Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change to List and Trade Shares of the ETFS Precious Metals Basket Trust, 39292-39299 [2010-16532]
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srobinson on DSKHWCL6B1PROD with NOTICES
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Federal Register / Vol. 75, No. 130 / Thursday, July 8, 2010 / Notices
request for extension of the previously
approved collection of information
discussed below.
Rule 477 (17 CFR 230.477) under the
Securities Act of 1933 (15 U.S.C. 77a et
seq.) sets forth procedures for
withdrawing a registration statement, an
amendment to a registration statement,
or any exhibits thereto. The rule
provides that if a registrant intends to
rely on the registered-to-private safe
harbor contained in Securities Act Rule
155, the registrant must affirmatively
state in the withdrawal application that
it plans to undertake a subsequent
private offering of its securities. Without
this statement, the Commission would
not be able to monitor a company’s
reliance on, and compliance with,
Securities Act Rule 155(c). The likely
respondents will be companies. All
information submitted to the
Commission under Securities Act Rule
477 is available to the public for review.
Information provided under Securities
Act Rule 477 is mandatory. The
information is required on occasion. We
estimate that approximately 300 issuers
will file Securities Act Rule 477
submissions annually at an estimated
one hour per response for a total annual
burden of approximately 300 hours. We
estimate that 100 percent of the
reporting burden is prepared by the
issuer.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Written comments regarding the
above information should be directed to
the following persons: (i) Desk Officer
for the Securities and Exchange
Commission, Office of Information and
Regulatory Affairs, Office of
Management and Budget, Room 10102,
New Executive Office Building,
Washington, DC 20503 or send an email to: Shagufta_Ahmed@omb.eop.gov;
and (ii) Charles Boucher, Director/CIO,
Securities and Exchange Commission,
C/O Shirley Martinson, 6432 General
Green Way, Alexandria, VA 22312; or
send an e-mail to
PRA_Mailbox@sec.gov. Comments must
be submitted to OMB within 30 days of
this notice.
Dated: June 30, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–16545 Filed 7–7–10; 8:45 am]
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SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
Extension:
Rule 19d–1; SEC File No. 270–242; OMB
Control No. 3235–0206.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.) the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget a
request for extension of the previously
approved collection of information
provided for in Rule 19d–1 (17 CFR
240.19d–1)—Notices by Self-Regulatory
Organizations of Final Disciplinary
Actions, Denials Bars, or Limitations
Respecting Membership, Association, or
Access to Services, and Summary
Suspensions.
Rule 19d–1 (‘‘Rule’’) under the
Securities Exchange Act of 1934 (17
U.S.C. 78a et seq.) prescribes the form
and content of notices to be filed with
the Commission by self-regulatory
organizations (‘‘SROs’’) for which the
Commission is the appropriate
regulatory agency concerning the
following final SRO actions: (1)
Disciplinary sanctions (including
summary suspensions); (2) denials of
membership, participation or
association with a member; and (3)
prohibitions or limitations on access to
SRO services.
The Rule enables the Commission to
obtain reports from the SROs containing
information regarding SRO
determinations to discipline members or
associated persons of members, deny
membership or participation or
association with a member, and similar
adjudicated findings. The Rule requires
that such actions be promptly reported
to the Commission. The Rule also
requires that the reports and notices
supply sufficient information regarding
the background, factual basis and issues
involved in the proceeding to enable the
Commission: (1) To determine whether
the matter should be called up for
review on the Commission’s own
motion; and (2) to ascertain generally
whether the SRO has adequately carried
out its responsibilities under the
Exchange Act.
It is estimated that 10 respondents
will utilize this application procedure
annually, with a total burden of 1,175
hours, based upon past submissions.
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This figure is based on 10 respondents,
spending approximately 117.5 hours
each per year. Each respondent
submitted approximately 235 responses.
The staff estimates that the average
number of hours necessary to comply
with the requirements of Rule 19d–1 for
each submission is 0.5 hours. The
average cost per hour, per each
submission is approximately $101.
Therefore, the total cost of compliance
for all the respondents is $118,675. (10
respondents × 235 responses per
respondent × .5 hrs per response × $101
per hour).
The filing of notices pursuant to the
Rule is mandatory for the SROs, but
does not involve the collection of
confidential information. Rule 19d–1
does not have a record retention
requirement.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
Comments should be directed to: (i)
Desk Officer for the Securities and
Exchange Commission, Office of
Information and Regulatory Affairs,
Office of Management and Budget,
Room 10102, New Executive Office
Building, Washington, DC 20503 or
send an e-mail to:
Shagufta_Ahmed@omb.eop.gov and (ii)
Charles Boucher, Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Shirley
Martinson, 6432 General Green Way,
Alexandria VA 22312 or send an e-mail
to: PRA_Mailbox@sec.gov. Comments
must be submitted to OMB within 30
days of this notice.
Dated: June 30, 2010.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–16546 Filed 7–7–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62402; File No. SR–
NYSEArca–2010–56]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change to List and Trade Shares
of the ETFS Precious Metals Basket
Trust
June 29, 2010.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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notice is hereby given that, on June 15,
2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III below, which Items have been
prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade ETFS Physical PM Basket Shares
of the ETFS Precious Metals Basket
Trust pursuant to NYSE Arca Equities
Rule 8.201. The text of the proposed
rule change is available on the
Exchange’s Web site at https://
www.nyse.com, at the Exchange’s
principal office and at the Commission’s
Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
srobinson on DSKHWCL6B1PROD with NOTICES
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to list and
trade ETFS Physical PM Basket Shares
(‘‘Shares’’ of the ETFS Precious Metals
Basket Trust (‘‘Trust’’) under NYSE Arca
Equities Rule 8.201. Under NYSE Arca
Equities Rule 8.201, the Exchange may
propose to list and/or trade pursuant to
unlisted trading privileges (‘‘UTP’’)
‘‘Commodity-Based Trust Shares.’’ 3 The
Commission has previously approved
listing on the Exchange under NYSE
Arca Equities Rule 8.201 of other issues
of Commodity-Based Trust Shares. The
Commission has approved listing on the
3 Commodity-Based Trust Shares are securities
issued by a trust that represent investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
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Exchange of ETFS Silver Trust,4 ETFS
Gold Trust,5 ETFS Platinum Trust 6 and
ETFS Palladium Trust (collectively, the
‘‘ETFS Trusts’’).7 In addition, The
Commission has approved listing on the
Exchange of streetTRACKS Gold Trust
and iShares COMEX Gold Trust.8 Prior
to their listing on the Exchange, the
Commission approved listing of the
streetTRACKS Gold Trust on the New
York Stock Exchange (‘‘NYSE’’) and
listing of iShares COMEX Gold Trust on
the American Stock Exchange LLC (now
known as ‘‘NYSE Amex LLC’’).9 In
addition, the Commission has approved
trading of the streetTRACKS Gold Trust
and iShares Silver Trust on the
Exchange pursuant to UTP.10 The
Commission also has approved listing of
the iShares Silver Trust on the
Exchange 11 and, previously, listing of
the iShares Silver Trust on the
American Stock Exchange LLC.12
The Trust will issue Shares which
represent units of fractional undivided
beneficial interest in and ownership of
the Trust. The investment objective of
the Trust is for the Shares to reflect the
performance of the price of physical
gold, silver, platinum and palladium in
4 Securities Exchange Act Release No. 59781
(April 17, 2009), 74 FR 18771 (April 24, 2009) (SR–
NYSEArca–2009–28).
5 Securities Exchange Act Release No. 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40).
6 Securities Exchange Act Release No. 61219
(December 22, 2009), 74 FR 68886 (December 29,
2009) (SR–NYSEArca–2009–95).
7 Securities Exchange Act Release No. 61220
(December 22, 2009), 74 FR 68895 (December 29,
2009) (SR–NYSEArca–2009–94).
8 See Securities Exchange Act Release Nos. 56224
(August 8, 2007), 72 FR 45850 (August 15, 2007)
(SR–NYSEArca–2007–76) (approving listing on the
Exchange of the streetTRACKS Gold Trust); 56041
(July 11, 2007), 72 FR 39114 (July 17, 2007) (SR–
NYSEArca–2007–43) (order approving listing on the
Exchange of iShares COMEX Gold Trust).
9 See Securities Exchange Act Release Nos. 50603
(October 28, 2004), 69 FR 64614 (November 5, 2004)
(SR–NYSE–2004–22) (order approving listing of
streetTRACKS Gold Trust on NYSE); 51058
(January 19, 2005), 70 FR 3749 (January 26, 2005)
(SR–Amex–2004–38) (order approving listing of
iShares COMEX Gold Trust on the American Stock
Exchange LLC).
10 See Securities Exchange Act Release Nos.
53520 (March 20, 2006), 71 FR 14977 (March 24,
2006) (SR–PCX–2005–117) (approving trading on
the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731
(March 4, 2005) (SR–PCX–2004–117) (approving
trading on the Exchange of the streetTRACKS Gold
Trust pursuant to UTP).
11 See Securities Exchange Act Release No. 58956
(November 14, 2008), 73 FR 71074 (November 24,
2008) (SR–NYSEArca–2008–124) (approving listing
on the Exchange of the iShares Silver Trust)).
12 See Securities Exchange Act Release No. 53521
(March 20, 2006), 71 FR 14967 (March 24, 2006)
(SR–Amex–2005–72) (approving listing on the
American Stock Exchange LLC of the iShares Silver
Trust).
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the proportions held by the Trust, less
the expenses of the Trust’s operations.13
ETFS Services USA LLC is the
sponsor of the Trust (‘‘Sponsor’’), The
Bank of New York Mellon is the trustee
of the Trust (‘‘Trustee’’),14 and JPMorgan
Chase Bank, N.A. is the custodian of the
Trust (‘‘Custodian’’).15
The Exchange represents that the
Shares satisfy the requirements of NYSE
Arca Equities Rule 8.201 and thereby
qualify for listing on the Exchange.16
The Shares will be book-entry only and
individual certificates will not be issued
for the Shares.
The NAV of the Trust is the aggregate
value of the Trust’s assets less its
liabilities (which include estimated
accrued but unpaid fees and expenses).
13 See the registration statement for the Trust on
Form S–1, filed with the Commission on April 29,
2010 (No. 333–164769) (‘‘Registration Statement’’).
The descriptions of the Trust, the Shares, the
Bullion, and the regulation and operation of the
commodity markets contained herein are based on
the Registration Statement.
14 The Trustee is generally responsible for the
day-to-day administration of the Trust, including
keeping the Trust’s operational records. The
Trustee’s principal responsibilities include
(1)Transferring the Trust’s Bullion metal (‘‘Bullion’’,
which is physical gold, silver, platinum and
palladium) as needed to pay the Sponsor’s Fee in
Bullion (Bullion transfers are expected to occur
approximately monthly in the ordinary course), (2)
valuing the Trust’s Bullion and calculating the net
asset value (‘‘NAV’’) of the Trust and the NAV per
Share, (3) receiving and processing orders from
Authorized Participants to create and redeem
Baskets and coordinating the processing of such
orders with the Custodian and DTC, (4) selling the
Trust’s Bullion as needed to pay any extraordinary
Trust expenses that are not assumed by the
Sponsor, (5) when appropriate, making
distributions of cash or other property to
Shareholders, and (6) receiving and reviewing
reports from or on the Custodian’s custody of and
transactions in the Trust’s Bullion.
15 The Custodian is responsible for safekeeping
for the Trust Bullion deposited with it by
Authorized Participants in connection with the
creation of Baskets. The Custodian is also
responsible for selecting the Zurich Sub-Custodians
and its other subcustodians, if any. The Custodian
facilitates the transfer of Bullion in and out of the
Trust through the unallocated Bullion accounts it
will maintain for each Authorized Participant and
the unallocated and allocated Bullion accounts it
will maintain for the Trust. The Custodian will hold
at its London, England vault premises that portion
of the Trust’s allocated Bullion to be held in
London. The Zurich Sub-Custodians will hold at
their Zurich, Switzerland vault premises that
portion of the Trust’s allocated platinum and
palladium to be held in Zurich on behalf of the
Custodian. The Custodian is responsible for
allocating specific bars of physical gold and silver
and specific plates or ingots of physical platinum
and palladium to the Trust’s allocated platinum
account. The Custodian will provide the Trustee
with regular reports detailing the Bullion transfers
in and out of the Trust’s unallocated and allocated
Bullion accounts and identifying the platinum and
palladium plates or ingots held in the Trust’s
allocated Bullion account.
16 With respect to application of Rule 10A–3 (17
CFR 240.10A–3) under the Securities Exchange of
1934 (‘‘Act’’) (15 U.S.C. 78a), the Trust relies on the
exemption contained in Rule 10A–3(c)(7).
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In determining the NAV of the Trust,
the Trustee will value the prices of
Bullion metal as determined by the
relevant London PM Fixes.17 Gold held
by the Trust will be valued on the basis
of the price of an ounce of gold as set
by the afternoon session of the twice
daily fix of the price of an ounce of gold
which starts at 3 p.m. London, England
time and is performed in London by the
five members of the London gold fix.
Silver held by the Trust will be valued
on the basis of the price of an ounce of
silver as set at approximately 12 noon
London time and performed in London
by three market making members of the
London Bullion Market Association
(‘‘LBMA’’). Platinum held by the Trust
will be valued on the basis of the price
of an ounce of platinum as set by the
afternoon session of the twice daily fix
of the price of an ounce of platinum
which starts at 2 p.m. London, England
time and is performed in London by the
four fixing members of the London
Platinum and Palladium Market
(‘‘LPPM’’). Palladium held by the Trust
will be valued on the basis of the price
of an ounce of palladium as set by the
afternoon session of the twice daily fix
of the price of an ounce of palladium
which starts at 2 p.m. London, England
time and is performed in London by the
four fixing members of the LPPM.18 The
Trustee will determine the NAV of the
Trust on each day the NYSE Arca is
open for regular trading, as promptly as
practicable after 4 p.m. Eastern Time
(‘‘E.T.’’). If no London PM Fixes are
made for gold, silver, platinum or
palladium on a particular evaluation
day or has not been announced by 4
p.m. E.T. on a particular evaluation day,
the next most recent London price fix
for such metal or metals will be used in
the determination of the NAV of the
Trust, unless the Sponsor determines
that such price is inappropriate to use
as basis for such determination.19 The
Trustee will also determine the NAV per
Share, which equals the NAV of the
Trust, divided by the number of
outstanding Shares.
17 Terms relating to the Trust and the Shares
referred to, but not defined, herein are defined in
the Registration Statement.
18 The operation of the London Fix for gold,
silver, platinum and palladium is described in the
registration statements on Form S–1 for the ETFS
Gold, Silver, Platinum and Palladium Trusts,
respectively, and in the Exchange’s proposed rule
changes pursuant to Rule 19b–4 under the Act in
connection with Exchange listing of such Trusts.
See notes 4–7, supra.
19 See discussion under ‘‘Operation of the Trust’’,
infra, regarding procedures used when the Sponsor
determines that the Bullion price is inappropriate
to use.
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Market Regulation
According to the Registration
Statement, the global gold, silver,
platinum and palladium markets are
overseen and regulated by both
governmental and self-regulatory
organizations. In addition, certain trade
associations have established rules and
protocols for market practices and
participants. In the United Kingdom,
responsibility for the regulation of the
financial market participants, including
the major participating members of the
LBMA and the LPPM, falls under the
authority of the Financial Services
Authority (‘‘FSA’’) as provided by the
Financial Services and Markets Act
2000 (‘‘FSM Act’’). Under the FSM Act,
all UK-based banks, together with other
investment firms, are subject to a range
of requirements, including fitness and
properness, capital adequacy, liquidity,
and systems and controls.
The FSA is responsible for regulating
investment products, including
derivatives, and those who deal in
investment products. Regulation of spot,
commercial forwards, and deposits of
Bullion not covered by the FSM Act is
provided for by The London Code of
Conduct for Non-Investment Products,
which was established by market
participants in conjunction with the
Bank of England.
The Tokyo Commodity Exchange
(‘‘TOCOM’’) has authority to perform
financial and operational surveillance
on its members’ trading activities,
scrutinize positions held by members
and large-scale customers, and monitor
the price movements of futures markets
by comparing them with cash and other
derivative markets’ prices. To act as a
Futures Commission Merchant Broker, a
broker must obtain a license from
Japan’s Ministry of Economy, Trade and
Industry (METI), the regulatory
authority that oversees the operations of
the TOCOM.20
20 Additional information regarding operation of
the gold, silver, platinum and palladium markets,
and the regulation of these markets, is described in
the Registration Statement and in the Commission
notices of the Exchange’s proposed rule changes
regarding listing of the ETFS Trusts. See Securities
Exchange Act Release Nos. 59781 (April 17, 2009),
74 FR 18771 (April 24, 2009) (SR–NYSEArca–2009–
28) (notice and order granting accelerated approval
regarding listing of ETFS Silver Trust); 59895 (May
8, 2009), 74 FR 22993 (May 15, 2009) (SR–
NYSEArca–2009–40 (notice and order granting
accelerated approval regarding listing of ETFS Gold
Trust); 60970 (November 9, 2009), 74 FR 59319
(November 17, 2009) (SR–NYSEArca–2009–95)
(notice regarding listing of ETFS Platinum Trust);
60971 (November 9, 2009), 74 FR 59283 (November
17, 2009) (SR–NYSEArca–2009–94) (notice
regarding listing of ETFS Palladium Trust).
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Operation of the Trust
The Trust is a common law trust
formed under New York law pursuant to
the Trust Agreement. The Trust holds
Bullion and is expected from time to
time to issue Baskets in exchange for
deposits of Bullion and to distribute
Bullion in connection with redemptions
of Baskets. The investment objective of
the Trust is for the Shares to reflect the
performance of the prices of physical
gold, silver, platinum and palladium in
the proportions held by the Trust, less
the Trust’s expenses.
According to the Registration
Statement, the Trust is not registered as
an investment company under the
Investment Company Act of 1940 and is
not required to register under such act.
The Trust will not hold or trade in
commodity futures contracts regulated
by the Commodity Exchange Act 21
(‘‘CEA’’), as administered by the
Commodity Futures Trading
Commission (‘‘CFTC’’). The Trust is not
a commodity pool for purposes of the
CEA, and neither the Sponsor nor the
Trustee is subject to regulation as a
commodity pool operator or a
commodity trading adviser in
connection with the Shares.
The Trust expects to create and
redeem Shares from time to time but
only in Baskets of 50,000 each. The
number of outstanding Shares is
expected to increase and decrease from
time to time as a result of the creation
and redemption of Baskets. The creation
and redemption of Baskets requires the
delivery to the Trust or the distribution
by the Trust of the amount of Bullion
and any cash represented by the Baskets
being created or redeemed. The total
amount of Bullion and any cash
required for the creation of Baskets will
be based on the combined NAV of the
number of Baskets being created or
redeemed. The initial amount of Bullion
required for deposit with the Trust to
create Shares will be 1,500 ounces of
gold, 55,000 ounces of silver, 200
ounces of platinum and 300 ounces of
palladium per Basket.22 The number of
ounces of Bullion required to create a
Basket or to be delivered upon a
redemption of a Basket will gradually
decrease over time. This is because the
21 7
U.S.C. 1 et seq.
of June 11, 2010, the value of a Basket was
approximately $3,285,395. The value of Bullion
required for the creation of a Basket was
approximately $1,837,650 for gold ($1225.10 per
ounce times 1,500 ounces); $1,003,750 for silver
($18.25 per ounce times 55,000 ounces); $308,290
for platinum ($1541.45 per ounce times 200
ounces); and $135,750 for palladium ($452.35 per
ounce times 300 ounces). These values represent
weightings for gold, silver, platinum and palladium
in a Basket of approximately 55.93%, 30.55%,
9.38% and 4.13%, respectively.
22 As
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Shares comprising a Basket will
represent a decreasing amount of
Bullion due to the delivery or sale of the
Trust’s Bullion to pay the Sponsor’s Fee
or the Trust’s expenses not assumed by
the Sponsor.
The Trustee will determine the NAV
of the Trust on each day that the NYSE
Arca is open for regular trading, as
promptly as practicable after 4 p.m. E.T.
The NAV of the Trust is the aggregate
value of the Trust’s assets less its
estimated accrued but unpaid liabilities
(which include accrued expenses). In
determining the Trust’s NAV, the
Trustee will value the gold held by the
Trust based on the London PM Fix price
for an ounce of gold or such other
publicly available price as the Sponsor
may deem fairly represents the
commercial value of the Trust’s gold,
the silver held by the Trust based on the
London PM Fix price for an ounce of
silver or such other publicly available
price as the Sponsor may deem fairly
represents the commercial value of the
Trust’s silver, the platinum held by the
Trust based on the London PM Fix price
for an ounce of platinum or such other
publicly available price as the Sponsor
may deem fairly represents the
commercial value of the Trust’s
platinum and the palladium held by the
Trust based on the London PM Fix price
for an ounce of palladium or such other
publicly available price as the Sponsor
may deem fairly represents the
commercial value of the Trust’s
palladium. The Trustee will also
determine the NAV per Share. If on a
day when the Trust’s NAV is being
calculated, the London Fix is not
available or has not been announced by
4 p.m. E.T., for any Bullion metal the
price from the next most recent London
fix (AM or PM) for such Bullion metal
will be used, unless the Sponsor
determines that such price is
inappropriate to use.
The Trust’s assets will consist of
allocated physical Bullion, Bullion
credited to an unallocated Bullion
account and, from time to time, cash,
which will be used to pay expenses not
assumed by the Sponsor. Cash held by
the Trust will not generate any income.
Each Share will represent a proportional
interest, based on the total number of
Shares outstanding, in the Bullion and
any cash held by the Trust, less the
Trust’s liabilities (which include
accrued but unpaid fees and expenses).
The Sponsor expects that the secondary
market trading price of the Shares will
fluctuate over time in response to the
prices of gold, silver, platinum and
palladium. In addition, the Sponsor
expects that the trading price of the
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Shares will reflect the estimated accrued
but unpaid expenses of the Trust.
Investors may obtain on a 24-hour
basis gold, silver, platinum and
palladium pricing information based on
the spot price for an ounce of each
Bullion metal from various financial
information service providers. Current
spot prices are also generally available
with bid/ask spreads from physical
Bullion dealers. In addition, the Trust’s
Web site (https://www.etfsecurities.com)
will provide ongoing pricing
information for gold, silver, platinum
and palladium spot prices and the
Shares. Market prices for the Shares will
be available from a variety of sources
including brokerage firms, information
Web sites and other information service
providers. The NAV of the Trust will be
published by the Sponsor on each day
that the NYSE Arca is open for regular
trading and will be posted on the Trust’s
Web site.
According to the Registration
Statement, the most significant gold,
silver, platinum and palladium futures
exchanges are the COMEX and the
TOCOM. Trading on these exchanges is
based on fixed delivery dates and
transaction sizes for the futures and
options contracts traded. The COMEX
operates through a central clearance
system. On June 6, 2003, TOCOM
adopted a similar clearance system.
Secondary Market Trading
According to the Registration
Statement, while the Trust’s investment
objective is for the Shares to reflect the
performance of prices of physical gold,
silver, platinum and palladium in the
proportions held by the Trust, less the
expenses of the Trust, the Shares may
trade in the secondary market on NYSE
Arca at prices that are lower or higher
relative to their NAV per Share. The
amount of the discount or premium in
the trading price relative to the NAV per
Share may be influenced by nonconcurrent trading hours between the
NYSE Arca and the COMEX, and the
London and Zurich Bullion markets.
While the Shares will trade on NYSE
Arca until 8 p.m. E.T., liquidity in the
global gold, silver, platinum and
palladium markets will be reduced after
the close of the COMEX at 1:30 p.m.
E.T. or the London and Zurich Bullion
markets. As a result, during this time,
trading spreads, and the resulting
premium or discount, on the Shares
may widen.
Creation and Redemption of Shares
The Trust will create and redeem
Shares from time to time, but only in
one or more Baskets of 50,000 Shares.
The creation and redemption of Baskets
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39295
will only be made in exchange for the
delivery to the Trust or the distribution
by the Trust of the amount of physical
gold, silver, platinum and palladium
and any cash represented by the Baskets
being created or redeemed, the amount
of which will be based on the combined
NAV of the number of Shares included
in the Baskets being created or
redeemed determined on the day the
order to create or redeem Baskets is
properly received.
Authorized Participants are the only
persons that may place orders to create
and redeem Baskets, as described in the
Registration Statement.
Creation Procedures
On any business day, an Authorized
Participant may place an order with the
Trustee to create one or more Baskets.
Creation and redemption orders will be
accepted on ‘‘business days’’ the NYSE
Arca is open for regular trading.
Settlements of such orders requiring
receipt or delivery, or confirmation of
receipt or delivery, of Bullion in the
United Kingdom, Zurich or another
jurisdiction will occur on ‘‘business
days’’ when (1) Banks in the United
Kingdom, Zurich and such other
jurisdiction and (2) the London and
Zurich Bullion markets are regularly
open for business. Purchase orders must
be placed no later than 3:59:59 p.m. E.T.
on each business day the NYSE Arca is
open for regular trading. By placing a
purchase order, an Authorized
Participant agrees to deposit Bullion
with the Trust. The creation and
redemption of Baskets will only be
made in exchange for the delivery to the
Trust or the distribution by the Trust of
the amount of Bullion and any cash
represented by the Baskets being created
or redeemed, the amount of which will
be based on the combined NAV of the
number of Shares included in the
Baskets being created or redeemed
determined on the day the order to
create or redeem Baskets is properly
received.
The initial deposit of Bullion into the
Trust establishes the ‘‘Bullion Ratio’’
such that, for every 1,500 ounces of
gold, there will also be 55,000 ounces of
silver, 200 ounces of platinum, and 300
ounces of palladium. Each Creation
Basket Deposit, which is the total
deposit required to create a Basket, will
be an amount of Bullion and cash, if
any, that is in the same proportion to
the total assets of the Trust (net of
estimated accrued but unpaid fees,
expenses and other liabilities) on the
date an order to purchase one or more
Baskets is properly received as the
number of Shares comprising the
number of Baskets to be created in
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respect of the deposit bears to the total
number of Shares outstanding on the
date such order is properly received.
The Bullion component of any Creation
Basket Deposit following the initial
deposit shall be comprised of gold,
silver, platinum and palladium in the
Bullion Ratio.23
An Authorized Participant who places
a purchase order is responsible for
crediting its Authorized Participant
Unallocated Account with the required
Bullion deposit amount by the third
business day in London or Zurich, as
applicable, following the purchase order
date. Upon receipt of the Bullion
deposit amount, the Custodian, after
receiving appropriate instructions from
the Authorized Participant and the
Trustee, will transfer on the third
business day following the purchase
order date the Bullion deposit amount
from the Authorized Participant
Unallocated Account to the Trust
Unallocated Account and the Trustee
will direct DTC to credit the number of
Baskets ordered to the Authorized
Participant’s DTC account. The expense
and risk of delivery, ownership and
safekeeping of Bullion until such
Bullion has been received by the Trust
is borne solely by the Authorized
Participant.
Redemption Procedures
srobinson on DSKHWCL6B1PROD with NOTICES
According to the Registration
Statement, the procedures by which an
Authorized Participant can redeem one
or more Baskets will mirror the
procedures for the creation of Baskets.
On any business day, an Authorized
Participant may place an order with the
Trustee to redeem one or more Baskets.
Redemption orders must be placed no
later than 3:59:59 p.m. E.T. on each
business day the NYSE Arca is open for
regular trading. A redemption order so
received is effective on the date it is
received in satisfactory form by the
Trustee. The redemption procedures
allow Authorized Participants to redeem
Baskets and do not entitle an individual
Shareholder to redeem any Shares in an
amount less than a Basket, or to redeem
Baskets other than through an
Authorized Participant.
By placing a redemption order, an
Authorized Participant agrees to deliver
the Baskets to be redeemed through
DTC’s book-entry system to the Trust
23 The
proportion of Bullion comprising a deposit
will remain the same following inception of the
Trust. The amount of gold, silver, platinum and
palladium in the required deposit is determined by
dividing the number of ounces of each metal held
by the Trust by the number of Baskets outstanding,
as adjusted for the amount of Bullion constituting
estimated accrued but unpaid fees and expenses of
the Trust.
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17:09 Jul 07, 2010
Jkt 220001
not later than the third business day
following the effective date of the
redemption order.
Determination of Redemption
Distribution
The redemption distribution from the
Trust will consist of a credit to the
redeeming Authorized Participant’s
Authorized Participant Unallocated
Account representing the amount of the
Bullion held by the Trust evidenced by
the Shares being redeemed. Redemption
distributions will be subject to the
deduction of any applicable tax or other
governmental charges which may be
due.
Creation and Redemption Transaction
Fee
To compensate the Trustee for
services in processing the creation and
redemption of Baskets, an Authorized
Participant will be required to pay a
transaction fee to the Trustee of $500
per order to create or redeem Baskets.
An order may include multiple Baskets.
The transaction fee may be reduced,
increased or otherwise changed by the
Trustee with the consent of the Sponsor.
The Trustee shall notify DTC of any
agreement to change the transaction fee
and will not implement any increase in
the fee for the redemption of Baskets
until 30 days after the date of the notice.
Termination Events
The Trustee will terminate and
liquidate the Trust if the aggregate
market capitalization of the Trust, based
on the closing price for the Shares, was
less than $350 million (as adjusted for
inflation) at any time after the first
anniversary after the Trust’s formation
and the Trustee receives, within six
months after the last of those trading
days, notice from the Sponsor of its
decision to terminate the Trust. The
Trustee will terminate the Trust if the
CFTC determines that the Trust is a
commodities pool under the CEA. The
Trustee may also terminate the Trust
upon the agreement of the owners of
beneficial interests in the Shares
(‘‘Shareholders’’) owning at least 75% of
the outstanding Shares.
The Trust has no fixed termination
date.
Additional information regarding the
Shares and the operation of the Trust,
including termination events, risks, and
creation and redemption procedures, are
described in the Registration Statement.
Valuation of Bullion, Definition of Net
Asset Value and Adjusted Net Asset
Value (‘‘ANAV’’)
On each day that the NYSE Arca is
open for regular trading, as promptly as
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Fmt 4703
Sfmt 4703
practicable after 4 p.m., New York time,
on such day (Evaluation Time), the
Trustee will evaluate the Bullion held
by the Trust and determine both the
ANAV and the NAV of the Trust.
At the Evaluation Time, the Trustee
will value the Trust’s Bullion on the
basis of that day’s London Fix for such
metal or, if no London Fix is made for
a metal on such day or has not been
announced by the Evaluation Time, the
next most recent London price fix for
such metal determined prior to the
Evaluation Time will be used, unless
the Sponsor determines that such price
is inappropriate as a basis for
evaluation. In the event the Sponsor
determines that the London Fix or such
other publicly available price as the
Sponsor may deem fairly represents the
commercial value of the Trust’s Bullion
metal is not an appropriate basis for
evaluation of the Trust’s Bullion metal,
it shall identify an alternative basis for
such evaluation to be employed by the
Trustee.
Once the value of the Bullion has
been determined, the Trustee will
subtract all estimated accrued but
unpaid fees (other than the fees accruing
for such day on which the valuation
takes place computed by reference to
the value of the Trust or its assets),
expenses and other liabilities of the
Trust from the total value of the Bullion
and all other assets of the Trust (other
than any amounts credited to the Trust’s
reserve account, if established). The
resulting figure is the ANAV of the
Trust. The ANAV of the Trust is used
to compute the Sponsor’s Fee.
Liquidity
Liquidity in the OTC market can vary
from time to time during the course of
the 24-hour trading day. Fluctuations in
liquidity are reflected in adjustments to
dealing spreads—the differential
between a dealer’s ‘‘buy’’ and ‘‘sell’’
prices. The period of greatest liquidity
in the Bullion markets generally occurs
at the time of day when trading in the
European time zones overlaps with
trading in the United States, which is
when OTC market trading in London,
New York, Zurich and other centers
coincides with futures and options
trading on the COMEX. This period lasts
for approximately four hours each New
York business day morning.
Availability of Information Regarding
Bullion Prices
Currently, the Consolidated Tape Plan
does not provide for dissemination of
the spot price of commodities such as
gold, silver, platinum and palladium
over the Consolidated Tape. However,
there will be disseminated over the
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Consolidated Tape the last sale price for
the Shares, as is the case for all equity
securities traded on the Exchange
(including exchange-traded funds). In
addition, there is a considerable amount
of Bullion market information available
on public Web sites and through
professional and subscription services.
Investors may obtain on a 24-hour
basis Bullion pricing information based
on the spot price for an ounce of Bullion
from various financial information
service providers, such as Reuters and
Bloomberg. Reuters and Bloomberg
provide at no charge on their Web sites
delayed information regarding the spot
price of Bullion and last sale prices of
Bullion futures, as well as information
about news and developments in the
Bullion market. Reuters and Bloomberg
also offer a professional service to
subscribers for a fee that provides
information on Bullion prices directly
from market participants. An
organization named EBS provides an
electronic trading platform to
institutions such as bullion banks and
dealers for the trading of spot Bullion,
as well as a feed of live streaming prices
to Reuters and Moneyline Telerate
subscribers. Complete real-time data for
Bullion futures and options prices
traded on COMEX are available by
subscription from Reuters and
Bloomberg. COMEX also provides
delayed futures and options information
on current and past trading sessions and
market news free of charge on its Web
site. There are a variety of other public
Web sites providing information on
Bullion, ranging from those specializing
in precious metals to sites maintained
by major newspapers, such as The Wall
Street Journal. In addition, the London
AM Fix and London PM Fix are
publicly available at no charge at or
https://www.thebulliondesk.com.
The Trust Web site will provide an
intraday indicative value (‘‘IIV’’) per
share for the Shares, updated at least
every 15 seconds, as calculated by the
Exchange or a third party financial data
provider, during the Exchange’s Core
Trading Session (9:30 a.m. to 4 p.m.
E.T.). The IIV is calculated by
multiplying the indicative spot price of
Bullion by the quantity of Bullion
backing each Share as of the last
calculation date. The Trust Web site
will also provide the NAV of the Trust
as calculated each business day by the
Sponsor. In addition, the Web site for
the Trust will contain the following
information, on a per Share basis, for
the Trust: (a) The NAV as of the close
of the prior business day and the mid-
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Jkt 220001
point of the bid-ask price 24 at the close
of trading in relation to such NAV (‘‘Bid/
Ask Price’’), and a calculation of the
premium or discount of such price
against such NAV; and (b) data in chart
format displaying the frequency
distribution of discounts and premiums
of the Bid/Ask Price against the NAV,
within appropriate ranges, for each of
the four previous calendar quarters. The
Web site for the Trust will also provide
the following information: The Creation
Basket Deposit, the Trust’s prospectus,
and as the two most recent reports to
stockholders. Finally, the Trust Web site
will also provide the last sale price of
the Shares as traded in the US market.
The Exchange will provide on its Web
site (https://www.nyx.com) a link to the
Trust’s Web site. In addition, the
Exchange will make available over the
Consolidated Tape quotation
information, trading volume, closing
prices and NAV for the Shares from the
previous day.
Criteria for Initial and Continued Listing
The Trust will be subject to the
criteria in NYSE Arca Equities Rule
8.201(e) for initial and continued listing
of the Shares.
A minimum of 100,000 Shares will be
required to be outstanding at the start of
trading. The minimum number of shares
required to be outstanding is
comparable to requirements that have
been applied to previously listed shares
of the streetTRACKS Gold Trust, the
iShares COMEX Gold Trust, the iShares
Silver Trust, the ETF Trusts and
exchange-traded funds. The Exchange
believes that the anticipated minimum
number of Shares outstanding at the
start of trading is sufficient to provide
adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be
equity securities, thus rendering trading
in the Fund subject to the Exchange’s
existing rules governing the trading of
equity securities. Trading in the Shares
on the Exchange will occur in
accordance with NYSE Arca Equities
Rule 7.34(a). The Exchange has
appropriate rules to facilitate
transactions in the Shares during all
trading sessions.
Further, NYSE Arca Equities Rule
8.201 sets forth certain restrictions on
ETP Holders acting as registered Market
Makers in the Shares to facilitate
surveillance. Pursuant to NYSE Arca
Equities Rule 8.201(h), an ETP Holder
acting as a registered Market Maker in
24 The bid-ask price of the Trust is determined
using the highest bid and lowest offer on the
Consolidated Tape as of the time of calculation of
the closing day NAV.
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39297
the Shares is required to provide the
Exchange with information relating to
its trading in the applicable underlying
Bullion, related futures or options on
futures, or any other related derivatives.
NYSE Arca Equities Rule 8.201(i)
prohibits an ETP Holder acting as a
registered Market Maker in the Shares
from using any material nonpublic
information received from any person
associated with an ETP Holder or
employee of such person regarding
trading by such person or employee in
the underlying Bullion, related futures
or options on futures or any other
related derivative (including the
Shares).
As a general matter, the Exchange has
regulatory jurisdiction over its ETP
Holders and their associated persons,
which include any person or entity
controlling an ETP Holder, as well as a
subsidiary or affiliate of an ETP Holder
that is in the securities business. A
subsidiary or affiliate of an ETP Holder
that does business only in commodities
or futures contracts would not be
subject to Exchange jurisdiction, but the
Exchange could obtain information
regarding the activities of such
subsidiary or affiliate through
surveillance sharing agreements with
regulatory organizations of which such
subsidiary or affiliate is a member.
With respect to trading halts, the
Exchange may consider all relevant
factors in exercising its discretion to
halt or suspend trading in the Shares.
Trading on the Exchange in the Shares
may be halted because of market
conditions or for reasons that, in the
view of the Exchange, make trading in
the Shares inadvisable. These may
include: (1) The extent to which
conditions in the underlying Bullion
market have caused disruptions and/or
lack of trading, or (2) whether other
unusual conditions or circumstances
detrimental to the maintenance of a fair
and orderly market are present.25 In
addition, trading in Shares will be
subject to trading halts caused by
extraordinary market volatility pursuant
to the Exchange’s ‘‘circuit breaker’’
rule.26
Surveillance
The Exchange intends to utilize its
existing surveillance procedures
applicable to derivative products
(including Commodity-Based Trust
Shares) to monitor trading in the Shares.
The Exchange represents that these
25 The Exchange, pursuant to NYSE Arca Equities
Rule 7.12, has discretion to halt trading in the
Shares if the London Fixes are not determined for
an extended time period based on extraordinary
circumstances or market conditions.
26 See NYSE Arca Equities Rule 7.12.
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Federal Register / Vol. 75, No. 130 / Thursday, July 8, 2010 / Notices
procedures are adequate to properly
monitor Exchange trading of the Shares
in all trading sessions and to deter and
detect violations of Exchange rules and
applicable Federal securities laws.
The Exchange’s current trading
surveillance focuses on detecting
securities trading outside their normal
patterns. When such situations are
detected, surveillance analysis follows
and investigations are opened, where
appropriate, to review the behavior of
all relevant parties for all relevant
trading violations. Also, pursuant to
NYSE Arca Equities Rule 8.201(h), the
Exchange is able to obtain information
regarding trading in the Shares and the
underlying Bullion, Bullion futures
contracts, options on Bullion futures, or
any other Bullion derivative, through
ETP Holders acting as registered Market
Makers, in connection with such ETP
Holders’ proprietary or customer trades
which they effect on any relevant
market. In addition, the Exchange may
obtain trading information via the
Intermarket Surveillance Group (‘‘ISG’’)
from other exchanges who are members
of the ISG.27 COMEX is an ISG member.
Information Bulletin will advise ETP
Holders, prior to the commencement of
trading, of the prospectus delivery
requirements applicable to the Trust.
The Exchange notes that investors
purchasing Shares directly from the
Trust (by delivery of the Creation Basket
Deposit) will receive a prospectus. ETP
Holders purchasing Shares from the
Trust for resale to investors will deliver
a prospectus to such investors.
In addition, the Information Bulletin
will reference that the Trust is subject
to various fees and expenses described
in the Registration Statement. The
Information Bulletin will also reference
the fact that there is no regulated source
of last sale information regarding
physical Bullion, that the Commission
has no jurisdiction over the trading of
Bullion as physical commodities, and
that the CFTC has regulatory
jurisdiction over the trading of Bullion
futures contracts and options on Bullion
futures contracts.
The Information Bulletin will also
discuss any relief, if granted, by the
Commission or the staff from any rules
under the Act.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Information Bulletin
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) 28 of the Act, in general, and
furthers the objectives of Section
6(b)(5),29 in particular, because it is
designed to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in facilitating transactions in securities,
and to remove impediments and perfect
the mechanisms of a free and open
market and to protect investors and the
public interest. The Exchange believes
that the proposed rule change will
facilitate the listing and trading of an
additional type of commodity-based
product that will enhance competition
among market participants, to the
benefit of investors and the marketplace.
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NYSEArca–2010–56 on the
subject line.
srobinson on DSKHWCL6B1PROD with NOTICES
Prior to the commencement of
trading, the Exchange will inform its
ETP Holders in an Information Bulletin
of the special characteristics and risks
associated with trading the Shares.
Specifically, the Information Bulletin
will discuss the following: (1) The
procedures for purchases and
redemptions of Shares in Baskets
(including noting that Shares are not
individually redeemable); (2) NYSE
Arca Equities Rule 9.2(a), which
imposes a duty of due diligence on its
ETP Holders to learn the essential facts
relating to every customer prior to
trading the Shares; (3) how information
regarding the IIV is disseminated; (4) the
requirement that ETP Holders deliver a
prospectus to investors purchasing
newly issued Shares prior to or
concurrently with the confirmation of a
transaction; (5) the possibility that
trading spreads and the resulting
premium or discount on the Shares may
widen as a result of reduced liquidity of
Bullion trading during the Core and Late
Trading Sessions after the close of the
major world Bullion markets; and (6)
trading information. For example, the
27 A list of ISG members is available at https://
www.isgportal.org. The Exchange notes that
TOCOM is not an ISG member and the Exchange
does not have in place a comprehensive
surveillance sharing agreement with such market.
In addition, the Exchange does not have access to
information regarding Bullion-related OTC
transactions in spot, forwards, options or other
derivatives.
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17:09 Jul 07, 2010
Jkt 220001
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.
PO 00000
28 15
29 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
Frm 00098
Fmt 4703
Sfmt 4703
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve the proposed
rule change, or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–NYSEArca–2010–56. 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
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Federal Register / Vol. 75, No. 130 / Thursday, July 8, 2010 / Notices
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–
NYSEArca–2010–56 and should be
submitted on or before July 29, 2010.
connection with the restructuring of
subsidiary holding companies by the
Montreal Exchange Inc.,5 a company
´
incorporated in Quebec, Canada (‘‘MX’’),
solely involving MX subsidiaries
indirectly holding ownership interests
in BOX LLC. The text of the proposed
rule change is available from the
principal office of the Exchange, at the
Commission’s Public Reference Room
and also on the Exchange’s Internet Web
site at https://
nasdaqomxbx.cchwallstreet.com/
NASDAQOMXBX/Filings/.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
Florence E. Harmon,
Deputy Secretary.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
[FR Doc. 2010–16532 Filed 7–7–10; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62400; File No. SR–BX–
2010–042]
Self-Regulatory Organizations;
NASDAQ OMX BX, Inc.; Notice of Filing
and Immediate Effectiveness of
Proposed Rule Change To Amend the
BOX LLC Agreement
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 28,
2010, NASDAQ OMX BX, Inc. (the
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Exchange filed the proposed rule change
pursuant to Section 19(b)(3)(A) of the
Act,3 and Rule 19b–4(f)(6) thereunder,4
which renders the proposal effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
from interested persons.
srobinson on DSKHWCL6B1PROD with NOTICES
June 29, 2010.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On January 13, 2004, the Commission
approved four Exchange proposals that
together established, through an
operating agreement among its owners,
a Delaware limited liability company,
BOX LLC, to operate BOX as an options
trading facility of the Exchange.6
Prior to the Transfer (as defined
below), MX held (i) 100% of the
common stock of MX US 1, Inc., a
Delaware corporation, (ii) 100% of the
common shares of 3226506 Nova Scotia
Company, a Nova Scotia unlimited
liability company (‘‘NSULC 1’’) and (iii)
100% of the preferred shares and 99.9%
of the common shares of 3226507 Nova
Scotia Company, a Nova Scotia
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
proposed Sixth Amended and Restated
Operating Agreement (‘‘BOX LLC
Agreement’’), of the Boston Options
Exchange Group LLC (‘‘BOX LLC’’), in
30 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
1 15
VerDate Mar<15>2010
17:09 Jul 07, 2010
Jkt 220001
5 The Montreal Exchange Inc. is also known in
´
´
French as the Bourse de Montreal Inc.
6 See Securities Exchange Act Release No. 49066
(January 13, 2004), 69 FR 2773 (January 20, 2004)
(establishing a fee schedule for the proposed BOX
facility); Securities Exchange Act Release No. 49065
(January 13, 2004), 69 FR 2768 (January 20, 2004)
(creating Boston Options Exchange Regulation LLC
to which the Exchange would delegate its selfregulatory functions with respect to the BOX
facility); Securities Exchange Act Release No. 49068
(January 13, 2004), 69 FR 2775 (January 20, 2004)
(approving trading rules for the BOX facility);
Securities Exchange Act Release No. 49067 (January
13, 2004), 69 FR 2761 (January 20, 2004) (approving
certain regulatory provisions of the operating
agreement of BOX LLC).
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
39299
unlimited liability company (‘‘NSULC
2’’). NSULC 1 held 0.1% of the common
shares of NSULC 2. MX US 1, Inc. held
100% of the common stock of MX US
2, Inc., a Delaware corporation, and
NSULC 2 owned 100% of the preferred
stock of MX US 2, Inc. MX US 2, Inc.
held a 53.83% ownership interest in
BOX LLC.7
Upon effectiveness of this rule filing,
MX is expected to effect a series of
transactions resulting in a new
ownership structure (the ‘‘Transfer’’).
Following the Transfer, the ownership
structure by which MX will indirectly
control MX US 2, Inc. will be as follows:
MX will hold 100% of the common
stock of MX US 1, Inc. MX US 1, Inc.
will hold (i) 100% of the equity of MX
US 1, LLC, a Delaware limited liability
company, and (ii) 100% of the common
stock of MX US 2, Inc. NSULC 1 will be
dissolved and its assets will be
distributed to MX US 1, LLC. MX US 1,
LLC will hold 100% of the equity of MX
US 2, LLC, a Delaware limited liability
company (formerly NSULC 2). MX US 2,
LLC will hold 100% of the preferred
stock of MX US 2, Inc. MX US 2, Inc.
will hold a 53.83% ownership interest
in BOX LLC.
The Exchange is submitting the
proposed rule change to the
Commission to amend the BOX LLC
Agreement pursuant to the proposed
Instruments of Accession in connection
with the Transfer. As a result of the
Transfer, MX US 1, LLC and MX US 2,
LLC will be indirect, wholly-owned
subsidiaries of MX.
Pursuant to Section 8.4(g) of the BOX
LLC Agreement, as previously approved
by the Commission, BOX LLC is
required to amend the BOX LLC
Agreement to make a Controlling
Person 8 a party to the BOX LLC
Agreement if such Controlling Person
establishes a Controlling Interest 9 in
any BOX Member that, alone or together
with any Affiliate of such BOX Member,
holds a Percentage Interest in BOX
7 See Securities Exchange Act Release No. 58822
(Oct. 21, 2008), 73 FR 63742 (Oct. 27, 2008) (SR–
BSE–2008–47) (approving BOX purchase and
cancellation of units held by a BOX LLC member
resulting in increased ownership interest of the
other members of the BOX LLC Agreement).
8 A ‘‘Controlling Person’’ is defined as ‘‘a Person
who, alone or together with any Affiliate of such
Person, holds a controlling interest in a [BOX]
Member.’’ See Section 8.4(g)(v)(B), BOX LLC
Agreement.
9 A ‘‘Controlling Interest’’ is defined as ‘‘the direct
or indirect ownership of 25% or more of the total
voting power of all equity securities of a Member
(other than voting rights solely with respect to
matters affecting the rights, preferences, or
privileges of a particular class of equity securities),
by any Person, alone or together with any Affiliate
of such Person.’’ See Section 8.4(g)(v)(A), BOX LLC
Agreement.
E:\FR\FM\08JYN1.SGM
08JYN1
]]>Agencies
[Federal Register Volume 75, Number 130 (Thursday, July 8, 2010)]
[Notices]
[Pages 39292-39299]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-16532]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-62402; File No. SR-NYSEArca-2010-56]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
of Proposed Rule Change to List and Trade Shares of the ETFS Precious
Metals Basket Trust
June 29, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\
[[Page 39293]]
notice is hereby given that, on June 15, 2010, NYSE Arca, Inc. (``NYSE
Arca'' or ``Exchange'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the self-
regulatory organization. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to list and trade ETFS Physical PM Basket
Shares of the ETFS Precious Metals Basket Trust pursuant to NYSE Arca
Equities Rule 8.201. The text of the proposed rule change is available
on the Exchange's Web site at https://www.nyse.com, at the Exchange's
principal office and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to list and trade ETFS Physical PM Basket
Shares (``Shares'' of the ETFS Precious Metals Basket Trust (``Trust'')
under NYSE Arca Equities Rule 8.201. Under NYSE Arca Equities Rule
8.201, the Exchange may propose to list and/or trade pursuant to
unlisted trading privileges (``UTP'') ``Commodity-Based Trust Shares.''
\3\ The Commission has previously approved listing on the Exchange
under NYSE Arca Equities Rule 8.201 of other issues of Commodity-Based
Trust Shares. The Commission has approved listing on the Exchange of
ETFS Silver Trust,\4\ ETFS Gold Trust,\5\ ETFS Platinum Trust \6\ and
ETFS Palladium Trust (collectively, the ``ETFS Trusts'').\7\ In
addition, The Commission has approved listing on the Exchange of
streetTRACKS Gold Trust and iShares COMEX Gold Trust.\8\ Prior to their
listing on the Exchange, the Commission approved listing of the
streetTRACKS Gold Trust on the New York Stock Exchange (``NYSE'') and
listing of iShares COMEX Gold Trust on the American Stock Exchange LLC
(now known as ``NYSE Amex LLC'').\9\ In addition, the Commission has
approved trading of the streetTRACKS Gold Trust and iShares Silver
Trust on the Exchange pursuant to UTP.\10\ The Commission also has
approved listing of the iShares Silver Trust on the Exchange \11\ and,
previously, listing of the iShares Silver Trust on the American Stock
Exchange LLC.\12\
---------------------------------------------------------------------------
\3\ Commodity-Based Trust Shares are securities issued by a
trust that represent investors' discrete identifiable and undivided
beneficial ownership interest in the commodities deposited into the
Trust.
\4\ Securities Exchange Act Release No. 59781 (April 17, 2009),
74 FR 18771 (April 24, 2009) (SR-NYSEArca-2009-28).
\5\ Securities Exchange Act Release No. 59895 (May 8, 2009), 74
FR 22993 (May 15, 2009) (SR-NYSEArca-2009-40).
\6\ Securities Exchange Act Release No. 61219 (December 22,
2009), 74 FR 68886 (December 29, 2009) (SR-NYSEArca-2009-95).
\7\ Securities Exchange Act Release No. 61220 (December 22,
2009), 74 FR 68895 (December 29, 2009) (SR-NYSEArca-2009-94).
\8\ See Securities Exchange Act Release Nos. 56224 (August 8,
2007), 72 FR 45850 (August 15, 2007) (SR-NYSEArca-2007-76)
(approving listing on the Exchange of the streetTRACKS Gold Trust);
56041 (July 11, 2007), 72 FR 39114 (July 17, 2007) (SR-NYSEArca-
2007-43) (order approving listing on the Exchange of iShares COMEX
Gold Trust).
\9\ See Securities Exchange Act Release Nos. 50603 (October 28,
2004), 69 FR 64614 (November 5, 2004) (SR-NYSE-2004-22) (order
approving listing of streetTRACKS Gold Trust on NYSE); 51058
(January 19, 2005), 70 FR 3749 (January 26, 2005) (SR-Amex-2004-38)
(order approving listing of iShares COMEX Gold Trust on the American
Stock Exchange LLC).
\10\ See Securities Exchange Act Release Nos. 53520 (March 20,
2006), 71 FR 14977 (March 24, 2006) (SR-PCX-2005-117) (approving
trading on the Exchange pursuant to UTP of the iShares Silver
Trust); 51245 (February 23, 2005), 70 FR 10731 (March 4, 2005) (SR-
PCX-2004-117) (approving trading on the Exchange of the streetTRACKS
Gold Trust pursuant to UTP).
\11\ See Securities Exchange Act Release No. 58956 (November 14,
2008), 73 FR 71074 (November 24, 2008) (SR-NYSEArca-2008-124)
(approving listing on the Exchange of the iShares Silver Trust)).
\12\ See Securities Exchange Act Release No. 53521 (March 20,
2006), 71 FR 14967 (March 24, 2006) (SR-Amex-2005-72) (approving
listing on the American Stock Exchange LLC of the iShares Silver
Trust).
---------------------------------------------------------------------------
The Trust will issue Shares which represent units of fractional
undivided beneficial interest in and ownership of the Trust. The
investment objective of the Trust is for the Shares to reflect the
performance of the price of physical gold, silver, platinum and
palladium in the proportions held by the Trust, less the expenses of
the Trust's operations.\13\
---------------------------------------------------------------------------
\13\ See the registration statement for the Trust on Form S-1,
filed with the Commission on April 29, 2010 (No. 333-164769)
(``Registration Statement''). The descriptions of the Trust, the
Shares, the Bullion, and the regulation and operation of the
commodity markets contained herein are based on the Registration
Statement.
---------------------------------------------------------------------------
ETFS Services USA LLC is the sponsor of the Trust (``Sponsor''),
The Bank of New York Mellon is the trustee of the Trust
(``Trustee''),\14\ and JPMorgan Chase Bank, N.A. is the custodian of
the Trust (``Custodian'').\15\
---------------------------------------------------------------------------
\14\ The Trustee is generally responsible for the day-to-day
administration of the Trust, including keeping the Trust's
operational records. The Trustee's principal responsibilities
include (1)Transferring the Trust's Bullion metal (``Bullion'',
which is physical gold, silver, platinum and palladium) as needed to
pay the Sponsor's Fee in Bullion (Bullion transfers are expected to
occur approximately monthly in the ordinary course), (2) valuing the
Trust's Bullion and calculating the net asset value (``NAV'') of the
Trust and the NAV per Share, (3) receiving and processing orders
from Authorized Participants to create and redeem Baskets and
coordinating the processing of such orders with the Custodian and
DTC, (4) selling the Trust's Bullion as needed to pay any
extraordinary Trust expenses that are not assumed by the Sponsor,
(5) when appropriate, making distributions of cash or other property
to Shareholders, and (6) receiving and reviewing reports from or on
the Custodian's custody of and transactions in the Trust's Bullion.
\15\ The Custodian is responsible for safekeeping for the Trust
Bullion deposited with it by Authorized Participants in connection
with the creation of Baskets. The Custodian is also responsible for
selecting the Zurich Sub-Custodians and its other subcustodians, if
any. The Custodian facilitates the transfer of Bullion in and out of
the Trust through the unallocated Bullion accounts it will maintain
for each Authorized Participant and the unallocated and allocated
Bullion accounts it will maintain for the Trust. The Custodian will
hold at its London, England vault premises that portion of the
Trust's allocated Bullion to be held in London. The Zurich Sub-
Custodians will hold at their Zurich, Switzerland vault premises
that portion of the Trust's allocated platinum and palladium to be
held in Zurich on behalf of the Custodian. The Custodian is
responsible for allocating specific bars of physical gold and silver
and specific plates or ingots of physical platinum and palladium to
the Trust's allocated platinum account. The Custodian will provide
the Trustee with regular reports detailing the Bullion transfers in
and out of the Trust's unallocated and allocated Bullion accounts
and identifying the platinum and palladium plates or ingots held in
the Trust's allocated Bullion account.
---------------------------------------------------------------------------
The Exchange represents that the Shares satisfy the requirements of
NYSE Arca Equities Rule 8.201 and thereby qualify for listing on the
Exchange.\16\ The Shares will be book-entry only and individual
certificates will not be issued for the Shares.
---------------------------------------------------------------------------
\16\ With respect to application of Rule 10A-3 (17 CFR 240.10A-
3) under the Securities Exchange of 1934 (``Act'') (15 U.S.C. 78a),
the Trust relies on the exemption contained in Rule 10A-3(c)(7).
---------------------------------------------------------------------------
The NAV of the Trust is the aggregate value of the Trust's assets
less its liabilities (which include estimated accrued but unpaid fees
and expenses).
[[Page 39294]]
In determining the NAV of the Trust, the Trustee will value the prices
of Bullion metal as determined by the relevant London PM Fixes.\17\
Gold held by the Trust will be valued on the basis of the price of an
ounce of gold as set by the afternoon session of the twice daily fix of
the price of an ounce of gold which starts at 3 p.m. London, England
time and is performed in London by the five members of the London gold
fix. Silver held by the Trust will be valued on the basis of the price
of an ounce of silver as set at approximately 12 noon London time and
performed in London by three market making members of the London
Bullion Market Association (``LBMA''). Platinum held by the Trust will
be valued on the basis of the price of an ounce of platinum as set by
the afternoon session of the twice daily fix of the price of an ounce
of platinum which starts at 2 p.m. London, England time and is
performed in London by the four fixing members of the London Platinum
and Palladium Market (``LPPM''). Palladium held by the Trust will be
valued on the basis of the price of an ounce of palladium as set by the
afternoon session of the twice daily fix of the price of an ounce of
palladium which starts at 2 p.m. London, England time and is performed
in London by the four fixing members of the LPPM.\18\ The Trustee will
determine the NAV of the Trust on each day the NYSE Arca is open for
regular trading, as promptly as practicable after 4 p.m. Eastern Time
(``E.T.''). If no London PM Fixes are made for gold, silver, platinum
or palladium on a particular evaluation day or has not been announced
by 4 p.m. E.T. on a particular evaluation day, the next most recent
London price fix for such metal or metals will be used in the
determination of the NAV of the Trust, unless the Sponsor determines
that such price is inappropriate to use as basis for such
determination.\19\ The Trustee will also determine the NAV per Share,
which equals the NAV of the Trust, divided by the number of outstanding
Shares.
---------------------------------------------------------------------------
\17\ Terms relating to the Trust and the Shares referred to, but
not defined, herein are defined in the Registration Statement.
\18\ The operation of the London Fix for gold, silver, platinum
and palladium is described in the registration statements on Form S-
1 for the ETFS Gold, Silver, Platinum and Palladium Trusts,
respectively, and in the Exchange's proposed rule changes pursuant
to Rule 19b-4 under the Act in connection with Exchange listing of
such Trusts. See notes 4-7, supra.
\19\ See discussion under ``Operation of the Trust'', infra,
regarding procedures used when the Sponsor determines that the
Bullion price is inappropriate to use.
---------------------------------------------------------------------------
Market Regulation
According to the Registration Statement, the global gold, silver,
platinum and palladium markets are overseen and regulated by both
governmental and self-regulatory organizations. In addition, certain
trade associations have established rules and protocols for market
practices and participants. In the United Kingdom, responsibility for
the regulation of the financial market participants, including the
major participating members of the LBMA and the LPPM, falls under the
authority of the Financial Services Authority (``FSA'') as provided by
the Financial Services and Markets Act 2000 (``FSM Act''). Under the
FSM Act, all UK-based banks, together with other investment firms, are
subject to a range of requirements, including fitness and properness,
capital adequacy, liquidity, and systems and controls.
The FSA is responsible for regulating investment products,
including derivatives, and those who deal in investment products.
Regulation of spot, commercial forwards, and deposits of Bullion not
covered by the FSM Act is provided for by The London Code of Conduct
for Non-Investment Products, which was established by market
participants in conjunction with the Bank of England.
The Tokyo Commodity Exchange (``TOCOM'') has authority to perform
financial and operational surveillance on its members' trading
activities, scrutinize positions held by members and large-scale
customers, and monitor the price movements of futures markets by
comparing them with cash and other derivative markets' prices. To act
as a Futures Commission Merchant Broker, a broker must obtain a license
from Japan's Ministry of Economy, Trade and Industry (METI), the
regulatory authority that oversees the operations of the TOCOM.\20\
---------------------------------------------------------------------------
\20\ Additional information regarding operation of the gold,
silver, platinum and palladium markets, and the regulation of these
markets, is described in the Registration Statement and in the
Commission notices of the Exchange's proposed rule changes regarding
listing of the ETFS Trusts. See Securities Exchange Act Release Nos.
59781 (April 17, 2009), 74 FR 18771 (April 24, 2009) (SR-NYSEArca-
2009-28) (notice and order granting accelerated approval regarding
listing of ETFS Silver Trust); 59895 (May 8, 2009), 74 FR 22993 (May
15, 2009) (SR-NYSEArca-2009-40 (notice and order granting
accelerated approval regarding listing of ETFS Gold Trust); 60970
(November 9, 2009), 74 FR 59319 (November 17, 2009) (SR-NYSEArca-
2009-95) (notice regarding listing of ETFS Platinum Trust); 60971
(November 9, 2009), 74 FR 59283 (November 17, 2009) (SR-NYSEArca-
2009-94) (notice regarding listing of ETFS Palladium Trust).
---------------------------------------------------------------------------
Operation of the Trust
The Trust is a common law trust formed under New York law pursuant
to the Trust Agreement. The Trust holds Bullion and is expected from
time to time to issue Baskets in exchange for deposits of Bullion and
to distribute Bullion in connection with redemptions of Baskets. The
investment objective of the Trust is for the Shares to reflect the
performance of the prices of physical gold, silver, platinum and
palladium in the proportions held by the Trust, less the Trust's
expenses.
According to the Registration Statement, the Trust is not
registered as an investment company under the Investment Company Act of
1940 and is not required to register under such act. The Trust will not
hold or trade in commodity futures contracts regulated by the Commodity
Exchange Act \21\ (``CEA''), as administered by the Commodity Futures
Trading Commission (``CFTC''). The Trust is not a commodity pool for
purposes of the CEA, and neither the Sponsor nor the Trustee is subject
to regulation as a commodity pool operator or a commodity trading
adviser in connection with the Shares.
---------------------------------------------------------------------------
\21\ 7 U.S.C. 1 et seq.
---------------------------------------------------------------------------
The Trust expects to create and redeem Shares from time to time but
only in Baskets of 50,000 each. The number of outstanding Shares is
expected to increase and decrease from time to time as a result of the
creation and redemption of Baskets. The creation and redemption of
Baskets requires the delivery to the Trust or the distribution by the
Trust of the amount of Bullion and any cash represented by the Baskets
being created or redeemed. The total amount of Bullion and any cash
required for the creation of Baskets will be based on the combined NAV
of the number of Baskets being created or redeemed. The initial amount
of Bullion required for deposit with the Trust to create Shares will be
1,500 ounces of gold, 55,000 ounces of silver, 200 ounces of platinum
and 300 ounces of palladium per Basket.\22\ The number of ounces of
Bullion required to create a Basket or to be delivered upon a
redemption of a Basket will gradually decrease over time. This is
because the
[[Page 39295]]
Shares comprising a Basket will represent a decreasing amount of
Bullion due to the delivery or sale of the Trust's Bullion to pay the
Sponsor's Fee or the Trust's expenses not assumed by the Sponsor.
---------------------------------------------------------------------------
\22\ As of June 11, 2010, the value of a Basket was
approximately $3,285,395. The value of Bullion required for the
creation of a Basket was approximately $1,837,650 for gold ($1225.10
per ounce times 1,500 ounces); $1,003,750 for silver ($18.25 per
ounce times 55,000 ounces); $308,290 for platinum ($1541.45 per
ounce times 200 ounces); and $135,750 for palladium ($452.35 per
ounce times 300 ounces). These values represent weightings for gold,
silver, platinum and palladium in a Basket of approximately 55.93%,
30.55%, 9.38% and 4.13%, respectively.
---------------------------------------------------------------------------
The Trustee will determine the NAV of the Trust on each day that
the NYSE Arca is open for regular trading, as promptly as practicable
after 4 p.m. E.T. The NAV of the Trust is the aggregate value of the
Trust's assets less its estimated accrued but unpaid liabilities (which
include accrued expenses). In determining the Trust's NAV, the Trustee
will value the gold held by the Trust based on the London PM Fix price
for an ounce of gold or such other publicly available price as the
Sponsor may deem fairly represents the commercial value of the Trust's
gold, the silver held by the Trust based on the London PM Fix price for
an ounce of silver or such other publicly available price as the
Sponsor may deem fairly represents the commercial value of the Trust's
silver, the platinum held by the Trust based on the London PM Fix price
for an ounce of platinum or such other publicly available price as the
Sponsor may deem fairly represents the commercial value of the Trust's
platinum and the palladium held by the Trust based on the London PM Fix
price for an ounce of palladium or such other publicly available price
as the Sponsor may deem fairly represents the commercial value of the
Trust's palladium. The Trustee will also determine the NAV per Share.
If on a day when the Trust's NAV is being calculated, the London Fix is
not available or has not been announced by 4 p.m. E.T., for any Bullion
metal the price from the next most recent London fix (AM or PM) for
such Bullion metal will be used, unless the Sponsor determines that
such price is inappropriate to use.
The Trust's assets will consist of allocated physical Bullion,
Bullion credited to an unallocated Bullion account and, from time to
time, cash, which will be used to pay expenses not assumed by the
Sponsor. Cash held by the Trust will not generate any income. Each
Share will represent a proportional interest, based on the total number
of Shares outstanding, in the Bullion and any cash held by the Trust,
less the Trust's liabilities (which include accrued but unpaid fees and
expenses). The Sponsor expects that the secondary market trading price
of the Shares will fluctuate over time in response to the prices of
gold, silver, platinum and palladium. In addition, the Sponsor expects
that the trading price of the Shares will reflect the estimated accrued
but unpaid expenses of the Trust.
Investors may obtain on a 24-hour basis gold, silver, platinum and
palladium pricing information based on the spot price for an ounce of
each Bullion metal from various financial information service
providers. Current spot prices are also generally available with bid/
ask spreads from physical Bullion dealers. In addition, the Trust's Web
site (https://www.etfsecurities.com) will provide ongoing pricing
information for gold, silver, platinum and palladium spot prices and
the Shares. Market prices for the Shares will be available from a
variety of sources including brokerage firms, information Web sites and
other information service providers. The NAV of the Trust will be
published by the Sponsor on each day that the NYSE Arca is open for
regular trading and will be posted on the Trust's Web site.
According to the Registration Statement, the most significant gold,
silver, platinum and palladium futures exchanges are the COMEX and the
TOCOM. Trading on these exchanges is based on fixed delivery dates and
transaction sizes for the futures and options contracts traded. The
COMEX operates through a central clearance system. On June 6, 2003,
TOCOM adopted a similar clearance system.
Secondary Market Trading
According to the Registration Statement, while the Trust's
investment objective is for the Shares to reflect the performance of
prices of physical gold, silver, platinum and palladium in the
proportions held by the Trust, less the expenses of the Trust, the
Shares may trade in the secondary market on NYSE Arca at prices that
are lower or higher relative to their NAV per Share. The amount of the
discount or premium in the trading price relative to the NAV per Share
may be influenced by non-concurrent trading hours between the NYSE Arca
and the COMEX, and the London and Zurich Bullion markets. While the
Shares will trade on NYSE Arca until 8 p.m. E.T., liquidity in the
global gold, silver, platinum and palladium markets will be reduced
after the close of the COMEX at 1:30 p.m. E.T. or the London and Zurich
Bullion markets. As a result, during this time, trading spreads, and
the resulting premium or discount, on the Shares may widen.
Creation and Redemption of Shares
The Trust will create and redeem Shares from time to time, but only
in one or more Baskets of 50,000 Shares. The creation and redemption of
Baskets will only be made in exchange for the delivery to the Trust or
the distribution by the Trust of the amount of physical gold, silver,
platinum and palladium and any cash represented by the Baskets being
created or redeemed, the amount of which will be based on the combined
NAV of the number of Shares included in the Baskets being created or
redeemed determined on the day the order to create or redeem Baskets is
properly received.
Authorized Participants are the only persons that may place orders
to create and redeem Baskets, as described in the Registration
Statement.
Creation Procedures
On any business day, an Authorized Participant may place an order
with the Trustee to create one or more Baskets. Creation and redemption
orders will be accepted on ``business days'' the NYSE Arca is open for
regular trading. Settlements of such orders requiring receipt or
delivery, or confirmation of receipt or delivery, of Bullion in the
United Kingdom, Zurich or another jurisdiction will occur on ``business
days'' when (1) Banks in the United Kingdom, Zurich and such other
jurisdiction and (2) the London and Zurich Bullion markets are
regularly open for business. Purchase orders must be placed no later
than 3:59:59 p.m. E.T. on each business day the NYSE Arca is open for
regular trading. By placing a purchase order, an Authorized Participant
agrees to deposit Bullion with the Trust. The creation and redemption
of Baskets will only be made in exchange for the delivery to the Trust
or the distribution by the Trust of the amount of Bullion and any cash
represented by the Baskets being created or redeemed, the amount of
which will be based on the combined NAV of the number of Shares
included in the Baskets being created or redeemed determined on the day
the order to create or redeem Baskets is properly received.
The initial deposit of Bullion into the Trust establishes the
``Bullion Ratio'' such that, for every 1,500 ounces of gold, there will
also be 55,000 ounces of silver, 200 ounces of platinum, and 300 ounces
of palladium. Each Creation Basket Deposit, which is the total deposit
required to create a Basket, will be an amount of Bullion and cash, if
any, that is in the same proportion to the total assets of the Trust
(net of estimated accrued but unpaid fees, expenses and other
liabilities) on the date an order to purchase one or more Baskets is
properly received as the number of Shares comprising the number of
Baskets to be created in
[[Page 39296]]
respect of the deposit bears to the total number of Shares outstanding
on the date such order is properly received. The Bullion component of
any Creation Basket Deposit following the initial deposit shall be
comprised of gold, silver, platinum and palladium in the Bullion
Ratio.\23\
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\23\ The proportion of Bullion comprising a deposit will remain
the same following inception of the Trust. The amount of gold,
silver, platinum and palladium in the required deposit is determined
by dividing the number of ounces of each metal held by the Trust by
the number of Baskets outstanding, as adjusted for the amount of
Bullion constituting estimated accrued but unpaid fees and expenses
of the Trust.
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An Authorized Participant who places a purchase order is
responsible for crediting its Authorized Participant Unallocated
Account with the required Bullion deposit amount by the third business
day in London or Zurich, as applicable, following the purchase order
date. Upon receipt of the Bullion deposit amount, the Custodian, after
receiving appropriate instructions from the Authorized Participant and
the Trustee, will transfer on the third business day following the
purchase order date the Bullion deposit amount from the Authorized
Participant Unallocated Account to the Trust Unallocated Account and
the Trustee will direct DTC to credit the number of Baskets ordered to
the Authorized Participant's DTC account. The expense and risk of
delivery, ownership and safekeeping of Bullion until such Bullion has
been received by the Trust is borne solely by the Authorized
Participant.
Redemption Procedures
According to the Registration Statement, the procedures by which an
Authorized Participant can redeem one or more Baskets will mirror the
procedures for the creation of Baskets. On any business day, an
Authorized Participant may place an order with the Trustee to redeem
one or more Baskets. Redemption orders must be placed no later than
3:59:59 p.m. E.T. on each business day the NYSE Arca is open for
regular trading. A redemption order so received is effective on the
date it is received in satisfactory form by the Trustee. The redemption
procedures allow Authorized Participants to redeem Baskets and do not
entitle an individual Shareholder to redeem any Shares in an amount
less than a Basket, or to redeem Baskets other than through an
Authorized Participant.
By placing a redemption order, an Authorized Participant agrees to
deliver the Baskets to be redeemed through DTC's book-entry system to
the Trust not later than the third business day following the effective
date of the redemption order.
Determination of Redemption Distribution
The redemption distribution from the Trust will consist of a credit
to the redeeming Authorized Participant's Authorized Participant
Unallocated Account representing the amount of the Bullion held by the
Trust evidenced by the Shares being redeemed. Redemption distributions
will be subject to the deduction of any applicable tax or other
governmental charges which may be due.
Creation and Redemption Transaction Fee
To compensate the Trustee for services in processing the creation
and redemption of Baskets, an Authorized Participant will be required
to pay a transaction fee to the Trustee of $500 per order to create or
redeem Baskets. An order may include multiple Baskets. The transaction
fee may be reduced, increased or otherwise changed by the Trustee with
the consent of the Sponsor. The Trustee shall notify DTC of any
agreement to change the transaction fee and will not implement any
increase in the fee for the redemption of Baskets until 30 days after
the date of the notice.
Termination Events
The Trustee will terminate and liquidate the Trust if the aggregate
market capitalization of the Trust, based on the closing price for the
Shares, was less than $350 million (as adjusted for inflation) at any
time after the first anniversary after the Trust's formation and the
Trustee receives, within six months after the last of those trading
days, notice from the Sponsor of its decision to terminate the Trust.
The Trustee will terminate the Trust if the CFTC determines that the
Trust is a commodities pool under the CEA. The Trustee may also
terminate the Trust upon the agreement of the owners of beneficial
interests in the Shares (``Shareholders'') owning at least 75% of the
outstanding Shares.
The Trust has no fixed termination date.
Additional information regarding the Shares and the operation of
the Trust, including termination events, risks, and creation and
redemption procedures, are described in the Registration Statement.
Valuation of Bullion, Definition of Net Asset Value and Adjusted Net
Asset Value (``ANAV'')
On each day that the NYSE Arca is open for regular trading, as
promptly as practicable after 4 p.m., New York time, on such day
(Evaluation Time), the Trustee will evaluate the Bullion held by the
Trust and determine both the ANAV and the NAV of the Trust.
At the Evaluation Time, the Trustee will value the Trust's Bullion
on the basis of that day's London Fix for such metal or, if no London
Fix is made for a metal on such day or has not been announced by the
Evaluation Time, the next most recent London price fix for such metal
determined prior to the Evaluation Time will be used, unless the
Sponsor determines that such price is inappropriate as a basis for
evaluation. In the event the Sponsor determines that the London Fix or
such other publicly available price as the Sponsor may deem fairly
represents the commercial value of the Trust's Bullion metal is not an
appropriate basis for evaluation of the Trust's Bullion metal, it shall
identify an alternative basis for such evaluation to be employed by the
Trustee.
Once the value of the Bullion has been determined, the Trustee will
subtract all estimated accrued but unpaid fees (other than the fees
accruing for such day on which the valuation takes place computed by
reference to the value of the Trust or its assets), expenses and other
liabilities of the Trust from the total value of the Bullion and all
other assets of the Trust (other than any amounts credited to the
Trust's reserve account, if established). The resulting figure is the
ANAV of the Trust. The ANAV of the Trust is used to compute the
Sponsor's Fee.
Liquidity
Liquidity in the OTC market can vary from time to time during the
course of the 24-hour trading day. Fluctuations in liquidity are
reflected in adjustments to dealing spreads--the differential between a
dealer's ``buy'' and ``sell'' prices. The period of greatest liquidity
in the Bullion markets generally occurs at the time of day when trading
in the European time zones overlaps with trading in the United States,
which is when OTC market trading in London, New York, Zurich and other
centers coincides with futures and options trading on the COMEX. This
period lasts for approximately four hours each New York business day
morning.
Availability of Information Regarding Bullion Prices
Currently, the Consolidated Tape Plan does not provide for
dissemination of the spot price of commodities such as gold, silver,
platinum and palladium over the Consolidated Tape. However, there will
be disseminated over the
[[Page 39297]]
Consolidated Tape the last sale price for the Shares, as is the case
for all equity securities traded on the Exchange (including exchange-
traded funds). In addition, there is a considerable amount of Bullion
market information available on public Web sites and through
professional and subscription services.
Investors may obtain on a 24-hour basis Bullion pricing information
based on the spot price for an ounce of Bullion from various financial
information service providers, such as Reuters and Bloomberg. Reuters
and Bloomberg provide at no charge on their Web sites delayed
information regarding the spot price of Bullion and last sale prices of
Bullion futures, as well as information about news and developments in
the Bullion market. Reuters and Bloomberg also offer a professional
service to subscribers for a fee that provides information on Bullion
prices directly from market participants. An organization named EBS
provides an electronic trading platform to institutions such as bullion
banks and dealers for the trading of spot Bullion, as well as a feed of
live streaming prices to Reuters and Moneyline Telerate subscribers.
Complete real-time data for Bullion futures and options prices traded
on COMEX are available by subscription from Reuters and Bloomberg.
COMEX also provides delayed futures and options information on current
and past trading sessions and market news free of charge on its Web
site. There are a variety of other public Web sites providing
information on Bullion, ranging from those specializing in precious
metals to sites maintained by major newspapers, such as The Wall Street
Journal. In addition, the London AM Fix and London PM Fix are publicly
available at no charge at or https://www.thebulliondesk.com.
The Trust Web site will provide an intraday indicative value
(``IIV'') per share for the Shares, updated at least every 15 seconds,
as calculated by the Exchange or a third party financial data provider,
during the Exchange's Core Trading Session (9:30 a.m. to 4 p.m. E.T.).
The IIV is calculated by multiplying the indicative spot price of
Bullion by the quantity of Bullion backing each Share as of the last
calculation date. The Trust Web site will also provide the NAV of the
Trust as calculated each business day by the Sponsor. In addition, the
Web site for the Trust will contain the following information, on a per
Share basis, for the Trust: (a) The NAV as of the close of the prior
business day and the mid-point of the bid-ask price \24\ at the close
of trading in relation to such NAV (``Bid/Ask Price''), and a
calculation of the premium or discount of such price against such NAV;
and (b) data in chart format displaying the frequency distribution of
discounts and premiums of the Bid/Ask Price against the NAV, within
appropriate ranges, for each of the four previous calendar quarters.
The Web site for the Trust will also provide the following information:
The Creation Basket Deposit, the Trust's prospectus, and as the two
most recent reports to stockholders. Finally, the Trust Web site will
also provide the last sale price of the Shares as traded in the US
market. The Exchange will provide on its Web site (https://www.nyx.com)
a link to the Trust's Web site. In addition, the Exchange will make
available over the Consolidated Tape quotation information, trading
volume, closing prices and NAV for the Shares from the previous day.
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\24\ The bid-ask price of the Trust is determined using the
highest bid and lowest offer on the Consolidated Tape as of the time
of calculation of the closing day NAV.
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Criteria for Initial and Continued Listing
The Trust will be subject to the criteria in NYSE Arca Equities
Rule 8.201(e) for initial and continued listing of the Shares.
A minimum of 100,000 Shares will be required to be outstanding at
the start of trading. The minimum number of shares required to be
outstanding is comparable to requirements that have been applied to
previously listed shares of the streetTRACKS Gold Trust, the iShares
COMEX Gold Trust, the iShares Silver Trust, the ETF Trusts and
exchange-traded funds. The Exchange believes that the anticipated
minimum number of Shares outstanding at the start of trading is
sufficient to provide adequate market liquidity.
Trading Rules
The Exchange deems the Shares to be equity securities, thus
rendering trading in the Fund subject to the Exchange's existing rules
governing the trading of equity securities. Trading in the Shares on
the Exchange will occur in accordance with NYSE Arca Equities Rule
7.34(a). The Exchange has appropriate rules to facilitate transactions
in the Shares during all trading sessions.
Further, NYSE Arca Equities Rule 8.201 sets forth certain
restrictions on ETP Holders acting as registered Market Makers in the
Shares to facilitate surveillance. Pursuant to NYSE Arca Equities Rule
8.201(h), an ETP Holder acting as a registered Market Maker in the
Shares is required to provide the Exchange with information relating to
its trading in the applicable underlying Bullion, related futures or
options on futures, or any other related derivatives. NYSE Arca
Equities Rule 8.201(i) prohibits an ETP Holder acting as a registered
Market Maker in the Shares from using any material nonpublic
information received from any person associated with an ETP Holder or
employee of such person regarding trading by such person or employee in
the underlying Bullion, related futures or options on futures or any
other related derivative (including the Shares).
As a general matter, the Exchange has regulatory jurisdiction over
its ETP Holders and their associated persons, which include any person
or entity controlling an ETP Holder, as well as a subsidiary or
affiliate of an ETP Holder that is in the securities business. A
subsidiary or affiliate of an ETP Holder that does business only in
commodities or futures contracts would not be subject to Exchange
jurisdiction, but the Exchange could obtain information regarding the
activities of such subsidiary or affiliate through surveillance sharing
agreements with regulatory organizations of which such subsidiary or
affiliate is a member.
With respect to trading halts, the Exchange may consider all
relevant factors in exercising its discretion to halt or suspend
trading in the Shares. Trading on the Exchange in the Shares may be
halted because of market conditions or for reasons that, in the view of
the Exchange, make trading in the Shares inadvisable. These may
include: (1) The extent to which conditions in the underlying Bullion
market have caused disruptions and/or lack of trading, or (2) whether
other unusual conditions or circumstances detrimental to the
maintenance of a fair and orderly market are present.\25\ In addition,
trading in Shares will be subject to trading halts caused by
extraordinary market volatility pursuant to the Exchange's ``circuit
breaker'' rule.\26\
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\25\ The Exchange, pursuant to NYSE Arca Equities Rule 7.12, has
discretion to halt trading in the Shares if the London Fixes are not
determined for an extended time period based on extraordinary
circumstances or market conditions.
\26\ See NYSE Arca Equities Rule 7.12.
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Surveillance
The Exchange intends to utilize its existing surveillance
procedures applicable to derivative products (including Commodity-Based
Trust Shares) to monitor trading in the Shares. The Exchange represents
that these
[[Page 39298]]
procedures are adequate to properly monitor Exchange trading of the
Shares in all trading sessions and to deter and detect violations of
Exchange rules and applicable Federal securities laws.
The Exchange's current trading surveillance focuses on detecting
securities trading outside their normal patterns. When such situations
are detected, surveillance analysis follows and investigations are
opened, where appropriate, to review the behavior of all relevant
parties for all relevant trading violations. Also, pursuant to NYSE
Arca Equities Rule 8.201(h), the Exchange is able to obtain information
regarding trading in the Shares and the underlying Bullion, Bullion
futures contracts, options on Bullion futures, or any other Bullion
derivative, through ETP Holders acting as registered Market Makers, in
connection with such ETP Holders' proprietary or customer trades which
they effect on any relevant market. In addition, the Exchange may
obtain trading information via the Intermarket Surveillance Group
(``ISG'') from other exchanges who are members of the ISG.\27\ COMEX is
an ISG member.
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\27\ A list of ISG members is available at https://www.isgportal.org. The Exchange notes that TOCOM is not an ISG
member and the Exchange does not have in place a comprehensive
surveillance sharing agreement with such market. In addition, the
Exchange does not have access to information regarding Bullion-
related OTC transactions in spot, forwards, options or other
derivatives.
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Information Bulletin
Prior to the commencement of trading, the Exchange will inform its
ETP Holders in an Information Bulletin of the special characteristics
and risks associated with trading the Shares. Specifically, the
Information Bulletin will discuss the following: (1) The procedures for
purchases and redemptions of Shares in Baskets (including noting that
Shares are not individually redeemable); (2) NYSE Arca Equities Rule
9.2(a), which imposes a duty of due diligence on its ETP Holders to
learn the essential facts relating to every customer prior to trading
the Shares; (3) how information regarding the IIV is disseminated; (4)
the requirement that ETP Holders deliver a prospectus to investors
purchasing newly issued Shares prior to or concurrently with the
confirmation of a transaction; (5) the possibility that trading spreads
and the resulting premium or discount on the Shares may widen as a
result of reduced liquidity of Bullion trading during the Core and Late
Trading Sessions after the close of the major world Bullion markets;
and (6) trading information. For example, the Information Bulletin will
advise ETP Holders, prior to the commencement of trading, of the
prospectus delivery requirements applicable to the Trust. The Exchange
notes that investors purchasing Shares directly from the Trust (by
delivery of the Creation Basket Deposit) will receive a prospectus. ETP
Holders purchasing Shares from the Trust for resale to investors will
deliver a prospectus to such investors.
In addition, the Information Bulletin will reference that the Trust
is subject to various fees and expenses described in the Registration
Statement. The Information Bulletin will also reference the fact that
there is no regulated source of last sale information regarding
physical Bullion, that the Commission has no jurisdiction over the
trading of Bullion as physical commodities, and that the CFTC has
regulatory jurisdiction over the trading of Bullion futures contracts
and options on Bullion futures contracts.
The Information Bulletin will also discuss any relief, if granted,
by the Commission or the staff from any rules under the Act.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) \28\ of the Act, in general, and furthers the
objectives of Section 6(b)(5),\29\ in particular, because it is
designed to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments and perfect the
mechanisms of a free and open market and to protect investors and the
public interest. The Exchange believes that the proposed rule change
will facilitate the listing and trading of an additional type of
commodity-based product that will enhance competition among market
participants, to the benefit of investors and the marketplace.
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\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) By order approve the proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NYSEArca-2010-56 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEArca-2010-56. 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
[[Page 39299]]
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-NYSEArca-2010-56 and should be submitted on or before
July 29, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-16532 Filed 7-7-10; 8:45 am]
BILLING CODE 8010-01-P
