’) commodity options in
the following commodity groups:
6 The Fund, as a commodity pool, will not be
subject to registration and regulation under the
Investment Company Act of 1940 (the ‘‘1940 Act’’).
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energy, industrial metals, precious
metals, livestock, agriculturals, and
tropical foods and fibers and may in the
future include other commodity
investments that become the subject of
commodity futures trading.7
The Fund is a commodity pool. The
Fund is managed by Nuveen
Commodities Asset Management, LLC
(the ‘‘Manager’’). The Manager is
registered as a commodity pool operator
(the ‘‘CPO’’) and a commodity trading
advisor (the ‘‘CTA’’) with the
Commodity Futures Trading
Commission (‘‘CFTC’’) and is a member
of the National Futures Association
(‘‘NFA’’).
The Manager will serve as the CPO
and a CTA of the Fund. The Manager
will determine the Fund’s overall
investment strategy, including: (i) The
selection and ongoing monitoring of the
Fund’s sub-advisors; (ii) the
management of the Fund’s business
affairs; and (iii) the provision of certain
clerical, bookkeeping and other
administrative services. Gresham
Investment Management LLC (the
‘‘Commodity Sub-Advisor’’) will invest
on a notional basis substantially all of
the Fund’s assets in commodity futures
and forward contracts pursuant to the
commodity investment strategy (its
proprietary Tangible Asset Program®
(‘‘TAP®’’) 8 and a risk management
program. The Commodity Sub-Advisor
is a Delaware limited liability company
and is registered with the CFTC as a
7 Following is a list of futures contracts and other
commodity interests in which the Fund intends to
invest, and the exchanges on which they trade,
based on systematic calculations of global
commodity production and U.S. dollar volume
traded: Lumber, Milk, Feeder Cattle, Lean Hogs,
Live Cattle, Pork Bellies—Chicago Mercantile
Exchange (‘‘CME’’); Cocoa, Arabica Coffee, Cotton,
Orange Juice, Sugar—New York Board of Trade
(‘‘NYBOT’’); Gold, Silver, Copper—Commodity
Exchange (‘‘COMEX’’) which is a division of the
New York Mercantile Exchange (‘‘NYMEX’’);
Palladium, Platinum, WTI Crude Oil, Heating Oil,
Natural Gas, Gasoline—NYMEX; Aluminum,
Copper, Lead, Nickel, Tin, Zinc—London Metals
Exchange (‘‘LME’’); Bean Oil, Corn, Oats, Soy Meal,
Soybeans, Wheat—Chicago Board of Trade
(‘‘CBOT’’); Brent Crude Oil, Gas Oil—
InterContinental Exchange (‘‘ICE’’); Robustta
Coffee— London International Financial Futures
Exchange (‘‘LIFFE’’); Wheat— Kansas City Board of
Trade (‘‘KCBOT’’).
8 The Fund does not intend to utilize leverage.
However, the Fund may borrow for temporary or
emergency purposes in an amount up to 5% of the
value of the Fund’s net assets should the need arise.
Such short term borrowings would mature in less
than 60 days from the date of borrowing. In order
to facilitate any such borrowing, the Fund intends
to establish a standby credit facility with State
Street Bank and Trust Company that will be entered
into as of the closing of the offering of its common
shares. Any temporary or emergency borrowings
would be used to provide the Fund with added
potential flexibility in managing short-term
portfolio liquidity needs and managing the payment
of distributions.
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CTA and a CPO and is a member of the
NFA. The Commodity Sub-Advisor is
also registered with the Commission as
an investment adviser. Nuveen Asset
Management (the ‘‘Collateral SubAdvisor’’), an affiliate of the Manager,
will invest the Fund’s collateral in
short-term, investment grade quality
debt instruments. The Collateral SubAdvisor is registered with the
Commission as an investment adviser.
Investment Description
The Fund’s investment objective is to
generate attractive risk-adjusted total
returns as compared to investments in
commodity indexes.
The Fund intends to pursue its
investment objective by utilizing: (a) An
actively managed rules-based
commodity investment strategy,
whereby the Fund will invest in a
diversified basket of commodity futures
and forward contracts with an aggregate
notional value substantially equal to the
net assets of the Fund; and (b) a risk
management program designed to
moderate the overall risk and return
characteristics of the Fund’s commodity
investments. In pursuing the risk
management program, the Fund will
write (sell) ‘‘out-of-the-money’’
commodity call options to obtain option
premium cash flow, on individual
futures and forward contracts, on
baskets of commodities or on broad
based commodity indices. The Fund
may also purchase ‘‘out-of-the-money’’
commodity put options for protection
against significant asset value declines
on an opportunistic basis. Initially, the
Fund does not expect to purchase
commodity put options.
The Fund will typically: (i) Invest in
commodity futures and forward
contracts that are traded either on U.S.
or non-U.S. commodity futures
exchanges; and (ii) sell call options on
commodity futures and forward
contracts that are traded either on U.S.
or non-U.S. exchanges. The Fund may
also purchase put options on
commodity futures and forward
contracts that are traded either on U.S.
or non-U.S. exchanges or may purchase
OTC commodity put options through
dealers pursuant to negotiated, bi-lateral
arrangements. The Fund also may invest
in other commodity contracts that are
presently, or may hereafter become, the
subject of commodity futures trading.
Except for certain limitations described
below, there are no restrictions or
limitations on the specific commodity
investments in which the Fund may
invest.
Commodity Investment Strategy
(TAP®). The Commodity Sub-Advisor
will invest on a notional basis
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substantially all of the Fund’s assets in
commodity futures and forward
contracts pursuant to the commodity
investment strategy TAP®, an actively
managed, rules-based 9 commodity
investment strategy. TAP® is
fundamental in nature and is designed
to maintain consistent, fully
collateralized exposure to commodities
as an asset class. TAP® does not require
the existence of price trends in order to
be successful.
Risk Management Program. Pursuant
to the risk management program, the
Fund will write (or sell) commodity call
options that may be up to 20% ‘‘out-ofthe-money’’ 10 on a continual basis on
up to approximately 50% of the
notional value of each of its commodity
futures and forward contract positions
that have sufficient option trading
volume and liquidity. The Commodity
Sub-Advisor will write call options on
individual futures and forward contracts
held by the Fund, on baskets of
commodities or on broad based
commodity indices. As the writer of call
options for which a premium is
received, the Fund will forego the right
to any appreciation in the value of each
commodity futures or forward contract
in its portfolio that effectively underlies
a call option to the extent the value of
the commodity futures or forward
contract exceeds the exercise price of
such option on or before the expiration
date.
Initially, the Fund does not expect to
purchase commodity put options. In
order to seek protection against
significant asset value declines, the
Fund may from time to time purchase
‘‘out-of-the-money’’ put options on
broad-based commodity indices such as
the DJ–UBS Commodity Index® (‘‘DJ–
UBS’’), the S&P GSCI Commodity Index
(‘‘GSCI’’), or on certain custom indices,
whose prices are expected to closely
correspond to a substantial portion of
the long commodity futures and forward
9 TAP® currently requires investment in futures
or forward contracts for commodities in each of the
energy, industrial metals, livestock, agriculturals,
tropical foods and fibers and precious metal
commodity groups. Commodity group weightings
and individual commodity weightings are chosen
by a process that blends two-thirds of five year
global production value and one-third of five year
value of commodity futures contracts traded in
dollars. The process constrains the weightings of
each commodity group such that no group may
constitute more than 35% of TAP® and no single
commodity interest can constitute more than 70%
of its group. In addition, each commodity is
rebalanced periodically to its target weighting if its
actual weighting deviates from its target
substantially (currently, by more than 10%).
10 A call option is ‘‘out-of-the-money’’ when the
strike price is above the current trading price of the
underlying commodity. A put option is ‘‘out-of-themoney’’ when the strike price is below the current
trading price of the underlying commodity.
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9267
contracts held by the Fund. The Fund
also may purchase put options on
baskets of commodities and on
individual futures and forward contracts
held by it. On an absolute basis, the
Fund does not expect that the cost to
purchase put options at any one time
will exceed 5% of the value of the
Fund’s net assets.
Debt Instruments Used as Collateral.
The Fund’s investments in commodity
futures and forward contracts, and
options on commodity futures and
forward contracts, generally will not
require significant outlays of principal.
To support its commodity investments,
the Fund anticipates that it will
maintain significant collateral that will
be invested in short-term debt
instruments with maturities of up to two
years that, at the time of investment, are
investment grade quality, including
obligations issued or guaranteed by the
U.S. government or its agencies and
instrumentalities, as well as corporate
obligations and asset-backed securities.
Although earning interest income, the
collateral is subject on a continual basis
to additional margin calls by the
commodity broker and to additional
deposits in the commodity account if
the levels of notional trading change.
Commodity Futures and Forward
Contracts and Related Options
The prices of the commodity futures
and forward contracts, options on
commodity futures and forward
contracts, and OTC commodity options
are volatile with fluctuations expected
to affect the value of the Shares.
Commodity futures and forward
contracts and options on commodity
futures and forward contracts to be held
by the Fund will be traded on U.S. and/
or non-U.S. exchanges. The commodity
futures and forward contracts to be
entered into by the Fund are listed and
traded on organized and regulated
exchanges based on the various
commodities in the groups described
above.11 Forward contracts are contracts
for the purchase and sale of a
commodity for delivery on or before a
future date or during a specified period
at a specified price. Futures contracts
are essentially forward contracts that are
traded on exchanges. Options on
commodity futures and forward
contracts are contracts giving the
purchaser the right, as opposed to the
obligation, to acquire or to dispose of
the commodity futures or forward
contract underlying the option on or
before a future date at a specified price.
The Fund may purchase OTC
commodity put options through dealers
11 See
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pursuant to negotiated, bi-lateral
arrangements.
The potential futures contracts are
traded on U.S. and non-U.S. exchanges,
including the CBOT, the CME, the ICE,
the LIFFE, the LME, the NYMEX, the
COMEX, the NYBOT and the KCBOT.
The Manager will assess or review, as
appropriate, the creditworthiness of
each potential or existing, as
appropriate, counterparty to an OTC
contract pursuant to guidelines
approved by the Manager’s board of
directors. Furthermore, the Manager, on
behalf of the Fund, will only enter into
OTC contracts with: (a) Members of the
Federal Reserve System or foreign banks
with branches regulated by the Federal
Reserve Board; (b) primary dealers in
U.S. government securities; (c) brokerdealers; (d) futures commission
merchants; or (e) affiliates of the
foregoing.
Structure of the Fund
Fund. The Fund is a statutory trust
formed pursuant to the Delaware
Statutory Trust Act and will issue
shares that represent units of fractional
undivided beneficial interest in and
ownership of the Fund.
Trustee. Wilmington Trust Company
is the Delaware Trustee of the Fund.
The Delaware Trustee is unaffiliated
with the Manager.
Individual Trustees. The individual
trustees of the Fund, all of whom will
be unaffiliated with the Manager, will
fulfill those functions required under
the NYSE Amex listing standards and
certain other functions as set forth in the
Fund’s Trust Agreement.
Manager. The Manager is a Delaware
limited liability company that is
registered with the CFTC as a CPO and
a CTA and is a wholly-owned
subsidiary of Nuveen Investments, Inc.
The Manager will serve as the CPO and
a CTA of the Fund and through the
Commodity Sub-Advisor will be
responsible for determining the Fund’s
overall investment strategy and its
implementation. It is anticipated that
the individual trustees, pursuant to the
Fund’s Trust Agreement, will delegate
all authority (other than the individual
trustees’ limited requirements to serve
on the Fund’s Audit Committee and
Nominating Committee) to the Manager
to operate the business of the Fund and
to be responsible for the conduct of the
Fund’s commodity affairs. As a
registered CPO and CTA, the Manager is
required to comply with various
regulatory requirements under the CEA
and the rules and regulations of the
CFTC and the NFA.
Commodity Sub-Advisor. The
Commodity Sub-Advisor is a Delaware
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limited liability company that is
registered with the CFTC as a CTA and
a CPO and is a member of the NFA. As
a registered CPO and CTA, the
Commodity Sub-Advisor is required to
comply with various regulatory
requirements under the CEA and the
rules and regulations of the CFTC and
the NFA. The Commodity Sub-Advisor
is also registered with the SEC as an
investment adviser.
Collateral Sub-Advisor. The Collateral
Sub-Advisor is an affiliate of the
Manager and a wholly owned subsidiary
of Nuveen Investments, Inc. The
Collateral Sub-Advisor is registered
with the Commission as an investment
adviser.
Custodian, Transfer Agent and
Registrar. State Street Bank and Trust
Company (‘‘State Street’’) will be the
Custodian and Accounting Agent for the
assets of the Fund and its affiliate,
Computershare Shareholder Services,
Inc. will be the Transfer Agent and
Registrar for the Shares of the Fund.
Commodity Broker. Newedge USA,
LLC (‘‘Newedge’’) will act as the
commodity broker for the Fund and will
clear transactions that may be executed
by it or other brokerage firms on a ‘‘giveup’’ basis. Newedge is registered as a
futures commission merchant and a
CPO and is a member of the NFA.
Newedge also is registered with the
Commission as a broker-dealer.
The Exchange notes that each of the
Manager, the Commodity Broker, and
the Commodity Sub-Advisor have
represented to the Exchange that they
each have erected and maintain
firewalls within their respective
institutions to prevent the flow of nonpublic information regarding the
portfolio of underlying securities from
the personnel involved in the
development and implementation of the
investment strategy to others such as
sales and trading personnel.
Product Description
The Shares represent units of
fractional undivided beneficial interest
in and ownership of the Fund.
Following the original issuance, the
Shares will be traded on the Exchange
similar to other equity securities.
Commencing with the Fund’s first
distribution, the Fund intends to make
regular monthly distributions to its
shareholders (stated in terms of a fixed
cents per share distribution rate) based
on past and projected performance of
the Fund.12 The Fund’s monthly
12 The Fund’s actual financial performance will
vary so that the distribution rate may exceed the
Fund’s actual total returns. The Fund does not
anticipate borrowing to obtain the cash necessary to
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distributions are sometimes referred to
as ‘‘managed distributions.’’ The Fund
will seek to establish a distribution rate
that roughly corresponds to the
Manager’s projections of the total return
that could reasonably be expected to be
generated by the Fund over an extended
period of time, although the distribution
rate will not be solely dependent on the
amount of income earned or capital
gains realized by the Fund. The Fund’s
ability to make regular monthly
distributions will depend on a number
of factors, including, most importantly,
the long-term total returns generated by
the Fund’s portfolio investments and
the risk management program.
As portfolio and market conditions
change, the Fund’s rate of distributions
and the Fund’s distribution policies
could change.13
State Street will calculate the net asset
value (‘‘NAV’’) of the Fund’s Shares
shortly after 4:00 p.m. Eastern Time
(‘‘ET’’) on each trading day.14
make its distributions; however, in the event that
the Fund’s distribution rate exceeds its actual
returns, the Fund may be required to liquidate
investments in order to make such a distribution.
To the extent that the Fund’s total return exceeds
the distribution rate for an extended period of time,
the Fund may increase the distribution rate or
distribute supplemental amounts to shareholders.
Conversely, if the Fund’s total return is less than
the distribution rate for an extended period of time,
the Fund will be drawing upon its net assets to meet
the distribution payments.
13 In connection with any change in distribution
policies, the Fund will provide written advance
notice to investors.
14 NAV per Share will be computed by dividing
the value of all assets of the Fund (including any
accrued interest and dividends), less all liabilities
(including accrued expenses and distributions
declared but unpaid), by the total number of Shares
outstanding. Under the Fund’s current operational
procedures, the Fund’s net asset value will be
calculated after close of the Exchange each day. The
values of the Fund’s exchange-traded futures and
forward contracts and options on futures and
forward contracts will be valued at the settlement
price determined by the principal exchange through
which they are traded. Market quotes for the Fund’s
exchange-traded futures and forward contracts and
options on futures and forward contracts may not
be readily available if a contract cannot be
liquidated due to the operation of daily limits or,
due to extraordinary circumstances, the exchanges
or markets on which the investments are traded do
not open for trading the entire day and no other
market prices are available. In addition, events may
occur after the close of the relevant market, but
prior to the determination of the Fund’s net asset
value, that materially affect the values of the Fund’s
investments. In such circumstances, the Fund will
use an independent pricing service to value such
investments. The Commodity Sub-Advisor will
review the values as determined by the
independent pricing service and discuss those
valuations with the pricing service if appropriate
based on guidelines established by the Manager that
it believes are consistent with industry standards.
The values of the Fund’s OTC derivatives will be
valued by the Commodity Sub-Advisor by taking
either the arithmetic mean of prices obtained by
several dealers, the prices as determined by the
average of two (2) or more independent means or
the prices as reported by an independent pricing
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The normal trading hours for those
investments of the Fund traded on the
various commodity exchanges may
differ from the normal trading hours of
the Exchange, which are from 9:30 a.m.
to 4 p.m. ET. Therefore, there may be
time periods during the trading day
where the Shares will be trading on the
Exchange, but the futures contracts on
various commodity exchanges will not
be trading. The value of the Shares may
accordingly be influenced by the nonconcurrent trading hours between the
Exchange and the various futures
exchanges on which the futures
contracts based on the underlying
commodities are traded.
The trading prices of the Fund’s
Shares listed on the Exchange may
differ from the NAV and can be affected
not only by movements in the NAV, but
by market forces of supply and demand,
economic conditions and other factors
as well. Accordingly, the trading prices
of the Shares should not be viewed as
a real-time update of the NAV.
Shares will be registered in book entry
form through DTC. Trading in the
Shares on the Exchange will be effected
until 4 p.m. ET each business day. The
minimum trading increment for such
shares will be $.01.
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Underlying Commodity Interests
Information
The daily settlement prices for the
commodity futures and forward
contracts held by the Fund are publicly
available on the Web sites of the futures
and forward exchanges trading the
particular contracts. Various data
vendors and news publications publish
futures prices and data. The Exchange
represents that futures, forwards and
related exchange traded options quotes
and last sale information for the
commodity contracts are widely
disseminated through a variety of
market data vendors worldwide,
including Bloomberg and Reuters. In
addition, the Exchange further
represents that complete real-time data
for such futures, forwards and exchange
traded options is available by
subscription from Reuters and
Bloomberg. The relevant futures and
forward exchanges also provide delayed
service. In the event the Commodity Sub-Advisor
uses an independent pricing service to value any of
its commodity futures and forward contracts,
options on futures and forward contracts and OTC
derivatives, the pricing service typically will value
such commodity futures and forward contracts,
options on futures and forward contracts and OTC
derivatives using a wide range of market data and
other information and analysis, including reference
to transactions in other comparable investments if
available. The procedures of any independent
pricing service provider will be reviewed by the
Manager on a periodic basis.
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futures and forward contract
information on current and past trading
sessions and market news free of charge
on their respective Web sites. The
contract specifications for the futures
and forward contracts are also available
from the futures and forward exchanges
on their Web sites as well as other
financial informational sources.
Information related to OTC commodity
options is disclosed by the Fund on a
monthly basis as discussed below.
each trading day shortly after 4 p.m. ET.
The NAV will be disclosed on the
Fund’s Web site and the Exchange’s
Web site.
Availability of Information Regarding
the Shares
The Web site for the Fund and the
Manager, https://www.nuveen.com,
which will be publicly accessible at no
charge, will contain the following
information: (a) The prior business day’s
NAV and the reported closing price; (b)
calculation of the premium or discount
of such price against such NAV; and (c)
other applicable quantitative
information. The Fund’s prospectus also
will be available on the Fund’s Web site.
The Fund’s total portfolio holdings
will also be disclosed and updated on
its Web site on each business day that
the Exchange is open for trading.15 This
Web site disclosure of portfolio holdings
(as of the previous day’s close) will be
made daily and will include, as
applicable: (a) The name and value of
each commodity investment; (b) the
value of over-the-counter commodity
put options, if any, and the value of the
collateral as represented by cash; (c)
cash equivalents; and (d) debt securities
held in the Fund’s portfolio. The values
of the Fund’s portfolio holdings will, in
each case, be determined in accordance
with the Fund’s valuation policies.
As described above, the NAV for the
Fund will be calculated and
disseminated daily. The Manager has
represented to the Exchange that the
NAV will be disseminated to all market
participants at the same time. The
Exchange will also make available on its
Web site daily trading volume, closing
prices, and the NAV. The closing price
and settlement prices of the futures
contracts held by the Fund are also
readily available from the relevant
futures exchanges, automated quotation
systems, published or other public
sources, or on-line information services
such as Bloomberg or Reuters. In
addition, the Exchange will provide a
hyperlink on its Web site at https://
www.nyse.com to the Manager’s Web
site.
As noted above, State Street will
calculate the NAV of the Fund once
Criteria for Initial and Continued Listing
The Fund will be subject to the
criteria in Rule 1602 for initial and
continued listing of the Shares. A
minimum of 2,000,000 shares will be
required to be publicly distributed at the
start of trading. It is anticipated that the
initial price of a share will be
approximately $25. The Fund will
accept subscriptions for a minimum of
100 shares during the initial offering
which is expected to last no more than
60 days. After the completion of the
initial offering, shares can be bought
and sold throughout the trading day like
any other publicly-traded security. The
Exchange believes that the anticipated
minimum number of shares outstanding
at the start of trading is sufficient to
provide adequate market liquidity and
to further the Fund’s objectives.
The Fund has represented to the
Exchange that, for initial and continued
listing of the Shares, it will be in
compliance with Section 803 of the
NYSE Amex Company Guide
(Independent Directors and Audit
Committee) and Rule 10A–3 under the
Act.
15 The total portfolio holdings will be
disseminated to all market participants at the same
time.
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Termination Events
The Fund will dissolve in certain
prescribed circumstances. Upon
termination of the Fund, shareholders
will surrender their shares and receive
in cash their portion of the value of the
Fund.
Original and Annual Listing Fees
The NYSE Amex original listing fee
applicable to the listing of the Fund is
$5,000. In addition, the annual listing
fee applicable under Section 141 of the
NYSE Amex Company Guide will be
based upon the year-end aggregate
number of shares in all series of the
Fund outstanding at the end of each
calendar year.
Trading Rules
The Shares are equity securities
subject to NYSE Amex Rules governing
the trading of equity securities,
including, among others, rules
governing priority, parity and
precedence of orders, DMM
responsibilities and account opening
and customer suitability (Rule 405—
NYSE Amex Equities). Initial equity
margin requirements of 50% will apply
to transactions in the Shares. Shares
will trade on the Exchange until 4 p.m.
ET each business day and will trade in
the minimum price variants established
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under Rule 62—NYSE Amex Equities.
Trading rules pertaining to odd-lot
trading in NYSE Amex equities (Rule
124—NYSE Amex Equities) will also
apply.
The Exchange states that Rule 15A—
NYSE Amex Equities complies with
Rule 611 of Regulation NMS, which
requires among other things, that the
Exchange adopt and enforce written
policies and procedures that are
reasonably designed to prevent tradethroughs of protected quotations. The
trading of the Shares will be subject to
certain conflict of interest provisions set
forth in NYSE Amex Equities Rules
1603 and 1604.
NYSE Amex Equities Rule 1603
provides that, if a DMM unit is
operating under Rule 98 (Former)—
NYSE Amex Equities, Rule 105(b)
(Former)—NYSE Amex Equities and
section (m) of the Guidelines thereunder
shall be deemed to prohibit a DMM, his
or her member organization, other
member, or approved person of such
member organization or employee or
officer thereof from acting as a market
maker or functioning in any capacity
involving market-marking
responsibilities in an underlying asset
or commodity, related futures or options
on futures, or any related derivative. If
an approved person of a DMM unit is
entitled to an exemption from Rule
105(b) (Former) under Rule 98 (Former),
such approved person may act in a
market making capacity, other than as a
specialist in Trust Units on another
market center, in the underlying asset or
commodity, related futures or options
on futures, or any other related
derivatives. NYSE Amex Equities Rule
1603 provides that, if a DMM unit is
operating under Rule 98—NYSE Amex
Equities, Rule 105(b)—NYSE Amex
Equities and section (m) of the
Guidelines thereunder shall be deemed
to prohibit the DMM unit or officer or
employee thereof from acting as a
market maker or functioning in any
capacity involving market-marking
responsibilities in an underlying asset
or commodity, related futures or options
on futures, or any other related
derivatives.
Under the proposed amendments,
NYSE Amex Rule 1604 will provide that
DMMshandling [sic] the Shares must
maintain in a readily accessible place
and provide to the Exchange upon
request, and keep current a list
identifying all accounts for trading the
underlying physical assets or
commodities, related futures or options
on futures, or any other related
derivatives, which the DMM may have
or over which it may exercise
investment discretion.
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Suitability
The Information Circular (described
below) will inform members and
member organizations of the
characteristics of the Fund and of
applicable Exchange rules, as well as of
the requirements of Rule 405—NYSE
Amex Equities (Diligence as to
Accounts).
The Exchange notes that, pursuant to
Rule 405—NYSE Amex Equities,
member organizations are required in
connection with recommending
transactions in the Shares to have a
reasonable basis to believe that a
customer is suitable for the particular
investment given reasonable inquiry
concerning the customer’s investment
objectives, financial situation, needs,
and any other information known by
such member.
Information Circular
The Exchange will distribute an
Information Circular to its members in
connection with the trading of the
Shares. The Circular will discuss the
special characteristics and risks of
trading this type of security.
Specifically, the Circular, among other
things, will discuss what the Shares are,
the requirement that members and
member firms deliver a prospectus to
investors purchasing the Shares prior to
or concurrently with the confirmation of
a transaction during the initial public
offering, applicable NYSE Amex rules,
and trading information and applicable
suitability rules. The Circular will also
explain that the Fund is subject to
various fees and expenses described in
the Registration Statement. The Circular
will also reference the fact that there is
no regulated source of last sale
information regarding physical
commodities and note the respective
jurisdictions of the SEC and CFTC. The
Circular will also note that the forward
contracts are traded on the LME, which
is subject to regulation by the Securities
and Investment Board in the United
Kingdom and the Financial Services
Authority. In addition, the Circular will
indicate that OTC instruments or
products may effectively be
unregulated.
The Circular will advise members of
their suitability obligations with respect
to recommended transactions to
customers in the Shares. The Circular
will also discuss any relief, if granted,
by the Commission or the staff from any
rules under the Act.
The Circular will disclose that the
NAV for shares will be calculated
shortly after 4:00 p.m. ET each trading
day.
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Surveillance
The Exchange represents that its
surveillance procedures are adequate to
properly monitor the trading of the
Shares and to deter and detect
violations of Exchange rules and
applicable Federal securities laws.16
NYSE Amex will rely on its existing
surveillance procedures. The Exchange
currently has in place Information
Sharing Agreements with ICE
FUTURES, LME, NYMEX, and KCBOT
for the purpose of providing information
in connection with trading in or related
to futures contracts traded on their
respective exchanges. The Exchange
also notes that the CBOT, CME, LIFFE
and NYBOT are members of the
Intermarket Surveillance Group (‘‘ISG’’).
As a result, the Exchange asserts that
market surveillance information is
available from the CBOT, CME, NYBOT
and LIFFE through ISG, if necessary,
due to regulatory concerns that may
arise in connection with the futures
contracts.
Conforming Changes and Updating
Amendments
Since the original adoption of Rule
1600 et seq., the Exchange has adopted
a completely new set of rules governing
both equity and options trading on the
Exchange. Consequently, a number of
references to Exchange rules in Rule
1600 et seq. are no longer correct and
have been appropriately modified.
References to equity specialists have
been modifiedto refer to ‘‘designated
market makers’’ (‘‘DMMs’’), which is the
designation used throughout the
amended NYSE Amex equity trading
rules. A typographical error in Rule
1602 is also corrected in this filing.
Commentary .03 to Rule 1600
provides that member organizations
shall not enter limit orders into the
Exchange’s order routing system as
agent (i.e. for customer agency orders) in
the same trust, for the account or
accounts of the same or related
beneficial owner, in such a manner that
the beneficial owner(s) effectively is
operating as a market maker by holding
itself out as willing to buy and sell such
Trust Units on a regular or continuous
basis. The Amex adopted provisions of
this kind because the ability of nonmembers to function effectively as
market makers gave those non-members
an advantage over the specialist who
was required to yield priority to their
orders. That advantage no longer exists
under current NYSE Amex rules, as all
16 See e-mail from John Carey, Chief Counsel—
U.S. Equities, Exchange, to Geoffrey Pemble and
Michou Nguyen, Special Counsels, Commission,
dated February 23, 2010.
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market participants (including the
DMM) trade on parity unless they
establish priority under Exchange rules,
which can be done by all market
participants including the DMM. As
such Commentary .03 to rule 1600 no
longer serves any purpose and the
Exchange proposes to delete it.
As originally adopted, Rule 1603
provided that NYSE Amex Rule 175(c)
was deemed to prohibit an equity
specialist, his member organization, or
any other member, limited partner,
officer, or approved person thereof from
acting as a market maker or functioning
in any capacity involving marketmaking responsibilities in an underlying
asset or commodity, related futures or
options on futures, or any other related
derivatives, unless the Exchange granted
an exemption under Rule 193. Rule
1603 as amended provides that, if a
DMM unit is operating under Rule 98
(Former)—NYSE Amex Equities, Rule
105(b) (Former)—NYSE Amex Equities
and section (m) of the Guidelines
thereunder shall be deemed to prohibit
a DMM, his or her member organization,
other member, or approved person of
such member organization or employee
or officer thereof from acting as a market
maker or functioning in any capacity
involving market-marking
responsibilities in an underlying asset
or commodity, related futures or options
on futures, or any related derivative. If
an approved person of a DMM unit is
entitled to an exemption from Rule
105(b) (former) under Rule 98 (former),
such approved person may act in a
market making capacity, other than as a
specialist in Trust Units on another
market center, in the underlying asset or
commodity, related futures or options
on futures, or any other related
derivatives.
As originally adopted, Commentary
.01 to Rule 1603 provided that trading
in the Shares was generally subject to
the Exchange’s Stabilization rule, except
that specialists would be permitted to
buy on ‘‘plus ticks’’ and sell on ‘‘minus
ticks,’’ in order to bring the Shares into
parity with the underlying commodity
or commodities and/or futures contract
price. The Exchange’s new stabilization
rule (Rule 104—NYSE Amex Equities)
does not contain the same prohibitions
on buying on ‘‘plus ticks’’ and selling on
‘‘minus ticks’’ as was formerly the case
under Rule 170—AIMI. Consequently,
the Exchange proposes to delete
Commentary .01 to Rule 1603, as it is no
longer relevant.
Rule 1604(a) as originally adopted,
provided that the member organization
acting as specialist in Trust Units was
obligated to conduct all trading in the
Trust Units in its specialist account,
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16:46 Feb 26, 2010
Jkt 220001
subject only to the ability to have one
or more investment accounts, all of
which must be reported to the Exchange
(See Rule 170—AEMI). The Exchange
proposes to delete this requirement, as
DMMs are now governed by Rule 104—
NYSE Amex Equities, which does not
limit the DMM’s use of investment
accounts to trade its assigned securities
or require the DMM to report activity in
such accounts to the Exchange.17 Rule
1604(a) also provides that the member
organization acting as DMM in the
Shares must file with the Exchange, in
a manner prescribed by the Exchange,
and keep current a list identifying all
accounts for trading the underlying
physical asset or commodity, related
futures or options on futures, or any
other related derivatives, which the
member organization acting as DMM
may have or over which it may exercise
investment discretion. The Exchange
proposes to amend this requirement to
provide that, rather than filing the list
with the Exchange, the DMM must
maintain it in a readily accessible place
and provide it to the Exchange upon
request. The Exchange believes that this
is sufficient for its regulatory needs, as
it will only review the list when as
specific regulatory need arises, so it is
sufficient to have the list readily
available upon request.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) 18 of the Act in general, and
furthers the objectives of Section 6(b)(5)
of the Act 19 in particular in that it is
designed to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
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. The
proposed rule change is designed to
protect investors and the public interest
because it will impose appropriate
restrictions on the listing and trading of
Trust Units.
17 The Exchange notes that Rule 104—NYSE
Amex Equities in its current form has been
approved by the SEC on a pilot program basis. In
the event that the pilot program is not made
permanent or is amended, DMMs may at that time
become subject to limitations on their ability to
trade Trust Units in investment accounts.
18 15 U.S.C. 78f(b).
19 15 U.S.C. 78f(b)(5).
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9271
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 Exchange consents,
the Commission will:
(A) By order approve such 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 rulecomments@sec.gov. Please include File
Number SR–NYSEAmex–2010–09 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–NYSEAmex–2010–09. 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
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submission,20 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 Web site viewing and
printing 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 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–
NYSEAmex–2010–09 and should be
submitted on or before March 22, 2010.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Florence E. Harmon,
Deputy Secretary
[FR Doc. 2010–4136 Filed 2–26–10; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–61559; File No. SR–NYSE–
2010–08]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by New York
Stock Exchange LLC Amending the
Provisions of NYSE Rules 116 and
123C To Repeal the Temporary
Provision That Allows the Exchange
To Report Multiple Closing Prints to
the Consolidated Tape When a Closing
Transaction Exceeds 99,999,999
Shares
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February 22, 2010.
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 February
20 The text of the proposed rule change is
available on the Commission’s Web site at https://
www.sec.gov.
21 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.
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16:46 Feb 26, 2010
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18, 2010, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II 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
The Exchange proposes to amend the
provisions of NYSE Rules 116 (‘‘Stop’’
Constitutes Guarantee) and 123C
(Market On The Close Policy And
Expiration Procedures) to repeal the
temporary provision that allows the
Exchange to report multiple closing
prints to the Consolidated Tape when a
closing transaction exceeds 99,999,999
shares. The text of the proposed rule
change is available at the Exchange, the
Commission’s Public Reference Room,
and https://www.nyse.com.
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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
New York Stock Exchange LLC
(‘‘NYSE’’ or the ‘‘Exchange’’) proposes to
amend the provisions of NYSE Rules
116 (‘‘Stop’’ Constitutes Guarantee) and
123C (Market On The Close Policy And
Expiration Procedures) to repeal the
temporary provision that allows the
Exchange to report multiple closing
prints to the Consolidated Tape when a
closing transaction exceeds 99,999,999
shares.
The Exchange amended NYSE Rules
116.40(C) and 123C(3) to report multiple
closing prints to the Consolidated Tape
last sale reporting system in order to
compensate for a temporary size
limitation in a new market data
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distribution system.4 At that time,
Exchange’s market data distribution
system was unable to support prints
greater than 99,999,999 shares.
Executions of greater than 99,999,999
shares had to be sent to the
Consolidated Tape in multiple prints.
The multiple prints reflected the
cumulative volume of the single closing
transaction.
The Exchange’s market data
distribution system is now capable of
reporting in a single transaction,
executions that exceed 99,999,999
shares to the Consolidated Tape last sale
reporting system in a single print.5 The
Exchange therefore seeks to remove the
temporary amendments to Rules
116.40(C) and 123C(3) and once again
require all closing transactions to be
reported in a single print.
The Exchange also proposes to add an
inadvertently omitted parenthesis in the
second paragraph of Rule 123C(3)(A).
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Securities Exchange Act of 1934
(the ‘‘Act’’),6 in general, and furthers the
objectives of Section 6(b)(5) of the Act,7
in particular, in that it is designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, 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. The Exchange believes
the proposed rule change will facilitate
the timely and efficient reporting of the
closing transaction on the Exchange and
thus ultimately serve to protect
investors and the public interest.
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.
4 See Securities Exchange Act Release No. 61235
(December 23, 2009), 75 FR 168 (January 4, 2010)
(SR–NYSE–2009–126). The Exchange represented
that it anticipated correction of the limitation no
later than the end of February 2010. Id. at Footnote
3.
5 The size limitation was corrected as of January
25, 2010.
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
E:\FR\FM\01MRN1.SGM
01MRN1
]]>Agencies
[Federal Register Volume 75, Number 39 (Monday, March 1, 2010)]
[Notices]
[Pages 9265-9272]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-4136]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61571; File No. SR-NYSEAmex-2010-09]
Self-Regulatory Organizations; NYSE Amex LLC; Notice of Filing of
Proposed Rule Change Amending Its Trust Unit Rules and Proposing the
Listing of the Nuveen Diversified Commodity Fund
February 23, 2010.
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 January 29, 2010, NYSE Amex LLC (the ``Exchange'' or
``NYSE Amex'') 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 Amex proposes to amend NYSE Amex Rule 1600 et seq., to provide
that the issuers of Trust Units listed thereunder may invest directly
in commodities and commodity derivatives rather than solely in the
assets of a trust, partnership, limited liability company, corporation
or other similar entity constituted as a commodity pool that holds such
investments. Other minor changes are also made to conform to changes
made to other NYSE Amex rules. Pursuant to these rules, the Exchange
proposes to list and trade shares of the Nuveen Diversified Commodity
Fund. The text of the proposed rule change is available at the
Exchange, the Commission's Public Reference Room, and https://www.nyse.com.
[[Page 9266]]
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
NYSE Amex previously adopted Rule 1600 et seq. to permit the
listing of Trust Units, which are defined as securities that are issued
by a trust or other similar entity that invests in the assets of a
trust, partnership, limited liability company, corporation or other
similar entity constituted as a commodity pool that holds investments
comprising or otherwise based on any combination of futures contracts,
options on futures contracts, forward contracts, swap contracts and/or
commodities.\4\ Rule 1600 was adopted in contemplation of the listing
of shares of the Nuveen Commodities Income and Growth Fund (the
``Fund''), a fund sponsored by Nuveen Investments, Inc. (``Nuveen'')
and the investment plan of the Fund was described in detail in the
Exchange's Form 19b-4 and the Commission's Notice.\5\ Nuveen now
proposes to go forward with a listing of shares (the ``Shares'') of the
Fund under a new name, the Nuveen Diversified Commodity Fund, and with
a somewhat modified investment plan, which is described below under
``Nuveen Diversified Commodity Fund.'' The Shares will conform to the
initial and continued listing criteria under Rule 1602. The initial
public offering and sale of the Shares will be registered under the
Securities Act of 1933.
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\4\ See Securities Exchange Act Release No. 56880 (December 3,
2007), 72 FR 69259 (December 3 [sic], 2007).
\5\ See Securities Exchange Act Release No. 56465 (September 19,
2007), 72 FR 54489 (September 25, 2007).
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In order to use income tax reporting procedures more familiar to
investors in investment trusts, it was originally contemplated that the
Fund would have a ``master/feeder'' structure in which the Fund would
hold no assets directly except the equity of a separate investment
vehicle, which would serve as the conduit through which the Fund would
make its investments. However, due to a change in the interpretation of
applicable tax law by the Internal Revenue Service, the originally
expected trust reporting procedures would no longer be available under
a master/feeder structure. In light of this interpretative change,
Nuveen proposes to modify its approach and have the listed Fund make
its own direct investments. Rule 1600 as currently in effect permits
only the listing of Trust Units whose issuers utilize the master/feeder
structure originally intended to be used for the Fund. The rule was
drafted in this way simply because it accommodated the security
proposed to be listed at that time and was not designed to provide any
protections to investors, but merely facilitated the now-unavailable
trust-based tax reporting procedures. Consequently, the Exchange
proposes to amend the definition of Trust Units in Rule 1600 to remove
the master/feeder structure requirement and permit the listing of Trust
Units where the issuer is constituted as a commodity pool which invests
directly in commodities and commodity derivatives. The Exchange
believes that this amendment does not in any way increase the risk to
investors of investing in the Trust Units or give rise to any new
regulatory concerns. Nuveen has represented to the Exchange that there
are no material revisions to the Fund's structure or investment
approach other than those described in this filing and the Exchange
believes that these revisions do not give rise to any new regulatory
issues or raise significant new investor protection concerns.
Nuveen Diversified Commodity Fund
The Fund was formed as a Delaware statutory trust on December 7,
2005 pursuant to a Declaration of Trust signed by Wilmington Trust
Company, as the Delaware Trustee.\6\ The Fund's primary investment
objective is to seek total return through broad exposure to the
commodities markets. The Fund's secondary objective is to provide
investors with monthly income and capital distributions not commonly
associated with commodity investments. The Fund will invest in
commodity futures and forward contracts, options on commodity futures
and forward contracts and over-the-counter (``OTC'') commodity options
in the following commodity groups: energy, industrial metals, precious
metals, livestock, agriculturals, and tropical foods and fibers and may
in the future include other commodity investments that become the
subject of commodity futures trading.\7\
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\6\ The Fund, as a commodity pool, will not be subject to
registration and regulation under the Investment Company Act of 1940
(the ``1940 Act'').
\7\ Following is a list of futures contracts and other commodity
interests in which the Fund intends to invest, and the exchanges on
which they trade, based on systematic calculations of global
commodity production and U.S. dollar volume traded: Lumber, Milk,
Feeder Cattle, Lean Hogs, Live Cattle, Pork Bellies--Chicago
Mercantile Exchange (``CME''); Cocoa, Arabica Coffee, Cotton, Orange
Juice, Sugar--New York Board of Trade (``NYBOT''); Gold, Silver,
Copper--Commodity Exchange (``COMEX'') which is a division of the
New York Mercantile Exchange (``NYMEX''); Palladium, Platinum, WTI
Crude Oil, Heating Oil, Natural Gas, Gasoline--NYMEX; Aluminum,
Copper, Lead, Nickel, Tin, Zinc--London Metals Exchange (``LME'');
Bean Oil, Corn, Oats, Soy Meal, Soybeans, Wheat--Chicago Board of
Trade (``CBOT''); Brent Crude Oil, Gas Oil-- InterContinental
Exchange (``ICE''); Robustta Coffee-- London International Financial
Futures Exchange (``LIFFE''); Wheat-- Kansas City Board of Trade
(``KCBOT'').
---------------------------------------------------------------------------
The Fund is a commodity pool. The Fund is managed by Nuveen
Commodities Asset Management, LLC (the ``Manager''). The Manager is
registered as a commodity pool operator (the ``CPO'') and a commodity
trading advisor (the ``CTA'') with the Commodity Futures Trading
Commission (``CFTC'') and is a member of the National Futures
Association (``NFA'').
The Manager will serve as the CPO and a CTA of the Fund. The
Manager will determine the Fund's overall investment strategy,
including: (i) The selection and ongoing monitoring of the Fund's sub-
advisors; (ii) the management of the Fund's business affairs; and (iii)
the provision of certain clerical, bookkeeping and other administrative
services. Gresham Investment Management LLC (the ``Commodity Sub-
Advisor'') will invest on a notional basis substantially all of the
Fund's assets in commodity futures and forward contracts pursuant to
the commodity investment strategy (its proprietary Tangible Asset
Program[reg] (``TAP[reg]'') \8\ and a risk management program. The
Commodity Sub-Advisor is a Delaware limited liability company and is
registered with the CFTC as a
[[Page 9267]]
CTA and a CPO and is a member of the NFA. The Commodity Sub-Advisor is
also registered with the Commission as an investment adviser. Nuveen
Asset Management (the ``Collateral Sub-Advisor''), an affiliate of the
Manager, will invest the Fund's collateral in short-term, investment
grade quality debt instruments. The Collateral Sub-Advisor is
registered with the Commission as an investment adviser.
---------------------------------------------------------------------------
\8\ The Fund does not intend to utilize leverage. However, the
Fund may borrow for temporary or emergency purposes in an amount up
to 5% of the value of the Fund's net assets should the need arise.
Such short term borrowings would mature in less than 60 days from
the date of borrowing. In order to facilitate any such borrowing,
the Fund intends to establish a standby credit facility with State
Street Bank and Trust Company that will be entered into as of the
closing of the offering of its common shares. Any temporary or
emergency borrowings would be used to provide the Fund with added
potential flexibility in managing short-term portfolio liquidity
needs and managing the payment of distributions.
---------------------------------------------------------------------------
Investment Description
The Fund's investment objective is to generate attractive risk-
adjusted total returns as compared to investments in commodity indexes.
The Fund intends to pursue its investment objective by utilizing:
(a) An actively managed rules-based commodity investment strategy,
whereby the Fund will invest in a diversified basket of commodity
futures and forward contracts with an aggregate notional value
substantially equal to the net assets of the Fund; and (b) a risk
management program designed to moderate the overall risk and return
characteristics of the Fund's commodity investments. In pursuing the
risk management program, the Fund will write (sell) ``out-of-the-
money'' commodity call options to obtain option premium cash flow, on
individual futures and forward contracts, on baskets of commodities or
on broad based commodity indices. The Fund may also purchase ``out-of-
the-money'' commodity put options for protection against significant
asset value declines on an opportunistic basis. Initially, the Fund
does not expect to purchase commodity put options.
The Fund will typically: (i) Invest in commodity futures and
forward contracts that are traded either on U.S. or non-U.S. commodity
futures exchanges; and (ii) sell call options on commodity futures and
forward contracts that are traded either on U.S. or non-U.S. exchanges.
The Fund may also purchase put options on commodity futures and forward
contracts that are traded either on U.S. or non-U.S. exchanges or may
purchase OTC commodity put options through dealers pursuant to
negotiated, bi-lateral arrangements. The Fund also may invest in other
commodity contracts that are presently, or may hereafter become, the
subject of commodity futures trading. Except for certain limitations
described below, there are no restrictions or limitations on the
specific commodity investments in which the Fund may invest.
Commodity Investment Strategy (TAP[reg]). The Commodity Sub-Advisor
will invest on a notional basis substantially all of the Fund's assets
in commodity futures and forward contracts pursuant to the commodity
investment strategy TAP[reg], an actively managed, rules-based \9\
commodity investment strategy. TAP[reg] is fundamental in nature and is
designed to maintain consistent, fully collateralized exposure to
commodities as an asset class. TAP[reg] does not require the existence
of price trends in order to be successful.
---------------------------------------------------------------------------
\9\ TAP[reg] currently requires investment in futures or forward
contracts for commodities in each of the energy, industrial metals,
livestock, agriculturals, tropical foods and fibers and precious
metal commodity groups. Commodity group weightings and individual
commodity weightings are chosen by a process that blends two-thirds
of five year global production value and one-third of five year
value of commodity futures contracts traded in dollars. The process
constrains the weightings of each commodity group such that no group
may constitute more than 35% of TAP[reg] and no single commodity
interest can constitute more than 70% of its group. In addition,
each commodity is rebalanced periodically to its target weighting if
its actual weighting deviates from its target substantially
(currently, by more than 10%).
---------------------------------------------------------------------------
Risk Management Program. Pursuant to the risk management program,
the Fund will write (or sell) commodity call options that may be up to
20% ``out-of-the-money'' \10\ on a continual basis on up to
approximately 50% of the notional value of each of its commodity
futures and forward contract positions that have sufficient option
trading volume and liquidity. The Commodity Sub-Advisor will write call
options on individual futures and forward contracts held by the Fund,
on baskets of commodities or on broad based commodity indices. As the
writer of call options for which a premium is received, the Fund will
forego the right to any appreciation in the value of each commodity
futures or forward contract in its portfolio that effectively underlies
a call option to the extent the value of the commodity futures or
forward contract exceeds the exercise price of such option on or before
the expiration date.
---------------------------------------------------------------------------
\10\ A call option is ``out-of-the-money'' when the strike price
is above the current trading price of the underlying commodity. A
put option is ``out-of-the-money'' when the strike price is below
the current trading price of the underlying commodity.
---------------------------------------------------------------------------
Initially, the Fund does not expect to purchase commodity put
options. In order to seek protection against significant asset value
declines, the Fund may from time to time purchase ``out-of-the-money''
put options on broad-based commodity indices such as the DJ-UBS
Commodity Index[reg] (``DJ-UBS''), the S&P GSCI Commodity Index
(``GSCI''), or on certain custom indices, whose prices are expected to
closely correspond to a substantial portion of the long commodity
futures and forward contracts held by the Fund. The Fund also may
purchase put options on baskets of commodities and on individual
futures and forward contracts held by it. On an absolute basis, the
Fund does not expect that the cost to purchase put options at any one
time will exceed 5% of the value of the Fund's net assets.
Debt Instruments Used as Collateral. The Fund's investments in
commodity futures and forward contracts, and options on commodity
futures and forward contracts, generally will not require significant
outlays of principal. To support its commodity investments, the Fund
anticipates that it will maintain significant collateral that will be
invested in short-term debt instruments with maturities of up to two
years that, at the time of investment, are investment grade quality,
including obligations issued or guaranteed by the U.S. government or
its agencies and instrumentalities, as well as corporate obligations
and asset-backed securities. Although earning interest income, the
collateral is subject on a continual basis to additional margin calls
by the commodity broker and to additional deposits in the commodity
account if the levels of notional trading change.
Commodity Futures and Forward Contracts and Related Options
The prices of the commodity futures and forward contracts, options
on commodity futures and forward contracts, and OTC commodity options
are volatile with fluctuations expected to affect the value of the
Shares. Commodity futures and forward contracts and options on
commodity futures and forward contracts to be held by the Fund will be
traded on U.S. and/or non-U.S. exchanges. The commodity futures and
forward contracts to be entered into by the Fund are listed and traded
on organized and regulated exchanges based on the various commodities
in the groups described above.\11\ Forward contracts are contracts for
the purchase and sale of a commodity for delivery on or before a future
date or during a specified period at a specified price. Futures
contracts are essentially forward contracts that are traded on
exchanges. Options on commodity futures and forward contracts are
contracts giving the purchaser the right, as opposed to the obligation,
to acquire or to dispose of the commodity futures or forward contract
underlying the option on or before a future date at a specified price.
The Fund may purchase OTC commodity put options through dealers
[[Page 9268]]
pursuant to negotiated, bi-lateral arrangements.
---------------------------------------------------------------------------
\11\ See supra note 7.
---------------------------------------------------------------------------
The potential futures contracts are traded on U.S. and non-U.S.
exchanges, including the CBOT, the CME, the ICE, the LIFFE, the LME,
the NYMEX, the COMEX, the NYBOT and the KCBOT.
The Manager will assess or review, as appropriate, the
creditworthiness of each potential or existing, as appropriate,
counterparty to an OTC contract pursuant to guidelines approved by the
Manager's board of directors. Furthermore, the Manager, on behalf of
the Fund, will only enter into OTC contracts with: (a) Members of the
Federal Reserve System or foreign banks with branches regulated by the
Federal Reserve Board; (b) primary dealers in U.S. government
securities; (c) broker-dealers; (d) futures commission merchants; or
(e) affiliates of the foregoing.
Structure of the Fund
Fund. The Fund is a statutory trust formed pursuant to the Delaware
Statutory Trust Act and will issue shares that represent units of
fractional undivided beneficial interest in and ownership of the Fund.
Trustee. Wilmington Trust Company is the Delaware Trustee of the
Fund. The Delaware Trustee is unaffiliated with the Manager.
Individual Trustees. The individual trustees of the Fund, all of
whom will be unaffiliated with the Manager, will fulfill those
functions required under the NYSE Amex listing standards and certain
other functions as set forth in the Fund's Trust Agreement.
Manager. The Manager is a Delaware limited liability company that
is registered with the CFTC as a CPO and a CTA and is a wholly-owned
subsidiary of Nuveen Investments, Inc. The Manager will serve as the
CPO and a CTA of the Fund and through the Commodity Sub-Advisor will be
responsible for determining the Fund's overall investment strategy and
its implementation. It is anticipated that the individual trustees,
pursuant to the Fund's Trust Agreement, will delegate all authority
(other than the individual trustees' limited requirements to serve on
the Fund's Audit Committee and Nominating Committee) to the Manager to
operate the business of the Fund and to be responsible for the conduct
of the Fund's commodity affairs. As a registered CPO and CTA, the
Manager is required to comply with various regulatory requirements
under the CEA and the rules and regulations of the CFTC and the NFA.
Commodity Sub-Advisor. The Commodity Sub-Advisor is a Delaware
limited liability company that is registered with the CFTC as a CTA and
a CPO and is a member of the NFA. As a registered CPO and CTA, the
Commodity Sub-Advisor is required to comply with various regulatory
requirements under the CEA and the rules and regulations of the CFTC
and the NFA. The Commodity Sub-Advisor is also registered with the SEC
as an investment adviser.
Collateral Sub-Advisor. The Collateral Sub-Advisor is an affiliate
of the Manager and a wholly owned subsidiary of Nuveen Investments,
Inc. The Collateral Sub-Advisor is registered with the Commission as an
investment adviser.
Custodian, Transfer Agent and Registrar. State Street Bank and
Trust Company (``State Street'') will be the Custodian and Accounting
Agent for the assets of the Fund and its affiliate, Computershare
Shareholder Services, Inc. will be the Transfer Agent and Registrar for
the Shares of the Fund.
Commodity Broker. Newedge USA, LLC (``Newedge'') will act as the
commodity broker for the Fund and will clear transactions that may be
executed by it or other brokerage firms on a ``give-up'' basis. Newedge
is registered as a futures commission merchant and a CPO and is a
member of the NFA. Newedge also is registered with the Commission as a
broker-dealer.
The Exchange notes that each of the Manager, the Commodity Broker,
and the Commodity Sub-Advisor have represented to the Exchange that
they each have erected and maintain firewalls within their respective
institutions to prevent the flow of non-public information regarding
the portfolio of underlying securities from the personnel involved in
the development and implementation of the investment strategy to others
such as sales and trading personnel.
Product Description
The Shares represent units of fractional undivided beneficial
interest in and ownership of the Fund. Following the original issuance,
the Shares will be traded on the Exchange similar to other equity
securities.
Commencing with the Fund's first distribution, the Fund intends to
make regular monthly distributions to its shareholders (stated in terms
of a fixed cents per share distribution rate) based on past and
projected performance of the Fund.\12\ The Fund's monthly distributions
are sometimes referred to as ``managed distributions.'' The Fund will
seek to establish a distribution rate that roughly corresponds to the
Manager's projections of the total return that could reasonably be
expected to be generated by the Fund over an extended period of time,
although the distribution rate will not be solely dependent on the
amount of income earned or capital gains realized by the Fund. The
Fund's ability to make regular monthly distributions will depend on a
number of factors, including, most importantly, the long-term total
returns generated by the Fund's portfolio investments and the risk
management program.
---------------------------------------------------------------------------
\12\ The Fund's actual financial performance will vary so that
the distribution rate may exceed the Fund's actual total returns.
The Fund does not anticipate borrowing to obtain the cash necessary
to make its distributions; however, in the event that the Fund's
distribution rate exceeds its actual returns, the Fund may be
required to liquidate investments in order to make such a
distribution. To the extent that the Fund's total return exceeds the
distribution rate for an extended period of time, the Fund may
increase the distribution rate or distribute supplemental amounts to
shareholders. Conversely, if the Fund's total return is less than
the distribution rate for an extended period of time, the Fund will
be drawing upon its net assets to meet the distribution payments.
---------------------------------------------------------------------------
As portfolio and market conditions change, the Fund's rate of
distributions and the Fund's distribution policies could change.\13\
---------------------------------------------------------------------------
\13\ In connection with any change in distribution policies, the
Fund will provide written advance notice to investors.
---------------------------------------------------------------------------
State Street will calculate the net asset value (``NAV'') of the
Fund's Shares shortly after 4:00 p.m. Eastern Time (``ET'') on each
trading day.\14\
---------------------------------------------------------------------------
\14\ NAV per Share will be computed by dividing the value of all
assets of the Fund (including any accrued interest and dividends),
less all liabilities (including accrued expenses and distributions
declared but unpaid), by the total number of Shares outstanding.
Under the Fund's current operational procedures, the Fund's net
asset value will be calculated after close of the Exchange each day.
The values of the Fund's exchange-traded futures and forward
contracts and options on futures and forward contracts will be
valued at the settlement price determined by the principal exchange
through which they are traded. Market quotes for the Fund's
exchange-traded futures and forward contracts and options on futures
and forward contracts may not be readily available if a contract
cannot be liquidated due to the operation of daily limits or, due to
extraordinary circumstances, the exchanges or markets on which the
investments are traded do not open for trading the entire day and no
other market prices are available. In addition, events may occur
after the close of the relevant market, but prior to the
determination of the Fund's net asset value, that materially affect
the values of the Fund's investments. In such circumstances, the
Fund will use an independent pricing service to value such
investments. The Commodity Sub-Advisor will review the values as
determined by the independent pricing service and discuss those
valuations with the pricing service if appropriate based on
guidelines established by the Manager that it believes are
consistent with industry standards. The values of the Fund's OTC
derivatives will be valued by the Commodity Sub-Advisor by taking
either the arithmetic mean of prices obtained by several dealers,
the prices as determined by the average of two (2) or more
independent means or the prices as reported by an independent
pricing service. In the event the Commodity Sub-Advisor uses an
independent pricing service to value any of its commodity futures
and forward contracts, options on futures and forward contracts and
OTC derivatives, the pricing service typically will value such
commodity futures and forward contracts, options on futures and
forward contracts and OTC derivatives using a wide range of market
data and other information and analysis, including reference to
transactions in other comparable investments if available. The
procedures of any independent pricing service provider will be
reviewed by the Manager on a periodic basis.
---------------------------------------------------------------------------
[[Page 9269]]
The normal trading hours for those investments of the Fund traded
on the various commodity exchanges may differ from the normal trading
hours of the Exchange, which are from 9:30 a.m. to 4 p.m. ET.
Therefore, there may be time periods during the trading day where the
Shares will be trading on the Exchange, but the futures contracts on
various commodity exchanges will not be trading. The value of the
Shares may accordingly be influenced by the non-concurrent trading
hours between the Exchange and the various futures exchanges on which
the futures contracts based on the underlying commodities are traded.
The trading prices of the Fund's Shares listed on the Exchange may
differ from the NAV and can be affected not only by movements in the
NAV, but by market forces of supply and demand, economic conditions and
other factors as well. Accordingly, the trading prices of the Shares
should not be viewed as a real-time update of the NAV.
Shares will be registered in book entry form through DTC. Trading
in the Shares on the Exchange will be effected until 4 p.m. ET each
business day. The minimum trading increment for such shares will be
$.01.
Underlying Commodity Interests Information
The daily settlement prices for the commodity futures and forward
contracts held by the Fund are publicly available on the Web sites of
the futures and forward exchanges trading the particular contracts.
Various data vendors and news publications publish futures prices and
data. The Exchange represents that futures, forwards and related
exchange traded options quotes and last sale information for the
commodity contracts are widely disseminated through a variety of market
data vendors worldwide, including Bloomberg and Reuters. In addition,
the Exchange further represents that complete real-time data for such
futures, forwards and exchange traded options is available by
subscription from Reuters and Bloomberg. The relevant futures and
forward exchanges also provide delayed futures and forward contract
information on current and past trading sessions and market news free
of charge on their respective Web sites. The contract specifications
for the futures and forward contracts are also available from the
futures and forward exchanges on their Web sites as well as other
financial informational sources. Information related to OTC commodity
options is disclosed by the Fund on a monthly basis as discussed below.
Availability of Information Regarding the Shares
The Web site for the Fund and the Manager, https://www.nuveen.com,
which will be publicly accessible at no charge, will contain the
following information: (a) The prior business day's NAV and the
reported closing price; (b) calculation of the premium or discount of
such price against such NAV; and (c) other applicable quantitative
information. The Fund's prospectus also will be available on the Fund's
Web site.
The Fund's total portfolio holdings will also be disclosed and
updated on its Web site on each business day that the Exchange is open
for trading.\15\ This Web site disclosure of portfolio holdings (as of
the previous day's close) will be made daily and will include, as
applicable: (a) The name and value of each commodity investment; (b)
the value of over-the-counter commodity put options, if any, and the
value of the collateral as represented by cash; (c) cash equivalents;
and (d) debt securities held in the Fund's portfolio. The values of the
Fund's portfolio holdings will, in each case, be determined in
accordance with the Fund's valuation policies.
---------------------------------------------------------------------------
\15\ The total portfolio holdings will be disseminated to all
market participants at the same time.
---------------------------------------------------------------------------
As described above, the NAV for the Fund will be calculated and
disseminated daily. The Manager has represented to the Exchange that
the NAV will be disseminated to all market participants at the same
time. The Exchange will also make available on its Web site daily
trading volume, closing prices, and the NAV. The closing price and
settlement prices of the futures contracts held by the Fund are also
readily available from the relevant futures exchanges, automated
quotation systems, published or other public sources, or on-line
information services such as Bloomberg or Reuters. In addition, the
Exchange will provide a hyperlink on its Web site at https://www.nyse.com to the Manager's Web site.
As noted above, State Street will calculate the NAV of the Fund
once each trading day shortly after 4 p.m. ET. The NAV will be
disclosed on the Fund's Web site and the Exchange's Web site.
Termination Events
The Fund will dissolve in certain prescribed circumstances. Upon
termination of the Fund, shareholders will surrender their shares and
receive in cash their portion of the value of the Fund.
Criteria for Initial and Continued Listing
The Fund will be subject to the criteria in Rule 1602 for initial
and continued listing of the Shares. A minimum of 2,000,000 shares will
be required to be publicly distributed at the start of trading. It is
anticipated that the initial price of a share will be approximately
$25. The Fund will accept subscriptions for a minimum of 100 shares
during the initial offering which is expected to last no more than 60
days. After the completion of the initial offering, shares can be
bought and sold throughout the trading day like any other publicly-
traded security. The Exchange believes that the anticipated minimum
number of shares outstanding at the start of trading is sufficient to
provide adequate market liquidity and to further the Fund's objectives.
The Fund has represented to the Exchange that, for initial and
continued listing of the Shares, it will be in compliance with Section
803 of the NYSE Amex Company Guide (Independent Directors and Audit
Committee) and Rule 10A-3 under the Act.
Original and Annual Listing Fees
The NYSE Amex original listing fee applicable to the listing of the
Fund is $5,000. In addition, the annual listing fee applicable under
Section 141 of the NYSE Amex Company Guide will be based upon the year-
end aggregate number of shares in all series of the Fund outstanding at
the end of each calendar year.
Trading Rules
The Shares are equity securities subject to NYSE Amex Rules
governing the trading of equity securities, including, among others,
rules governing priority, parity and precedence of orders, DMM
responsibilities and account opening and customer suitability (Rule
405--NYSE Amex Equities). Initial equity margin requirements of 50%
will apply to transactions in the Shares. Shares will trade on the
Exchange until 4 p.m. ET each business day and will trade in the
minimum price variants established
[[Page 9270]]
under Rule 62--NYSE Amex Equities. Trading rules pertaining to odd-lot
trading in NYSE Amex equities (Rule 124--NYSE Amex Equities) will also
apply.
The Exchange states that Rule 15A--NYSE Amex Equities complies with
Rule 611 of Regulation NMS, which requires among other things, that the
Exchange adopt and enforce written policies and procedures that are
reasonably designed to prevent trade-throughs of protected quotations.
The trading of the Shares will be subject to certain conflict of
interest provisions set forth in NYSE Amex Equities Rules 1603 and
1604.
NYSE Amex Equities Rule 1603 provides that, if a DMM unit is
operating under Rule 98 (Former)--NYSE Amex Equities, Rule 105(b)
(Former)--NYSE Amex Equities and section (m) of the Guidelines
thereunder shall be deemed to prohibit a DMM, his or her member
organization, other member, or approved person of such member
organization or employee or officer thereof from acting as a market
maker or functioning in any capacity involving market-marking
responsibilities in an underlying asset or commodity, related futures
or options on futures, or any related derivative. If an approved person
of a DMM unit is entitled to an exemption from Rule 105(b) (Former)
under Rule 98 (Former), such approved person may act in a market making
capacity, other than as a specialist in Trust Units on another market
center, in the underlying asset or commodity, related futures or
options on futures, or any other related derivatives. NYSE Amex
Equities Rule 1603 provides that, if a DMM unit is operating under Rule
98--NYSE Amex Equities, Rule 105(b)--NYSE Amex Equities and section (m)
of the Guidelines thereunder shall be deemed to prohibit the DMM unit
or officer or employee thereof from acting as a market maker or
functioning in any capacity involving market-marking responsibilities
in an underlying asset or commodity, related futures or options on
futures, or any other related derivatives.
Under the proposed amendments, NYSE Amex Rule 1604 will provide
that DMMshandling [sic] the Shares must maintain in a readily
accessible place and provide to the Exchange upon request, and keep
current a list identifying all accounts for trading the underlying
physical assets or commodities, related futures or options on futures,
or any other related derivatives, which the DMM may have or over which
it may exercise investment discretion.
Suitability
The Information Circular (described below) will inform members and
member organizations of the characteristics of the Fund and of
applicable Exchange rules, as well as of the requirements of Rule 405--
NYSE Amex Equities (Diligence as to Accounts).
The Exchange notes that, pursuant to Rule 405--NYSE Amex Equities,
member organizations are required in connection with recommending
transactions in the Shares to have a reasonable basis to believe that a
customer is suitable for the particular investment given reasonable
inquiry concerning the customer's investment objectives, financial
situation, needs, and any other information known by such member.
Information Circular
The Exchange will distribute an Information Circular to its members
in connection with the trading of the Shares. The Circular will discuss
the special characteristics and risks of trading this type of security.
Specifically, the Circular, among other things, will discuss what the
Shares are, the requirement that members and member firms deliver a
prospectus to investors purchasing the Shares prior to or concurrently
with the confirmation of a transaction during the initial public
offering, applicable NYSE Amex rules, and trading information and
applicable suitability rules. The Circular will also explain that the
Fund is subject to various fees and expenses described in the
Registration Statement. The Circular will also reference the fact that
there is no regulated source of last sale information regarding
physical commodities and note the respective jurisdictions of the SEC
and CFTC. The Circular will also note that the forward contracts are
traded on the LME, which is subject to regulation by the Securities and
Investment Board in the United Kingdom and the Financial Services
Authority. In addition, the Circular will indicate that OTC instruments
or products may effectively be unregulated.
The Circular will advise members of their suitability obligations
with respect to recommended transactions to customers in the Shares.
The Circular will also discuss any relief, if granted, by the
Commission or the staff from any rules under the Act.
The Circular will disclose that the NAV for shares will be
calculated shortly after 4:00 p.m. ET each trading day.
Surveillance
The Exchange represents that its surveillance procedures are
adequate to properly monitor the trading of the Shares and to deter and
detect violations of Exchange rules and applicable Federal securities
laws.\16\ NYSE Amex will rely on its existing surveillance procedures.
The Exchange currently has in place Information Sharing Agreements with
ICE FUTURES, LME, NYMEX, and KCBOT for the purpose of providing
information in connection with trading in or related to futures
contracts traded on their respective exchanges. The Exchange also notes
that the CBOT, CME, LIFFE and NYBOT are members of the Intermarket
Surveillance Group (``ISG''). As a result, the Exchange asserts that
market surveillance information is available from the CBOT, CME, NYBOT
and LIFFE through ISG, if necessary, due to regulatory concerns that
may arise in connection with the futures contracts.
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\16\ See e-mail from John Carey, Chief Counsel--U.S. Equities,
Exchange, to Geoffrey Pemble and Michou Nguyen, Special Counsels,
Commission, dated February 23, 2010.
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Conforming Changes and Updating Amendments
Since the original adoption of Rule 1600 et seq., the Exchange has
adopted a completely new set of rules governing both equity and options
trading on the Exchange. Consequently, a number of references to
Exchange rules in Rule 1600 et seq. are no longer correct and have been
appropriately modified. References to equity specialists have been
modifiedto refer to ``designated market makers'' (``DMMs''), which is
the designation used throughout the amended NYSE Amex equity trading
rules. A typographical error in Rule 1602 is also corrected in this
filing.
Commentary .03 to Rule 1600 provides that member organizations
shall not enter limit orders into the Exchange's order routing system
as agent (i.e. for customer agency orders) in the same trust, for the
account or accounts of the same or related beneficial owner, in such a
manner that the beneficial owner(s) effectively is operating as a
market maker by holding itself out as willing to buy and sell such
Trust Units on a regular or continuous basis. The Amex adopted
provisions of this kind because the ability of non-members to function
effectively as market makers gave those non-members an advantage over
the specialist who was required to yield priority to their orders. That
advantage no longer exists under current NYSE Amex rules, as all
[[Page 9271]]
market participants (including the DMM) trade on parity unless they
establish priority under Exchange rules, which can be done by all
market participants including the DMM. As such Commentary .03 to rule
1600 no longer serves any purpose and the Exchange proposes to delete
it.
As originally adopted, Rule 1603 provided that NYSE Amex Rule
175(c) was deemed to prohibit an equity specialist, his member
organization, or any other member, limited partner, officer, or
approved person thereof from acting as a market maker or functioning in
any capacity involving market-making responsibilities in an underlying
asset or commodity, related futures or options on futures, or any other
related derivatives, unless the Exchange granted an exemption under
Rule 193. Rule 1603 as amended provides that, if a DMM unit is
operating under Rule 98 (Former)--NYSE Amex Equities, Rule 105(b)
(Former)--NYSE Amex Equities and section (m) of the Guidelines
thereunder shall be deemed to prohibit a DMM, his or her member
organization, other member, or approved person of such member
organization or employee or officer thereof from acting as a market
maker or functioning in any capacity involving market-marking
responsibilities in an underlying asset or commodity, related futures
or options on futures, or any related derivative. If an approved person
of a DMM unit is entitled to an exemption from Rule 105(b) (former)
under Rule 98 (former), such approved person may act in a market making
capacity, other than as a specialist in Trust Units on another market
center, in the underlying asset or commodity, related futures or
options on futures, or any other related derivatives.
As originally adopted, Commentary .01 to Rule 1603 provided that
trading in the Shares was generally subject to the Exchange's
Stabilization rule, except that specialists would be permitted to buy
on ``plus ticks'' and sell on ``minus ticks,'' in order to bring the
Shares into parity with the underlying commodity or commodities and/or
futures contract price. The Exchange's new stabilization rule (Rule
104--NYSE Amex Equities) does not contain the same prohibitions on
buying on ``plus ticks'' and selling on ``minus ticks'' as was formerly
the case under Rule 170--AIMI. Consequently, the Exchange proposes to
delete Commentary .01 to Rule 1603, as it is no longer relevant.
Rule 1604(a) as originally adopted, provided that the member
organization acting as specialist in Trust Units was obligated to
conduct all trading in the Trust Units in its specialist account,
subject only to the ability to have one or more investment accounts,
all of which must be reported to the Exchange (See Rule 170--AEMI). The
Exchange proposes to delete this requirement, as DMMs are now governed
by Rule 104--NYSE Amex Equities, which does not limit the DMM's use of
investment accounts to trade its assigned securities or require the DMM
to report activity in such accounts to the Exchange.\17\ Rule 1604(a)
also provides that the member organization acting as DMM in the Shares
must file with the Exchange, in a manner prescribed by the Exchange,
and keep current a list identifying all accounts for trading the
underlying physical asset or commodity, related futures or options on
futures, or any other related derivatives, which the member
organization acting as DMM may have or over which it may exercise
investment discretion. The Exchange proposes to amend this requirement
to provide that, rather than filing the list with the Exchange, the DMM
must maintain it in a readily accessible place and provide it to the
Exchange upon request. The Exchange believes that this is sufficient
for its regulatory needs, as it will only review the list when as
specific regulatory need arises, so it is sufficient to have the list
readily available upon request.
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\17\ The Exchange notes that Rule 104--NYSE Amex Equities in its
current form has been approved by the SEC on a pilot program basis.
In the event that the pilot program is not made permanent or is
amended, DMMs may at that time become subject to limitations on
their ability to trade Trust Units in investment accounts.
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) \18\ of the Act in general, and furthers the
objectives of Section 6(b)(5) of the Act \19\ in particular in that it
is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, 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.
The proposed rule change is designed to protect investors and the
public interest because it will impose appropriate restrictions on the
listing and trading of Trust Units.
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\18\ 15 U.S.C. 78f(b).
\19\ 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 Exchange consents, the Commission will:
(A) By order approve such 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-NYSEAmex-2010-09 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-NYSEAmex-2010-09. 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
[[Page 9272]]
submission,\20\ 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 Web site viewing and printing 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 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-NYSEAmex-2010-09 and should be submitted
on or before March 22, 2010.
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\20\ The text of the proposed rule change is available on the
Commission's Web site at https://www.sec.gov.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary
[FR Doc. 2010-4136 Filed 2-26-10; 8:45 am]
BILLING CODE 8011-01-P
